Home > Perspective

Again, the Math Proves Itself

by Conservativity Staff,
Originally Posted: 7/13/2005 2:05:44 PM

Our President pushed through a tax cut, right as we entered a war on terrorism, and in the middle of a recession spurred by the evil 9/11 attack and the bursting of the Clinton-era dot-com bubble.  The left loudly decried the tax cut, saying that the wealthy were getting a windfall right when they should be fleeced even more -- oops, "do their fair share."  Today, the news is out:  Tax revenues have skyrocketed, led by higher personal income tax revenues.  In fact, these revenues are adding $100 billion to the government’s coffers, and reducing the deficit by a whopping 15% this year alone.

Why did this happen?  Simply put, people were taxed less, so they made more.  They spent more of what they made and the economy kicked it up a notch.  People had more disposable incomes and bought more real estate.  More houses were built, and tradesmen had more work.  They made more money and paid more taxes.  Real estate agents sold more existing homes and got paid to do it.  They paid taxes on those commissions.  Title companies had record closings to handle; they hired more workers, who in turn paid more taxes.  Companies faced increased demand for consumer goods, as attested to by the strong performance of the retail sector.  Those companies and their new employees paid taxes.

"The top 50% of income earners added, based on IRS statistics, $96.03 billion to the government’s coffers this year!  That’s right, the tax cut resulted in the wealthy paying more tax dollars!"

The result?  The top 50% of income earners added, based on IRS statistics, $96.03 billion to the government’s coffers this year!  That’s right, the tax cut resulted in the wealthy paying more tax dollars!  The question is then simple?  Why let the wealthy pay less?  How much more would these income earners have brought in if they paid what the socialists called "their fair share?"  The answer is easy:  Tax revenues would have dropped if there were no tax rate cut.  The rate cut caused the economic upturn, which then took off on its own.

The left, in its insatiable greed for more money to implement the nanny-state, constantly looks to increase the tax rate on the "wealthy."  This shows that liberals have no understanding whatsoever, either of the human nature they seek to completely control or of the economy that functions based on that same human nature.  If saddled with a huge tax bill, people will do two things: 1) Divert money from productive use to pay for it; and 2) Find a way to pay less taxes.  Sheltering one’s income usually involves investing it in a tax-free bond, which is in essence funding more government spending and will result in even higher taxes when the bill comes due.  Other sheltering involves taking the money offshore and completely out of the U.S. Economy.  Either alternative stymies economic growth.

"When one pays a lower tax rate, they have more disposable income.  People feel more affluent, because they are.  They invest more, usually in vehicles that can result in a high return on investment."

When one pays a lower tax rate, they have more disposable income.  People feel more affluent, because they are.  They invest more, usually in vehicles that can result in a high return on investment.  They also improve their standard of living.  Build a new house, put 40 people to work from 2-4 months!  Build a new subdivision of houses, and those investors in the homes are putting those 40 people to work for years!  This does not even account for the benefits to the construction material and tool industries, which in turn result in more jobs.

Ronald Reagan used the term "trickle-down economics" to describe the notion of cutting tax rates to spur economic growth.  The leftists, quickly suggested that the GOP were rich people seeking to "trickle down" something nefarious upon the people.  This latest news repeats the proof that their statements were ludicrous.  However, I disagree with the term "trickle down," for it understates the impact of the tax cuts.  Our President is now ahead of schedule on his plan to emerge from deficit spending.

"To continue, however, to improve, the tough part is still to come.  U.S. spending is growing at 7 per cent per year.  Almost none of that growth is in defense.  It’s in pork, Social Security and Medicare."

To continue, however, to improve, the tough part is still to come.  U.S. spending is growing at 7 per cent per year.  Almost none of that growth is in defense.  It’s in pork, Social Security and Medicare.  We cannot grow ourselves out of a 7 per cent annual increase in spending.  We need to hold spending level, which means cutting 7 per cent out of this budget, and eliminating all growth.  This is hard when the left calls spending 3% more than the previous year a "massive cut."

This will take discipline and guts.  The people recognized this and elected the GOP to complete power, and increased its control over Congress in 2004.  However, Washington D.C. has this disturbing ability to suck the spines out of Congressional conservatives.  They think that they will not be re-elected if they make the very tough decisions that they were elected to make.  This reasoning is facially insane, yet it persists like a plague.  The Congress needs to make the cuts and eliminate the pork.

The economy is growing, and so is tax revenue.  The people have seen to the growth and they have elected congresspersons and senators to handle the spending cuts.  The math works for us every time.  Let’s slash spending and save the day completely.