As the Senate struggles to assemble a tax reform bill good enough to garner 50 votes, one palliative (or buy-off) that speaks volumes is a reported provision that will work as a tax increase “trigger” should future revenues fall short.

This sop stinks for reasons beyond the obvious (i.e. buy his vote). First, it gives future Senators an out: “The tax increase about to land on the economy is not our fault.” Second, it perpetuates the falsehood that tax cuts must be “paid for” by the government. Third, the most infuriating, it tells us that the Senate doesn’t much care for the notion that, perhaps, just perhaps, spending should be cut in the event that revenues decrease (as to that – tax cuts are stimulative, and they have historically generated increases in revenue).

Whatever happened to the idea of limited government? Whatever happened to the branding of the GOP as the party of smaller government and reduced spending? Is it one of those ideals/goals that the party has long strove for but had trouble achieving, or is it just a lie dropped on its supporters in order to keep them coming to the polls?

Sure, the retort is “the Democrats are worse,” but the GOP controls Congress (albeit only barely in the Senate, giving inordinate power to a couple “Democrat-lite” Senators), and this would be the time to hammer the budget.

Obviously, it’s not to be. Their inaction, and especially the talking points/narrative surrounding this tax reform drive, tell us that the GOP is not serious about cutting spending. Heck, it doesn’t even seem to care all that much about the reported waste/fraud/duplication in defense ($125B) and Medicare ($100B). Some have pegged the “cost” of the tax cut proposal at $1.5T over a decade (notice, by the way, that they like to report such numbers on a decade basis. Pay attention when they talk about spending proposals – they prefer to mention those on an annual basis). Even if that $1.5T (decade) figure is accurate, it could be recovered by going after the $2.25T (decade) in waste/fraud/duplication in those two segments of the government alone (and who knows how much more such exists in other segments?).

The Democrats’ narrative is, of course, that the tax bill benefits the rich, and is thus bad for the country.

The problems with this narrative are legion.

The bill, as of my last look, is primarily geared towards the business side in terms of rate cuts. While, superficially, this sounds like a giveaway to big business, lets not forget that taxes paid by businesses are monies collected from consumers. Lets also not forget that business activities and decisions are affected by taxes, and that rate cuts will make more of these viable (generating more economic activity and, you guessed it, more revenue). We should also enjoy the nervousness of nations like Ireland, which have drawn business with low corporate tax rates. Cut the highest-in-the-world American rate down to something more competitive, and businesses will have less incentive to “invert” and more incentive to repatriate. Moreso, there’s a message that, after 8 years of open hostility to business, success, and prosperity, the government might actually be kinder to that which enables all of us to put food on our tables and roofs over our heads.

The “rich” pay just about all the federal income taxes in America. Any full-spectrum tax cut, even an uneven one, is almost certainly going to let the “rich” keep more of their money. That’s part of the problem, too – the media’s failure to describe income as the property of the earner. While socialists and communists believe that income and wealth belong to the state, it behooves those of us who aren’t apologists for a murderous political ideology that what a person earns belongs to him.

There’s also the fact that, by and large, the “rich” got that way by doing things that create wealth. Thus, jobs are born, thus productivity improves, thus the economy grows, thus, our standards of living improve. The economy is not a zero-sum game, it is not a pie of fixed size. It should shock us that the media routinely report economic numbers that are measures of growth and still treat wealth and taxation as zero-sum games. The ignorance this speaks of is so profound that it almost has to be deliberate. Why would it be deliberate? Because it’s easier to take someone else’s money by force than it is to generate your own, and envy, no matter how baseless or unjust, is a powerful vote-getter.

I’m of the Milton Friedman school on tax cuts:

I am favor of cutting taxes under any circumstances and for any excuse, for any reason, whenever it’s possible.

Does this tax bill cut taxes enough? Not by a long shot. Nor does it clean up the tax code enough. And, unfortunately, it won’t result in a tax cut for everyone.* Fact is, given how complex the tax code currently is, any attempt at simplification (i.e. closing loopholes and removing exceptions, carveouts, etc) will result in someone paying more taxes. Anecdotes and individual instances are not, however, sound basis for policy, and a bill that moves things, in the aggregate, in the right direction is good.

As for growing deficits and ballooning debt, we can cut spending, or we can hold spending level while spurring economic growth. Or both, of course, but it’s obvious that there are far too few in Congress who actually want to do the former. Historically, Federal tax revenues have held around a remarkably steady long-term average of 18.5% of GDP. If we grow GDP faster, we grow tax revenues faster. While I understand the theory of Corker’s demand for a trigger should revenues not grow as anticipated, I don’t trust the government not to engage in shenanigans that would activate that trigger, simply because I see how rapacious the government is.

Meanwhile, perhaps we should remind our politicians that deficits and debt are a spending problem, and that, if they can’t find expenditures to cut, perhaps they should at least try to spend better.

Peter Venetoklis

About Peter Venetoklis

I am twice-retired, a former rocket engineer and a former small business owner. At the very least, it makes for interesting party conversation. I'm also a life-long libertarian, I engage in an expanse of entertainments, and I squabble for sport.

Nowadays, I spend a good bit of my time arguing politics and editing this website.

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