Friday, May 6, 2016

The Tax Cut Catastrophists

When a “liberal” attacks a GOP tax proposal, you can pretty much bet that the tax proposal favors taxpayers; i.e., cuts taxes. So when the New Jersey Star-Ledger editorialized that the Trump, Cruz and Rubio tax plans are indecent proposals, I jumped in with these comments, somewhat edited for clarity, singling out this quote from the Star-Ledger:

And every reputable tax analyst from across the political spectrum asserts that these plans devised by Donald Trump, Ted Cruz and Marco Rubio would all wreck the economy and add trillions to the national debt.

“Wreck the economy”?!? Maybe we need to borrow from the climate change catastrophists, and coin a new catchphrase—Tax Cut Catastrophist:

Boy, suggest to a statist the very idea of leaving a bit more money in the hands of people who earned it, rather than send it to the government, and you’d think the end of the world is nigh. I haven’t even studied the GOP tax plans, and I already like them based on this editorial, which is full of distortions, half-truths, non-sequiturs, and outright falsehoods.

Viewed from a statist’s perspective that “the economy” starts and ends with government spending, the end is nigh. A tax code overhaul that would “shift the burden up the income ladder, not down” from the existing tax structure—a tax code that already virtually exempts the lower 50% of income earners from income taxes—would not strengthen the economy. It would add to the power and scope of the government. And that, after all, is the real intention of the statists.

Not that taxes should be shifted down the income ladder. The economy is production and trade of goods and services. Taxes should be made fairer and less destructive—i.e., lower—for all producers. A low-rate flat tax on both personal and especially corporate income would accomplish that. Corporate income taxes are particularly egregious on two counts: America has by far the highest corporate tax rate in the industrialized world, compounded by the fact that America is the only major nation that taxes external profits of domestic corporations. To talk of “punishing corporations that moved jobs overseas” while criticizing corporate income tax cuts is a complete break with reality.

As to the deficits, they are a product of the regulatory/redistributionist welfare state spending spree. The welfare state punishes producers in two ways: It punishes production and rewards sloth through forced redistribution of wealth, and hampers producers through regulations. The only moral and practical way to cut the deficit is to slash regulatory/redistributionist spending. Every dollar spent by government is a tax on productive Americans, because every dollar spent by government eventually has to be covered. Some spending is necessary to fulfil the government's legitimate purpose of protecting our liberty and rights. But most government spending these days is illegitimate, relating to the regulatory welfare state. I’d rather see spending cuts before tax cuts. But, in fairness, we should have both.

Rightfully and morally, income first and foremost belongs to the productive people who earned it, on any income scale. Tax cuts don’t “cost” the government. Tax increases cost the American people. That’s the way government fiscal issues should be considered.

[Next, I answer some selected replies to my comments.]

Related Reading:

Why Not Fight for Immediate Abolition of Sales and Income Taxes?

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