Friday, April 23, 2010

Tax Cuts Don't Need To Be Paid For

For the past eight years, and especially the last two years, all we've been hearing is that the Bush tax cuts were only for the rich and weren't paid for. It's long since been debunked about the tax cuts only being for the rich. We already know that everyone benefitted from the tax cuts.

Oddly enough, it was the Democrats that made the point more clear than anyone else. They did this when they began saying that they were going to leave the tax cuts in place for anyone making less than $200,000 per year and end the tax cuts for those making more than $200,000 per year.

How can they claim that only the rich got tax cuts if they are now saying that they are going to leave the tax cuts in place for the middle and lower class? Or, do they believe that only the rich got a tax cut and they're just trying to do a sales job on the rest by telling them that they are ending the tax cuts on the rich?

The myth is that tax cuts need to be paid for. We have history to prove that this is untrue. In the 1980's, Ronald Reagan cut taxes. He lowered the top marginal tax rate down from 70%. This had the effect of raising tax revenue to the federal government. This continued for eight of the following ten years.

When President Bush lowered taxes in 2001 and 2003, the same thing occurred. Tax revenue rocketed up. How can this happen?

If you're earning $50,000 and you're taxed at 20% you pay $10,000 in taxes. But suppose your taxes are cut and you're only taxed at 10% on a $50,000 per year income. You now have $5,000 in your pocket. What will you do with it? Groceries? Pay additional on your house? Buy things that you don't need but want? Save it?

Most would do a little of all of the above. What each will do though is put it into the economy. They'll spend it at their local store. When they spend it, the generate the need for someone to work. You can't spend money at a store that's closed. So you've created a job. Some may travel, which generates the need for hotels. You'll need a desk clerk, housekeeping, maintenance. All of these are done by people working for pay. If they are working for pay, this creates income, which creates a need to pay taxes, which increases the tax revenue.

When you buy, you're being charged a sales tax in your state. Again, more revenue. If you save the money, you'll pay taxes on capital gains in addition to earning more money on your savings. Even if you save it at the bank, they have to make money on that money so that they can lend money to others, not to mention paying for the teller to do their job, the bank manager, and so on.

Tax cuts don't need to be paid for, they pay. Now imagine if the government actually decreased spending in addition to the tax cuts. That savings by not spending money, along with the increase in tax revenue due to the tax cuts, can now be used to pay down the debt.

Since Obama took over the Presidency, we've got record deficits and record debt. The deficit has been increased four times. The debt has been doubled. That's just in a year and a half!

Why are the Republicans letting the Democrats control the language on taxes and spending when these simple facts are backed up by history? The Republicans would look like hypocrites if they did this. They spent so much money from 2001 through 2006 that they could have made Democrats proud. The Republicans can only make themselves look bad when they start talking about pulling back on spending. It's a hit that they need to take and they need to make that point forcefully even at their own expense.

It's entirely likely that the Republicans will take over the House in November. They are on the verge of actually taking control of the Senate in November as well. If you believe Dick Morris, it's going to happen. They need to take these hits and show that they are going with a more conservative approach.

We elect these people to be good stewards of our money and to represent us in government. The people, for the most part, want reins put on spending and they want taxes lower. The people have it right. If this was left to the people, this country would be living within its' means and be thriving.

In Washington and in state capitols around the country, our elected officials spend our money, put us in debt by their own actions, then come to us and say 'we need you to pay more for our mistakes and our lack of control with your money'. So they increase taxes, thinking they'll pull in more money to the government when in fact, they are doing just the opposite.

Tax cuts don't need to be paid for. They pay us. As they cut taxes and our incomes remain more and more in our control, the country thrives and grows. Get this debt paid down and the deficit reduced or even balanced, and taxes can even be cut more giving more of the people's money back to them causing and even greater growth and sustaining a strong economy. Each time it happens, it works. We are the strongest economy when we are fiscally responsible.

Tax increases need to be paid for. Tax cuts pay for themselves and generate profit that may be returned to the people to create more economic activity, innovation, and t opay for education and make this the strongest country in the world.

Republicans need to take control of the message as well as the Congress.

Your comments are welcome.


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