By Scott Tibbs, December 7, 2010
Republicans are proposing more budget-busting deficits, just to pay off their richest paymasters from public funds.
This statement was made by a poster on a message board I follow, demonstrating a fundamental lack of understanding about economics. Tax cuts do not "pay off" anyone from "public funds." Tax cuts allow someone to keep more of what he earns, rather than have that money confiscated by government at the point of a gun.
Sadly, this is not an unusual statement. Class warfare is the foundation of the argument Democrats are using to oppose extending the current tax rates. On "Face the Nation" a few weeks ago, Chuck Schumer argued against tax cuts for people earning more than $1 million annually, saying that they're not going to spend it because "they have plenty of money anyway." So we might as well take it away, Chuck? It's not your money!
Of course, as I explained a couple months ago, we're not talking about "tax cuts" at all. We are talking about tax increases. If nothing is done, tax rates will go up in January. Whether on the richest Americans or on all Americans, tax rates are scheduled to increase in less than a month. Republicans have done a much better job of framing the debate by advancing the message that no taxes will be lowered, just that the current rates will be extended.
We're in a deep recession, and now is not the time to be raising taxes on anyone. We should not be taking more money out of the private sector, when it could be used for investing and creating jobs. Above all else, we need to make a moral statement to Washington: the money we earn does not belong to you and you are not entitled to it.
Furthermore, lower tax rates do not result in lower revenue to the government! Tax revenue significantly increased after both Ronald Reagan and George W. Bush cut taxes. The problem is that federal deficit spending is out of control. (See posts from 2/18/2009 and 10/22/2009.) The problem is not a lack of revenue. The problem is that we are spending far too much. We're never going to make a serious dent in the deficit unless we deal with spending - and we're going to have to look at both military spending and entitlement spending to get that done.