From: pjm@anegada.sps.mot.com (Patrick J. McGuinness)
Subject: Re: Derailing the Reagan Revolution, part III: Getting back on track.
Organization: Motorola Inc., Austin TX
Date: Wed, 26 Aug 1992 20:41:27 GMT

In article <1992Aug25.223200.3743@desire.wright.edu> demon@desire.wright.edu (Stupendous Man) writes:
>
>		Derailing the Reagan Revolution: Getting Back on Track.
>
>
>	In parts I and II we examined the present fiscal problems and some of
>their underlying causes.  Here in part III, we see how other countries have
>learned what we didn't (or wouldn't).  And how they are now applying the 
>principles of the Seven Fat Years to promote their own economies into 
>peacetime booms.

An excellent series ....
Let me just highlight and juxtapose a few things:

>	The following is largely taken from _Forbes_, August 17th, 1992.
>...
>		An Interview with President Carlos Salinas
>
>	FORBES: In addition to reducing domestic debt, you've also substantially
>reduced tax rates.
>[Salinas]
>	Oh, yes, we reduced tax rates and we increased the tax base.  We know
>we have to be competative [in tax rates] on an international level if we are to
>compete for capital, which in the Nineties will be the key question for
>economic success or failure.  We've reduced tax rates and strengthened
>enforcement, and now are getting more revenue out of [lower] tax rates.
>....
>	Inflation had reached almost 200% three or four years ago; this year
>it's going toward 10%.
>	The main tool for reducing inflation is on the fiscal side.  This year
>we're running a [budgetary] surplus for the first time in history.


They reduced tax rates ..... and created a budget surplus.

Unfortunately in this country, there are people who are unwilling
to look at the reality, and instead blame an 11-year-old tax cut,
that cost less than $35 billion in revenue in 1985, and cost
virtually *nothing* in revenue by 1987 (thanks to higher growth from
'83 to '87), for our current budget deficit that exceeds $300 billion.
Listening to the Democrats and many pundits for example, you'd think
it was a logical impossibility to cut taxes and at the same time
cure the deficit problem.

The Mexican experience disproves this.

Further highlights on the Mexican economic success story:

>	But wait, there's more!  Here's an excerpt from the interview with the
>Finance Minister.
>
>			We Don't Tax Capital Gains
>		An Interview with Finance Minister Pedro Aspe
> ....
>	FORBES: Stop, Mr. Aspe.  You're hitting too close to home.  Let's talk
>about a pleasanter subject.  President Salinas has said that supply-side
>economics has worked very well in Mexico.  Would you elaborate?
>
>	Only a few years back our maximum tax rate for individuals was 60.5%. 
>Today it's 35%.  For a corporation, it was 42%; now it's 35%.  On value-added
>tax we had two rates, 20% and 15%; now we have just one, 10%.  And we have made
>13 federal taxes disappear.  We have zero tax on dividends.  Why should you tax
>corporations if they distribute the money?
>
>	FORBES: Come to Washington and convince our Congress.
>
>	You know, a government should not mess around with the decision of the
>corporation to distribute dividends or not.  This is a typical entrepenurial
>decision that the government should not mess around in....
>
>	FORBES: Do you have a capital gains tax in Mexico?
>
>	On all [publicly traded] firms the rate is zero.
....
----
>
>	Well, I think our friends down south have eloquently put down any
>supply-side nay-sayers.  The proof is in the pudding, so to speak.  We are
>today approaching the point Mexico was at last decade.  They are using the same
>methods we used to boom in the 80s.  Why have we turned away?  Collective guilt
>at being wealthy?  Tired of success?  Willing to rest on our laurels?
>
>	Well, there is still a lot more to be done in America, and around the
>world.  Please fax this series (heck, send the August 17th issue of _FORBES_!)
>to your congresspeople and favorite presidental candidate.
>
>	If you are dissatisified with the Dems and the Reps, take a look at the
>Libertarians, whose economic philosophy is based on free trade and no
>government intervention (like taxes).
>
>	We've gotten derailed.  But we know how to get back on track.  The
>only question is are we willing to try?
>
>
>	Sources for this series include _Forbes_, August 17th, 1992, The Wall
>Street Journal, Thursday, July 9th, 1992.  Page A12.  And _The Seven Fat Years_
>by Robert Bartley.  I strongly recommend reading both all three.
>
>Brett                                                      
>_______________________________________________________________________________
>Proconsul Computer Consulting                                        CHA-CHING!
>Better, Cheaper, Faster					       (Pick any two :)
>Disclaimer:								   NOT!

---
Pat
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