Tax Cuts: When Paying Enough Is Enough
July 28, 2016 at 4:25 p.m.
I think sometimes that people don't fully understand what a tax cut is.
I see editorials and op-ed pieces all the time about how irresponsible it would be if the Republicans got their way and we had a big tax cut.
Just for the record: A tax cut is not a refund. It is not a rebate. It is not money taken out of the federal coffers and returned to us. It is a reduction in the amount of money the government will collect from us in the future.
Frankly, I don't see how that could be a bad thing.
When I hear politicians argue against tax cuts, it's as if they are trying to say we haven't yet paid quite enough in taxes.
They talk about the big debt "we" owe.
If the government is in debt, there can only be two causes.
Either they didn't collect enough money or they spent too much money.
Which do you believe it is? Some politicians, I think, actually believe they don't collect enough money from us.
And they bristle at the thought of collecting less.
The Congressional Budget Office is projecting $996 billion in non-Social Security surpluses over the next 10 years.
The White House has branded the GOP's $778-billion tax cut plan as "dangerous," "risky" and "extreme."
Exactly how much tax revenue do we owe Washington before a tax cut is no longer "dangerous," "risky" and "extreme?"
CBO's most recent forecasts say that the government - without the proposed tax cut - will collect $17 trillion in non-Social Security tax revenues over the next 10 years. The CBO also projects that non-Social Security revenues will grow 48 percent over the next 10 years. That's around $665 billion.
Even if Congress decided to give us a $996-billion tax break (all of the non-Social Security surplus), it would still allow total non-Social Security tax revenues to grow by $487 billion over the next 10 years. That's a 35 percent increase.
At the same time, Washington would be collecting somewhere in the neighborhood of $16 trillion in revenue instead of the $17 trillion they are currently projecting.
Are our fearless leaders in Washington telling us that they simply can't live on $16 trillion in tax revenues over the next 10 years?
If they are, there is something seriously wrong with the process.
Now I realize that government projections about surpluses are not etched in stone. But neither are the tax cut proposals. If the cuts are to take place over 10 years, who knows what will happen in years six, seven or eight? It could all change. Anything can happen.
I have long argued that the problem with the budget is the government's, not the taxpayers'.
The deficit was created not because of a deficiency in tax collection. Quite the contrary.
The deficit was created because the government squandered tax dollars - many times aimlessly - on wasteful and inefficient government programs.
Even now, in light of the economic prosperity we are enjoying, they can't get it right.
Instead of eliminating programs or downsizing government, (which is what private businesses are doing) our lawmakers are telling us about a whole batch of new programs and new ways to spend tax dollars.
New programs for the uninsured, for people on Medicare, for education. The list is virtually endless.
At the same time, they pass more federal regulations, thereby expanding the scope of government and enlarging the number of bureaucrats necessary to keep the whole mess chugging along, albeit slowly, inefficiently and counterproductively.
When they talk about how risky a big tax cut would be, it's like they're blaming us for their problems.
They are the ones who created the deficits - not the taxpayers.
They are the ones who spend tax dollars like there's no tomorrow. They are the ones who feel it necessary to enact programs to suit every special interest group.
And what they forever fail to recognize is the simple truth that government programs rarely generate any revenue for the treasury. The programs only drain the treasury.
Simultaneously, government programs impede and restrict private enterprise which is the hingepin of all tax revenue to the treasury.
While some politicians argue that tax cuts are corporate welfare or a sop to the "rich," I argue that the "rich" are paying the biggest share of the taxes. Of course the government classifies anybody who makes $100,000 a year as "rich."
Opponents of tax cuts, essentially, are saying the government just can't afford to let us keep more of our earnings.
So let's take a look at what they can afford.
$10 million for fish farming research.
$343 million for the obsolete Corporation for Public Broadcasting.
$6.3 million for disaster resistant universities.
$63 million for more than 130 agriculture research and education grants.
$50 million contribution to the Global Environment Facility administered by the World Bank.
$22 million for the Next Generation High-Speed Rail program.
$300 million spent on Legal Services Corp. (That's a group of taxpayer supported attorneys who sue taxpayers.)
$20 million for more attorneys President Clinton wants to hire to sue tobacco companies.
$32 million for an urban and community forestry program.
$64 million for photovoltaic energy system research.
$63 million for the Spallation Neutron Source project.
OK, that's enough. You get the picture.
But politicians don't get the picture.
