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 surpass 50,000, they might have been admitted into a mental institution. But U.S. stocks have grown 60-fold (not counting inflation). Even accounting for inflation, the Dow is up about 12-fold.
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 they’ve got a lot of work to do despite having four times more people than we do. The market cap of all Chinese companies is estimated at roughly $11 trillion. The market cap of all European Union 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 only have 5% of the world’s population. THAT should get you out of your chair shouting “USA, USA, USA!”
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 bookended by two of our greatest pro-business presidents, Ronald Reagan and Donald Trump.
Rewind to 1981 when Reagan came into office: 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 taxes are taxed at 23.4%.
Supply-siders like 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 much less in taxes. They pay more. The top 1% now pay roughly 40% of the income tax.
That’s the good news. The bad news is that so many Democrats haven’t learned the lesson that lower tax rates create more prosperity. By the way, the evidence also shows that even with these lower tax rates, the richest 1% pay a higher share of the tax burden than ever before.
The city in the U.S. with the highest combined federal/state/local income tax rate is New York City. The new mayor, Zohran Mamdani, was elected promising that millionaires and billionaires would pay more taxes to close a $10 billion deficit.
California is our most populous state. The liberal Democrats want to put a first-in-the-nation wealth tax on the ballot that has already created an exodus of millionaires and billionaires out of the state.
Meanwhile, back in Washington, D.C., Trump is predicting the Dow will reach 100,000 by the time he leaves office. That’s a bit of a moonshot, for sure, but the last four decades prove supply-side miracles can come true.
Stephen Moore is a former Trump senior economic adviser and the cofounder of Unleash Prosperity, which advocates for education freedom for all children.
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This article encourages positive, right thinking . Well done with your writing here Stephan, it is appreciated.
Should be headline news… of course it won’t be…. because Trump is President.
Thank you for the interesting article. I admit to being ill informed about the economy. I appreciate a glimpse that increases my understanding.
All the “panicans” SHOULD have egg on their faces but they are SO deluded they have no chance of thinking rationally! TDS is a REAL disease!
Just one more of a 1000 things that INFURIATE the TDS-SUFFERING, leftwing, socialist/commie America-LAST Illegals-FIRST DemoRATS. And the equally corrupt, lying and dirty Fake News media commie personnel won’t put this info out and will give 47 ZERO CREDIT for setting yet positive another record.
BOTH GROUPS ARE TRULY AMERICA’S ENEMIES WITHIN.
Democrats are having a conniption fit. They’re probably going to find a liberal district court federal judge overturn this and force the companies to lose money. Exactly what they would be doing if the Democrats were in charge right? They are absolutely insane how can somebody publicly say they’re against making America great? And that’s what the Democrats say and they want you to vote for them. Vote for me and I’ll make America mediocre or maybe just destroy it I don’t know see how I feel in the morning. Hell I don’t even know what a woman is
Good work President Trump’s Administration ????
Good article with some basics. Will be interesting to see how California and New York fit in.
I recall Sir John Templton stating in the late 80s that the DJ would soon surpass 4000. If the DemoncRats stay out of our economy America will grow n go!
This is really important information for …. crickets …. Yeah, to the average working class schlub … none of this makes much difference. It’s more about feeding your family, owning a car that can take you to work, worry free, and a roof over your head. If you have some jingle in your pocket after words “Hip hip Hooray!’
The economy is healthy, but the dollar is heading for worthless … nickel gum ball machines don’t exist, as you can’t find gum for a nickel. Has the price of gas actually gone up since I started to drive in 1966 at .26 a gallon? Or has the value of the dollar decreased so much … that technically we are paying a similar price at $3 a gallon.
I remember $.15 hamburgers … now, a burger under $5.00 is a rarity.
So … so what? On paper Dow Jones at 50,000 might be impressive … but to me … let’s see the dollar gain some worth.
I remember Reagan and his trickle-down economics. He and Trump have got to be 2 of the greatest presidents. Each survived assassination attempts and pulled the USA out from under a free-fall.
Actually, Trump may be right. What almost NOBODY has recognized in spite of the statistics is that there has never been a time in American history that the DOW hasn’t increased by 1,000% during a normal 30 year mortgage period. So for the market to double (100% gain) on its way to a 1,000% gain in 30 years is quite believable. Especially when he and his entire staff are focused on what is already working to create the right direction. Killing our energy sector in the name of environmental “science” while allowing China and others to continue polluting is criminal . . . and idiotic. We now create less than 3% of the world’s pollution while having more than 5% of the population. Release American ingenuity, rather than stifling it with government regulations absent logic, reason or science. When industry and the economy are ready for responsible environmental improvements, they will happen without government interference and they will be MUCH more effective, efficient and affordable. And Americans will welcome them when done right — i.e. without government interference.
I wish everyone would read this good information. I’m tired of listening to people with nice houses, nice cars, nice bank account complain about the economy. Become informed then shut up and be thankful.
We are going to see that Millionaires and Billionaires don’t want to give up their money to inflated state governments. Come on to Tennessee, we love business here!
23.8 LTCG tax for high earners and 37 income and 40.8 for interest for high earners
As impressive as this is, it is too early to celebrate. As I read this article, the Dow is already closer to 49k than it is to 50k. There just isn’t enough good news (yet) to justify the Dow being able to hold on to 50k. And I don’t understand the rhetoric from Pam Bondi, touting the the Dow at 50 while while avoiding answering questions she was being asked. It reminded me of a democrat deliberately avoiding answering questions just to avoid another issue. I like Pam, but now she is being trashed by the left for her answer that had nothing to do with the question, rightfully so? We don’t need this just before the midterms. I hope this doesn’t become the norm on the right as it is on the left. But the bigger issue here is still affordability. Gas is down, and that’s good. But I am tired of hearing how groceries and things people use every day are down. It simply isn’t true, at least where I live. I don’t mean to get off topic here, but for most people there are more important things than the Dow, at least short term. The Trump administration has to get better at explaining how things will work in the long term. I also need to say that for the first time in years, I am getting a federal tax refund. A lot of that has to do with the extra 6k deduction in the BBB. I hope this will be true for a lot of others, as this is the kind of thing people need to see to have a better outlook going forward. And to quiet the naysayers who have said that none of that would matter.
And the dollar is almost valueless!