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TheStreet Open House

Obama's Impact on Economy? Priceless

It was Kennedy who famously said: "Paradoxically, the way to increase tax revenues, is to cut tax rates." Those are my italics.

When Kennedy became president, the top personal tax rate was 91%. That's not a typo. Almost every penny of the last dollar earned by top wage earners went to the government -- and the economy was stagnant.

Kennedy became the largest tax-cutter in American history at that time, cutting the top personal tax rate from 91% to 70%. He also cut the top corporate tax rate from 52% to 48%. Unfortunately, he did not live to see the resultant spurt in growth that came to be known as the "Kennedy Boom."

Cutting taxes to spur economic growth is not a Republican vs. Democrat issue. It is a growth vs. stagnation issue. And since the top 10% of tax returns produce 60% of the tax revenues, that is where rates will have to be cut in order to produce more jobs, more economic growth and then more tax revenues.

President-elect Barack Obama has given ample demonstration of his insight, intelligence and his appreciation of his place in history. That is why the world, and the markets, should be filled with hope, even amid this very real economic slowdown. And that's The Savage Truth.

Terry Savage is an expert on personal finance and also appears as a commentator on national television on issues related to investing and the financial markets. Savage's personal finance column in the Chicago Sun-Times is nationally syndicated. She was the first woman trader on the Chicago Board Options Exchange and is a registered investment adviser for stocks and futures. Savage currently serves as a director of the Chicago Mercantile Exchange Corp.
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