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Time to Apply the Tax Breaks
by Raymond Green, SupportNoSpin.com
14 April 2003

The government is not borrowing money from the US Treasury to pay the taxpayer - the government is borrowing the money from the taxpayer to begin with.

This column was written in response to George Robertson's April 6th
Tax Cuts Paid For With Other People's Money.

With the freedom of speech comes the freedom to make yourself look like an absolute imbecile.

This is something I expect from Nancy Pelosi, Tom Daschle, and John Kerry, and they've all recently reaffirmed how moronic they actually are. But to hear columnists, supposedly in the name of conservatism, denounce tax cuts because we have a national deficit is the kind of economic policy I expect from third graders.

To begin, deficits are healthy, and ideally should always remain in some form. The deficit helps control spending and promotes at least a small amount of responsibility when implementing the fiscal budget. Whenever our budget "suffers" surplus, the big government liberals see an opportunity to expand, meaning spend more. In a sense, deficits are what keep spending in check and surpluses are what inevitably give a "charitable" Congress an even better reason to distribute your and my money to people that rarely deserve it. Our budget encountering some shortfalls, or deficits, is no reason to oppose cutting taxes. 

That said, on to tax cuts.

Let us be clear on this: The government is not borrowing money from the US Treasury to pay the taxpayer - as a "conservative" columnist recently said on IntellectualConservative.com. The government is borrowing the money from the taxpayer to begin with. Further, the US Treasury does not loan taxpayers money in order to finance tax cuts. Tax cuts, like those being debated now in Congress, are taken from the government's budget. For example, for the FY04 budget, the House allocated $550 billion for tax cuts, and the Senate allocated $350 billion. By allocating a particular amount for tax cuts, the difference is made up elsewhere in the budget.

Cutting taxes isn't a benefit to the taxpayer; it's an obligation on the part of a conservative administration. Traditionally, conservatives advocate a limited government and we all know Congress isn't going to limit it on their own. If Congress will not, and in some cases cannot (note: filibusters in the Senate), limit the size of government and reduce irresponsible spending, tax cuts will do it for them. Cutting the taxes is, as I've already explained, cutting the budget, which is reducing the size of government. If you claim to be a traditional - limited government - conservative, you can't currently oppose reasonable tax cuts because by doing so, you are giving your permission to finance an overgrown government. Tax cuts are desperately needed, even if the only reason is cutting the size of government; but that's not the only reason we cut taxes.

The same "conservative" columnist on IntellectualConservative.com resorted to the age-old analogy of comparing how much Mr. Rich saves compared to Mr. Average (Mr. Rich and Mr. Average being his words). The analogy is as uncreative as it gets, but it's not relevant either. How many times does this need to be explained? Clearly, at least one more time since even a supposed "conservative" doesn't get it.

According to the columnist's analogy, Mr. Average essentially saves $10,000 over 10 years and Mr. Rich saves $500,000 with a tax cut. In the article he states, "even if you strongly support any tax-cut, try to think of Mr. Bush's and the Republican Congress' tax-cut with some consideration for fairness." So let's talk fairness. The top 1% of income tax payers in this country pays over 37% of all income taxes. The top 5% pay almost 57% of all income taxes in this country. The entire bottom 50% of income tax payers (if you can call them that) pays a whopping 3.91%. Let me put this in perspective. The top 1% of income earners will pay $13,000 per household for war in Iraq while the bottom 20% will pay $33 per household. Half of Americans don't pay income taxes, of those that do, half pay less than 4% of all the income tax collected. So tell me again how it's unfair for Mr. Rich to benefit far more than Mr. Average with a tax cut.

Here's a simple analogy for the layman: Assume Mr. Average pays $8,000 per year in income taxes and Mr. Rich pays $90,000. Propose a 10% tax cut across the board. Mr. Average saves $800; Mr. Rich saves $9,000. Unfair? Consider this: Mr. Average physically can't save $9000 in the tax cut because he doesn't even pay $9000 to begin with. An across the board tax cut only appears to be unfair until you consider what was paid in to begin with. Comparing Mr. Rich's total benefit to Mr. Average's total benefit is unfair to the truth.

Philosophically and principally, tax cuts are necessary; but what about economically? Now some might suggest that with the military budget increases, a poor economy and uncertain growth, tax cuts might not be the wisest thing. That's what they told former President Ronald Reagan. But Reagan believed that the reasons people used to denounce a tax cut, merely provided all the evidence to support one if you looked at it correctly.

Another layman analogy: Consider the average worker with credit card debt making just enough to continue making minimum monthly payments. Surely it wouldn't be too bright to ring up any more debt on the credit card, but if the worker came across a unique business opportunity with the potential to increase his income, it would be worth investing in and suffering a short-term sacrifice of greater debt. So the worker uses the credit card to invest in the opportunity and in return he increases in income, which allows him to pay off the debt promptly and entirely. It's clear that a greater debt is worth the sacrifice if the sacrifice is used for a profitable investment.

Likewise, a tax cut is an investment into business, which has always proven to be more profitable than government programs. When businesses make money, they pay taxes. When businesses are able to employ more workers, that's more people paying income taxes. If the economy continues status quo, the debt will never be paid off, especially with the current unemployment rate and low profits from corporations - much like the credit card debt will never be paid at minimum monthly payments unless more income is somehow generated. Profitable investments almost always require a short-term loss. Our national deficit is no different.

To be sure, this has been tried, tested, and proven before. When Reagan cut taxes, military spending was on a steep incline, the economy was going nowhere and the same arguments were used. "It only benefits the rich", "We can't cut taxes if we are in debt", "How are we going to pay for this", and so on. Still Reagan cut taxes and the stimulated economy bounced back beyond imagination. Tax revenue actually increased for the government when Reagan cut taxes.

We should learn from history. Not just with war talk, but with economics as well. This has been done before, we've heard all the babble before, and we know what works.

The US Treasury doesn't pay for tax cuts, cuts in unneeded social programs do. Tax cuts need to be implemented now and the more the better. On the same note, Congress needs to adhere to the budget they pass and control pork spending. Now is a better time than any to reform our enormous government and if you are a real conservative, you ought to support any policy that will limit the size of government we have at this time in history.

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