Council Tax Reduction: The bloated welfare states of France and Sweden have lower corporate rates and generally better corp

Now that recession-warning lights have begun to blink, Democrats should give tax hikes a rest.

As tax-happy Democrats might have noticed, the stock market resembles a kindergartner on a swing set: half-giddy, half-scared, and hyperactive. Meanwhile, payrolls sagged by 4,000 positions last month. Not since August 2003 has America created no new jobs. Fifty-two economists in September 13鈥檚 Wall Street Journal offered a 36-percent average probability of recession by next September, up from 28-percent in August.

Oil hit $81.93 per-barrel Wednesday 鈥?hardly good news. And the tumultuous home-mortgage industry suffered 243,497 foreclosure listings last month, up 115-percent versus August 2006, RealtyTrac.com reports. This mess triggered 12,000 layoffs, just at lender Countrywide Financial Corp. To prevent tight credit from suffocating the economy, the Federal Reserve Board Tuesday hastily administered a 0.5-percent federal-funds-rate reduction.

Amid these worrisome omens and genuine human suffering, the last thing America needs is for congressional Democrats to stuff a pillow over the economy鈥檚 face. But they can鈥檛 control themselves.

鈥淭hrough 2012, the Democratic Congress鈥?new budget raises taxes $217 billion,鈥?the National Taxpayers Union鈥檚 Pete Sepp calculates. 鈥淚f no surpluses appear that year, another $175.5 billion tax hike automatically kicks in.鈥?

This $392.5 billion includes a halving of the per-child tax credit, restoration of the marriage penalty, a 50-percent leap in the low-income tax bracket (10-percent under Republicans; 15-percent under Democrats), and the resurrection of the Death Tax 鈥?from 0 to 55-percent.

After August鈥檚 tragic Minneapolis bridge collapse, House Transportation chairman James Oberstar (D., Minn.) proposed a 鈥渢emporary鈥?nickel-a-gallon federal gasoline-tax increase. Never mind that existing gas-tax revenues vanish into narcissistic pork projects rather than urgent infrastructure repairs. Such a tax hike would 鈥渃ost American motorists an estimated $25 billion over the next three years,鈥?NTU reckons.

Democrats cannot plea that soaring deficits require tax hikes to absorb red ink. Indeed, the federal budget gap narrowed from $413 billion in 2004 to $158 billion today, proving that the best deficit medicine nearly always is to limit taxes and consequently unleash American enterprise. A thinner federal slice of a bigger economic pie usually yields revenues exceeding pre-tax-cut levels.

Federal receipts have zoomed 7-percent this year. 鈥淭he tax cuts are working exactly as intended,鈥?Heritage Foundation analyst Brian Riedl argues. 鈥淟ower tax rates have increased the incentives to work, save, and invest, and as a result, the economy has grown faster than expected.鈥?He adds: 鈥淐oncerns that the Bush tax cuts would lead to a long-term shortfall of government revenues have proven false 鈥ax revenues in 2007 are now estimated to be $70 billion above the level projected even before the 2003 tax cuts. In other words, tax revenues are now above their pre-tax cut baseline.鈥?br>

Democrats cannot deny what happened after President Bush and Capitol Hill Republicans slashed maximum capital-gains taxes from 18 to 15-percent in 2003. Rather than dwindle $5.37 billion between 2003 and 2006, as the congressional Joint Tax Committee鈥檚 antique, static-analysis model wrongly predicted, revenues actually advanced $53 billion.

Foreign economic ministers understand these lessons and are lowering taxes as if Franklin Roosevelt never lived and Ronald Reagan never died.

鈥淪weden and Russia last year eliminated their estate taxes because they said the tax was economically counterproductive,鈥?economist Stephen Moore wrote in the August 31 Wall Street Journal. 鈥淚n Germany under Chancellor Angela Merkel, the corporate tax rate has been reduced to less than 30 percent from 39-percent.鈥?Poland recently chopped its business tax from 27-percent to 19.

Even Hanoi gets it! Thanks to corporate-tax relief, 鈥渢he business environment will become more and more attractive, resulting in increased investment,鈥?Vietnamese tax chief Nguyen Van Ninh told Moore.

While America鈥檚 corporate tax levitates at 35-percent, seven European Union nations have lowered business levies this year. The EU-average corporate tax is 24.2-percent.

鈥淔urther corporate tax rate cuts are being implemented in Germany, Estonia, Spain, and the United Kingdom, and rate cuts are being discussed in the Czech Republic and France,鈥?observes Cato Institute senior fellow Dan Mitchell. 鈥淓ven the bloated welfare states of France and Sweden have lower corporate rates and generally better corporate tax systems than America.鈥?br>

Democrats thus resist global pro-market trends, even among progressive governments long on social solidarity and short on 鈥渞eckless cowboyism.鈥?br>

But, for most Democrats, these facts and numbers are irrelevant. Taxes are not about merely funding vital government duties and basic public services. They are meant to punish the wealthy, 鈥渃orrect鈥?personal behavior, and distribute universal largesse. Thus, Democrats itch to raise taxes on highly lucrative private-equity partnerships, from 15 to 35-percent.

True to form, the Democratic Senate voted in August to hike cigarette taxes 156 percent, from 39 cents to $1 per pack. This would ignite a massive explosion in the State Child Health Insurance Program. The Democratic House extended government medicine to kids in families of four earning quadruple the Federal Poverty Line, or $82,600 鈥?twice today鈥檚 threshold. The House also redefined 鈥渃hild鈥?as an eligible boy or girl 鈥p to age 25.

While America鈥檚 economy clings from a ledge, Democrats dance on its fingertips. When the donkey party promises 鈥渃hange,鈥?it delivers 鈥?good and hard.