No tax cut is free. By its very nature it is a reduction of
income for the taxing body. That means either the taxing body does its job with
less money, or finds new efficiencies to do more with less. It can be done. But
care should be taken; some tasks are work intensive and do not lend themselves
to common efficiency theory.
Of course amateur economists live among us and claim that we
need not worry. With lower taxes come higher disposable incomes that will surely
be spent in the economy and create more economic activity, taxable incomes,
etc. The theory states that what was eliminated by tax cuts will be replaced
with higher earnings. Such are taxed replacing the taxes eliminated.
All of that sounds good. But we have tried it. At times it
worked as outlined above, but mostly it has not worked out well.
What the amateur economists have lost sight of is the
shrinking Middle Class. We are not what we once were. Not only are their fewer
of us, but those of us surviving – barely – are doing so with much less wealth,
income and standard of living. To add to this misery, budget conscious
politicians preach reduced entitlements and government programs in human
services. They feel the beneficiaries of such programs are slothful ingrates
who feed at the public trough.
They need to check the trough; first of all they are there
feeding off of high government salaries for elected officials, and posh benefit
plans as well as generous expense accounts and stipends. Second, they should
check the troughs for those they know – like their Aunt Mary, Uncle Joe, and
their own parents.
The so-called entitlements are benefit plans the ‘insured’
paid for through premiums and payroll taxes over a lifetime. So too Medicare;
like Social Security, it is a benefit plan paid for by those covered by the
program. Besides, if benefits were reduced in both of those programs, the poor
will become poorer, and that will include retired people. All retired people.
The trickle down economic theory only works when it is early
in a cycle of trying it. Pretty much all of the benefits from this theory were
recognized a few decades ago; even President George H. W. Bush learned the
truth; he tried extending trickle down methods and met with failure in a big
way. The same would be true today. There is only so much blood in a turnip you
can squeeze from it! Think about that.
Tax cuts today would benefit only the wealthy. They would
pay less but the beneficiaries would receive less and in a more costly economy.
Standards of living would drop steeply. The economy would contract and
unemployment grow. Household incomes would likely stall once again. New job
creation and adoption of new technology would also stall.
During the George W. Bush presidency an enormous social cost
was transferred to the Middle Class when tax cuts for the wealthy were enacted.
That move cost the US government $1 trillion. Then the wars in Afghanistan and
Iraq were waged endlessly for another $2 trillion. No wonder the federal
deficit was a runaway! And the annual red ink gushing in the federal budget is
easily explained.
To correct this mess tax increases are required on those who
have the money with which to pay the higher taxes. It’s like gravity, folks;
what goes up must come down and vice versa. There is no such thing as a free
lunch. We can work hard to ease the pain on those who will be asked to pay, but
please do not extract one more dollar from those who truly cannot afford it.
That would be your disappearing Middle Class.
We’ve heard all of this before. Why don’t we listen and heed
the facts and truth?
Because we are wishful thinkers trying to escape
responsibility. ‘Not me Boss! Surely not me!’
Bosh!!
August 25, 2017
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