Thursday, March 29, 2001
A number of politicians have proposed some sort of "trigger" mechanism on the tax cuts they may, by popular demand, be forced to pass. They suggest the tax cut should be scaled back if revenues fall short of certain targets. Such a trigger is a bad idea for several reasons.
First of all, the primary reason for a tax cut is that taxes are too high. The average person pays more than 40% of his income in taxes, more than on food, clothing, and shelter combined. Historically, taxes have rarely been so high, even in wartime. Taxation and government continue to grow because people who receive something from the government tend to be grateful to "their" politician who gets it for them, while they focus their anger at the "other" politicians who raise their taxes. |
Guest Commentary ========= RICHARD FREEDMAN |
Secondly, if expenditures have to be cut back because times are tough, it's the government that should be cutting back first. Let the people keep more of what they earn, to dispose of as they see fit, and let the government cut back. We shouldn't make it harder for those who earn, or produce wealth, while protecting from hardship those in the government who merely benefit from the effort of others.
Thirdly, a tax cut is the best way to forestall the tough times. Tax cuts have historically triggered economic booms, and there is every reason to expect the same thing to happen again. (Opponents of tax cuts try to misrepresent the tax cut of the early eighties, claiming it led to massive deficits. In fact, tax revenues increased after the Reagan tax cut, as investments were moved from nonproductive investments, where they had been effectively frozen by the confiscatory tax rates, to more productive uses. The economy took off. Unfortunately, the tax cut was accompanied by massive spending increases. It was the increased spending that caused the deficit to grow.)
Fourth, letting taxpayers keep more of their own money is more important than paying off the National Debt, a debt which, by the way, most politicians were remarkably unconcerned about until surpluses started to appear. Now they embrace that debt as an argument against cutting taxes. But ask yourself the following question: if the budget was balanced and the economy was shaky, would they be arguing for a tax increase in order to pay down the debt? That's exactly the situation we are in now, except that they don't have to pay the political price of increasing taxes.
Fifth, keeping taxes high to pay off the debt is a false argument. If Congress has the money, it spends it. They've never been able to keep their hands out of the cookie jar, and they won't be able to this time. The only way to keep them from spending it is to insist they give it back. As the economy grows in size, the debt will shrink, relative to the economy, and need be no cause for concern.
[This paragraph was cut in publication. - rnf] Sixth, people don't want new programs, only the politicans do. Some legislators are bemoaning their inability to fund new initiatives, from their inexhaustible list of "unmet needs", and arguing that we shouldn't "squander the surplus" on a tax cut when there are so many things we should be doing. But remember what just happened in this state. The taxpayers were threatened with cutbacks in vital services if they voted for a tax cut, and they voted for it overwhelmingly, anyway. That does not suggest a general demand for new programs. It's only the politicians, trying to buy loyalty, and the beneficiaries of targeted goodies, that want new programs. The rest of us want our money back.
Richard N. Freedman lives in North Billerica