Neither tax plan works
So the president wants the economy to be the topic du jour. Okay, Iíll bite. First of all, assuming for a moment that a tax cut is a good idea, I donít have a problem with most of the money going to higher earners. They pay more. If the intention is to cut taxes a given percentage across the board, they get a bigger break. But there are two big qualifications in that; one, that itís a good idea in the first place, and two, that itís even across the board.
But a tax cut at this time is not a good idea. We have debt. We are looking at more debt. Even if we had a balanced budget we still have trillions of past debt to pay on.
An idea thatís gaining popularity is that a certain amount of debt is not a problem. Not in terms of the overall economy, no. But whenever there is debt there is someone who pays and someone who profits.
The government pays, which means all of us. Regular working people feel the burden of those taxes the most. On the other hand, while many people own treasury bills and receive interest, obviously it is people who have the most to invest who benefit the most. So national debt leads to a transfer of wealth upward.
Yes, there is something to the idea of cutting taxes to make a healthier economy, which in turn boosts tax revenues. But thereís a delayed reaction before that kicks in. In the meantime thereís either more debt, or services get cut. You might like the idea of less government in general, and certainly there are services that could be cut. But these kinds of forced cuts never happen that rationally. Locally we have the sheriffís department exceeding their manpower budget. I donít think we want to cut that. Or the cuts fall on people who canít wait for the economic boost. The president has already ordered a cut in the program to help people having trouble paying for heat during this winter.
Besides, the idea of cutting taxes to boosts tax revenues eventually reaches diminishing returns. Obviously thereís a point of carrying that idea too far. You have to decide what services you want, and generate enough tax to pay for them. Thereís just no free lunch.
The other qualification, that it be even across the board, doesnít fit with this package either. The cuts to business taxes, and the stock dividend tax cut, shift the balance upward. If the economy is slow and needs a boost, surely the people who can afford the downturn the least need the most help.
The free market system is the best thing going, but it has flaws. It pushes those at the bottom down and those at the top up. Thatís why we have minimum wage laws and anti-trust laws. The only way people near the bottom are going to see any benefit is if the cut goes directly to them. It will trickle up soon enough anyway, because theyíll spend it, which will boost businesses, because theyíll get it in profit on sales. But at least that way those near the bottom get a crack at it. Which is why I donít like the Democratic proposal of a one-time refund. If weíre going to do anything to help ordinary working people it would need to be a permanent cut weighted towards the bottom.
No, itís not a good time to be cutting taxes. Itís just a way to make the government budget so tight that it forces cuts to services. And you know it wonít be all the benefits that corporate lobbyists get for their constituents that will get cut. It will be more like Bushís other recent cut, canceling scheduled raises for federal workers. It will be cuts like these that will have regular working people footing the bill disproportionately. And thatís not just.