A Short ECON101 Lesson about Taxes

A Short ECON101 Lesson about Taxes

Right now, the US Congress is hashing out a “tax reform” set of bills intended to change the ways taxes are confiscated from American workers and savers.  Those on the Left often refer to “tax cuts for the rich”, showing their basic envy of people who actually EARN their livings in the real world.  Republicans, in the majority in both the House and Senate, and in possession of the White House, consider it their responsibility to reduce the tax burden on working and saving Americans.

The concept of “revenue neutrality” was originated by Democrats who are horrified at the thought of Government receiving one fewer cent of its lifeblood from those Americans who pay income taxes (currently just slightly over 50% of Americans).  A young member over at Ricochet opines that the current tax scheme MUST be “revenue neutral”, as the Federal Government is already overdrawn on its accounts and can’t tolerate any reduction in its “income”.

That is not true, and here’s why.

Reductions in Tax Rates, especially for high-earners, always result in more revenue for the government (small and large business owners keep more of their earnings, add employees to their payrolls, and create more taxpayers). Why is this so hard for people to understand? This is Econ 101. And why, oh why, should the all-mighty Government not shrink? Why can’t waste be eliminated from all levels of Government? The less Government confiscates from your paycheck, the more you have to spend, and save!

The problem is that those in Government do not trust their fellow Americans, who pay their salaries from their own legitimate earnings, to know how to allocate their own money. “Revenue Neutral” is a crock!