Home > Perspective

Stats Show Leftist Lies on Taxes

by John F. Tamburo, Editor in Chief, Publisher
Originally Posted: 10/25/2005 11:38:11 AM

The Democrats in Congress want to "roll back the tax cuts" -- meaning that they want to hike your taxes -- to "pay for" the insane Hurricane Katrina spending programs.  These Leftist fools lie through their teeth, as they describe our President’s wonderful tax cuts, in and of themselves responsible for massive and continuing economic growth out of the Clinton-era tech bubble debacle, as "tax cuts for the rich."  However, one need only look at statistics to see that this allegation is facially stupid.

In 2001, according to the Internal Revenue Service, the top 50% of wage earners paid 96.03% of all tax revenues.  Then the tax cut "for the rich" passed.  One would expect that percentage to go down.  I know I expected it to go down.  Well, I forgot an important thing:  If you cut taxes on the rich, they will make more income!  As of 2003, the latest calendar year for which the IRS has reported data, after the tax cut, the top 50% of wage earners now pay 96.54% of all tax revenues!

"But how is that possible?  Didn’t the rich get tax cuts?  Yes, but so did everyone else!  Also, there was the child tax credit, which disproportionately benefitted lower-income workers."

But how is that possible?  Didn’t the rich get tax cuts?  Yes, but so did everyone else!  Also, there was the child tax credit, which disproportionately benefitted lower-income workers.  Both of these things reduced the tax that lower income earners paid by a higher percentage than they did the more productive, higher-earning citizens.  This in and of itself is an adequate explanation of the tax shift to higher-income citizens.

There is also the productivity factor.  If one removes the tax burden from the most productive, highest-earning citizens, they will be able to earn more money.  This will result, and has resulted, in a higher percentage of tax dollars, in toto, being collected from our highest earners.  Thus, even though there was a tax rate cut that benefitted the highest earners by reducing their rate, they went right out and earned more money.  The end result is a greater revenue!  It’s akin to supply and demand.  You could price a VCR at $1,000 and sell 1,000 of them for $1,000,000 in revenue.  Or you could price the same VCR at $50 and sell 1,000,000 of them for $50,000,000 in revenue.  Did your price cut harm you or help you?

The same pressures on price -- in this case tax rates -- apply even more in a multinational economy.  By reducing the tax burden on the productive, they are less likely to seek tax haven in other countries.  That means more domestic investment, and more jobs, and more revenue.  Before Katrina, the tax cuts were directly credited with a $100 billion revenue increase -- for 2005 alone!  $100 billion of a $3 trillion budget is a statistically significant 3.3%  3.3% revenue growth is great!

The Left is strangely silent on the tax cut’s other benefits, like the reversal of the offshore outsourcing trend.  Starting midway through the Clinton administration, and continuing until about 2003, call centers, information technology and other entire classes of jobs were fleeing the country to India, Russia and other places.  Part of that was technological.  VoIP (Voice over Internet Protocol) made it possible to use the Internet to make U.S. phone numbers ring seamlessly in these countries, making it possible to get rid of American workers making decent wages and replace them with people making the American minimum hourly wage -- per day.  Information technology professionals with decades of experience, making six-digit incomes, were replaced with foreign sweatshop programmers that billed their clients about $10 per hour.  Customers griped with English-challenged support lines, but the cost savings were far too attractive.

"Corporations are getting more investment dollars because of the tax cut, and they’re innovating with those dollars.  Those innovations create jobs and income and income taxes.  The Left does not want you to see this."

With the tax code reductions, there were incentives for companies to improve customer service because the cost of redomesticating these call centers and IT departments became manageable.  And it’s still happening as I write this.  Because of the tax cuts.  Corporations are getting more investment dollars because of the tax cut, and they’re innovating with those dollars.  Those innovations create jobs and income and income taxes.  The Left does not want you to see this.  They do overly simple math that ignores the way that the economy actually works, because they want more money to buy more control over your lives.

The next time that they try this garbage, remember that the actual statistics prove that they’re lying.