They don't seem to understand that the problem with taxes is spending, not collecting. [[In-content Ad]]
I think sometimes that people don't fully understand what a tax cut is.
I see editorials and op-ed pieces all the time about how irresponsible it would be if the Republicans got their way and we had a big tax cut.
Just for the record: A tax cut is not a refund. It is not a rebate. It is not money taken out of the federal coffers and returned to us. It is a reduction in the amount of money the government will collect from us in the future.
Frankly, I don't see how that could be a bad thing.
When I hear politicians argue against tax cuts, it's as if they are trying to say we haven't yet paid quite enough in taxes.
They talk about the big debt "we" owe.
If the government is in debt, there can only be two causes.
Either they didn't collect enough money or they spent too much money.
Which do you believe it is? Some politicians, I think, actually believe they don't collect enough money from us.
And they bristle at the thought of collecting less.
The Congressional Budget Office is projecting $996 billion in non-Social Security surpluses over the next 10 years.
The White House has branded the GOP's $778-billion tax cut plan as "dangerous," "risky" and "extreme."
Exactly how much tax revenue do we owe Washington before a tax cut is no longer "dangerous," "risky" and "extreme?"
CBO's most recent forecasts say that the government - without the proposed tax cut - will collect $17 trillion in non-Social Security tax revenues over the next 10 years. The CBO also projects that non-Social Security revenues will grow 48 percent over the next 10 years. That's around $665 billion.
Even if Congress decided to give us a $996-billion tax break (all of the non-Social Security surplus), it would still allow total non-Social Security tax revenues to grow by $487 billion over the next 10 years. That's a 35 percent increase.
At the same time, Washington would be collecting somewhere in the neighborhood of $16 trillion in revenue instead of the $17 trillion they are currently projecting.
Are our fearless leaders in Washington telling us that they simply can't live on $16 trillion in tax revenues over the next 10 years?
If they are, there is something seriously wrong with the process.
Now I realize that government projections about surpluses are not etched in stone. But neither are the tax cut proposals. If the cuts are to take place over 10 years, who knows what will happen in years six, seven or eight? It could all change. Anything can happen.
I have long argued that the problem with the budget is the government's, not the taxpayers'.
The deficit was created not because of a deficiency in tax collection. Quite the contrary.
The deficit was created because the government squandered tax dollars - many times aimlessly - on wasteful and inefficient government programs.
Even now, in light of the economic prosperity we are enjoying, they can't get it right.
Instead of eliminating programs or downsizing government, (which is what private businesses are doing) our lawmakers are telling us about a whole batch of new programs and new ways to spend tax dollars.
New programs for the uninsured, for people on Medicare, for education. The list is virtually endless.
At the same time, they pass more federal regulations, thereby expanding the scope of government and enlarging the number of bureaucrats necessary to keep the whole mess chugging along, albeit slowly, inefficiently and counterproductively.
When they talk about how risky a big tax cut would be, it's like they're blaming us for their problems.
They are the ones who created the deficits - not the taxpayers.
They are the ones who spend tax dollars like there's no tomorrow. They are the ones who feel it necessary to enact programs to suit every special interest group.
And what they forever fail to recognize is the simple truth that government programs rarely generate any revenue for the treasury. The programs only drain the treasury.
Simultaneously, government programs impede and restrict private enterprise which is the hingepin of all tax revenue to the treasury.
While some politicians argue that tax cuts are corporate welfare or a sop to the "rich," I argue that the "rich" are paying the biggest share of the taxes. Of course the government classifies anybody who makes $100,000 a year as "rich."
Opponents of tax cuts, essentially, are saying the government just can't afford to let us keep more of our earnings.
So let's take a look at what they can afford.
$10 million for fish farming research.
$343 million for the obsolete Corporation for Public Broadcasting.
$6.3 million for disaster resistant universities.
$63 million for more than 130 agriculture research and education grants.
$50 million contribution to the Global Environment Facility administered by the World Bank.
$22 million for the Next Generation High-Speed Rail program.
$300 million spent on Legal Services Corp. (That's a group of taxpayer supported attorneys who sue taxpayers.)
$20 million for more attorneys President Clinton wants to hire to sue tobacco companies.
$32 million for an urban and community forestry program.
$64 million for photovoltaic energy system research.
$63 million for the Spallation Neutron Source project.
OK, that's enough. You get the picture.
But politicians don't get the picture.
They don't seem to understand that the problem with taxes is spending, not collecting. [[In-content Ad]]