Can't You Hear The Howls?

Can't You Hear The Howls?

I can. "Hooowoo is Trump going to pay for these tax cuts?” "They will cost trillions!” “Tax cuts for the rich!” “What about the deficit?"

These exclamations demonstrate the disrespectful nature of the ruling elites in Washington, who treat the rest of us as ignorant and stupid. Let me explain.

First of all, why would a reduction in tax rates be labelled a “cost" to the government? Costs to the government are for employees, buildings, military, computers, etc. The very notion that a tax rate cut “costs” the government money reveals a lot about whose money they think they are spending. The government considers that ALL money is THEIR money - not yours! To reduce a revenue is a cost? Yikes!

Secondly, rate cuts won’t “cost” anybody anything. Ever hear of dynamic scoring? This is a foul if not absent word in the liberal lexicon. Dynamic scoring means that you take into account ALL the factors, over time, in analyzing the outcome of a shift in policy - not just a single or narrow set. As opposed to static scoring: "a simplified analysis wherein the effect of an immediate change to a system is calculated without regard to the longer-term response of the system to that change.”

Let’s look at an example. If the government cuts tax rates, there will be less revenue. Right? Wrong! Presidents Kennedy and Reagan cut tax rates and revenue leapt. In the Reagan era, revenue doubled! It works every time it’s tried. Why? Lower rates puts money in the hands of individuals and companies to spend, expand, and start new ventures, creating new jobs and new tax revenue. 

I did a simple analysis based on the very modest assumption that rate cuts will cause the GDP to grow at 3%, instead of the anemic rate of under 2% for the past 8 years. The result was a revenue increase of $500B a year in the 5th year.

What about the rich people? President Trump’s proposal will reduce the top marginal rate by 4.9%, but they may pay MORE taxes because of the elimination of deductions – the so called loopholes.

“Loopholes” irritate me. That word connotes some sort of sleazy cheating. Folks, there are no loopholes in our tax code! Each and every permitted deduction is legally sanctioned by Congress - or the IRS comes a-knocking. Legal deductions are not Get Out Of Jail Free cards. The government WANTS you to use them, otherwise why would they go to the trouble to pass them into law?

The thing that is not taught in our public school system is basic economics. Rich people have earned more money than others, through hard work, smarts, and sometimes a little luck, so they own more assets - stuff. But all people are the same when it comes to assets. Unless it’s under a mattress, this “stuff" is inextricably locked into our economy. It’s in a bank, it’s in a house, it’s in a stock account, or perhaps a boat. Maybe, it’s a stream of income from a job or from investments. The point is the difference between a rich person and a poor person is just the amount, but the money is always at work in our free market economy. So, why pick on the rich?

Money you have in a bank is loaned out to other people to buy a house or start a business. Money in a stock provides capital for a business to expand. Money that buys a boat provides jobs for many people. Any expenditure by anyone, rich or poor, is economic activity that creates revenue for government. Rich people spend more per capita. But all spending elevates our economy. Targeting rich people for being successful is a liberal tactic to divide us and it’s called class warfare to get votes. Successful people should be celebrated! 1% of taxpayers pay 39% of taxes. Way to go!

And, hey, what about the deficit? Did you ever hear one liberal complain about the deficit? I can’t find one. Obama doubled it in 8 years. So, now suddenly, a tax rate cut that purportedly “costs us” is a complaint because it adds to the national debt? Should I laugh or cry?

In fact, a national pundit recently asked, “Why impose any taxes?” The revenue from taxes bears no relationship to expenditures by Congress. They just spend whatever they like. So why collect taxes at all? Good question.

Posted on 08 May 2017, 01:44 - Category: Taxes

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