Essay:Tax cuts

Benefiting the wealthy via tax cuts

Some say if tax cuts (rebates, etc) aren't carefully crafted, the wealthy will be disproportionately benefitted, and in fact this is the malevolent purpose of some pols.

There is no doubt in my mind that govt can (and does) pursue policies detrimental to its citizens (oh yeah), and that the poor disproportionately bear the brunt of such policies, but can a tax cut do that -- hurt the poor? Okay, it is theoretically possible i suppose to achieve that, but not very likely, and i doubt if anyone in the current US govt is that clever.

You have to ask yourself this question (Clint Eastwood style), does a rising tide lift all boats (JFK)? If an economy improves, if people are more productive, if there are more tax producers and fewer tax consumers, aren't the poorest among us better off? If you can't answer that in the affirmative, you are either a hopeless idealogue, cannot accept reality, or are totally ignorant of simple economics. (That should stifle all dissent.)

Another question: is there ANY system in the real world where the rich and well-connected (they go hand in hand) are not better off? And the poor not always worse off? Not some Utopia that would happen if only the XYZ-statist policies were ACTUALLY tried by Good People In Govt (GPIG).

Now if you answered those rather simple questions correctly (rate yourself, i trust you), you may proceed. Money back to the people that earned it will be spent or invested -- either way it motivates productive people, which helps the economy. Okay, there is a third way; they could hide it in their mattress, but even then, no harm is done.

Whereas money that sticks to the hands of govt officials and bureaucrats, is money that goes to tax consumers -- granted, they'll spend it, but they haven't PRODUCED anything, therefore haven't contributed to the economy -- are in fact a drain on it. The more goods and services produced, the better off everyone is. To consume these goods and services without contributing to the economy hurts everbody -- in the same way that shoplifting hurts everybody because it pushes up prices, hurting the poor the most.

Awright, if you haven't given up in disgust already, here is the point i have been building up to. Tax rebates help everybody, because everybody pays everybody else's taxes. Let me explain. Businesses don't pay taxes, they collect them, from consumers of course, including the poor. It works out the same as the taxes at the gas pump; it is the consumer who ALWAYS pays, and that hits the poorest the hardest.

The newsies (and pundits like Keith Olbermann, Bill O'Reilly, Chris Matthews, and Joe Scarborough) imply that gasoline is somehow significantly different than other goods, because when gas prices rise, then the price of EVERYTHING goes up. Yep, but other goods are no different in this respect. When prices rise on ANY goods or services, that affects the whole economy. Nothing is exempt. No one is unaffected.

So in the overall scheme of things, it matters not whether tax rebates are directed at the rich or the poor. If the rich get the cash (doctors, lawyers, and dentists, let's say), they raise their prices less, which benefits the poor. If the poor get the cash, it simply gets eaten up by higher prices, so in the end they are no better off. Even if they feel like they should be.

Every dollar sent to govt is a dollar you can't spend, invest, save, or employ someone with. Every dollar you get back has the opposite effect. This leaves only the issue of fairness. Is it fair to give tax rebates to those that don't pay taxes? Naw, but it does feel good, for both those that receive it and of course the politicians that gave it to them -- let's just hope taxpayers don't mind or notice.

So, isn't the fairest way to distribute tax rebates to give back proportionately to those that paid the tax? Maybe 5% across the board, or a daring 20%, or a Libertarian 90% ? Perhaps the economy would grow too fast creating too much wealth leading to more obesity, poorer health, more terrorist attacks, and more war. Not my fault, man.

Okay, since we all agree now, i don't suppose anybody will comment on this. (Libertarian humor.)

-- Rem^Beau 10:44, 23 August 2008 (EDT)