OPINION:
When I first arrived in Washington in 1982, the Dow Jones hit a low of 800. You may not believe that, so feel free to look it up.
If anyone had predicted that, in a little more than four decades, the Dow would be at 50,000, they might have been admitted to a mental institution. Yet it has grown sixtyfold (not counting inflation). Even accounting for inflation, the Dow is up about twelvefold.
We have lived through the greatest period of wealth creation in perhaps the history of the world. No other nation has come even close in modern times. Consider that American publicly traded companies are now worth more than $70 trillion.
Is China catching up? Yes, but it has a lot of work to do despite having four times as many people as we do. The market cap of all Chinese companies is estimated at $11 trillion. The market cap of all European countries is roughly $16 trillion. Japan’s companies are worth $7 trillion.
We are worth roughly as much as the rest of the world combined, even though we have only 5% of the world’s population.
This wealth spurt didn’t happen by accident. It’s the triumph of good economic policy, including the steep decline in tax rates and tame inflation.
When President Reagan came into office in 1981, at the start of this bull market of all bull markets, inflation was running at about 12%, the top income tax rate was 70%, the corporate rate was 46%, the estate tax was 70% and the capital gains rate was 28%. The economy was in a state of collapse.
Today, inflation is roughly 3%, the top income tax rate is 39.6%, the corporate rate is down to 21%, the estate tax is 40%, and capital gains are taxed at 23.4%.
Supply-siders such as Steve Forbes, Arthur Laffer and Larry Kudlow should take a bow. They were right about lowering tax rates and inflation igniting growth and prosperity. The income redistributionists were wrong that the rich would pay far less in taxes. They pay more. The top 1% now pays roughly 40% of the income tax.
• Stephen Moore is a former Trump senior economic adviser and a co-founder of Unleash Prosperity.
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