The Lie Behind the Phrase "Paying for Tax Cuts."

When I hear Obama, Pelosi, Reid and other progressives utter this lie I just wanna scream. I do tire of sound bites and the fools who chew on them as if there were actual nutrition buried deep within. There is no truth there. Allow me to explain this to those so direly in need of some facts in place of talking points.

Believe it or not, tax cuts pay for themselves. How can that be? Tax cuts, unlike their purposes forwarded by progressives, are NOT revenue neutral...they are NOT revenue deniers...they ARE revenue enhancers. They ARE revenue generating. Progressives want one to believe tax cuts are "payback" to the wealthy. They want to pretend that tax cuts are some backdoor manner of conservatives enriching each other with a "I'll scratch your back, then you do mine," and that is not what tax cuts are at all.

Tax cuts pay for themselves by generating more revenue by increased economic activities. For example, Joe Richguy gets a tax break and let's say he pays $100K LESS in taxes this year. Joe either spends it, saves or invests or some combination of the three. Unless Joe buries it in a Mason Jar in the yard, the money grows - ya know ... "it takes money to make money?" So The $100K Joe saved this year is invested. Now let's say Tom borrows $100K from a bank to open a restaurant.

Tom spends that money, which generates revenue streams all through the financial system, but especially in hiring. Tom needs a staff, so he hires a greeter, a cashier, 5 cooks, 3 kitchen help/dishwashers, and a 10 person wait staff. TWENTY people now have jobs who did not have a job previous.

Each one will pay taxes on their earnings. The cooks are pros, so they make good money. Add up the combined salaries of all 20 employees and it looks like say maybe $500K gross for all twenty of them in total. 20 employees at an average of $25K each (professionals make more, dishwashers less, etc) and we see $500K generated in salaries. The taxes on these salaries combined will be damned near $100K! SEE?

So instead of government taking the extra $100K in taxes from Joe Richguy, Joe invested it and the bank lent it out and now 21 people have a job who did not before. That's Tom the owner and his 20 employees. See? Between them all combined, they will pay the government the $100K Joe got to keep in the tax cut, so now 21 unemployed peeps have jobs and government still gets the money, it just travels through more hands than one.

For the unwashed, this is the explanation of "Trickle Down Economics." Everyone along the way is enriched a bit. But back to my point...isn't it obvious it's better for 21 unemployed to now have jobs and government STILL gets the $100K in tax revenue? If Joe Richguy hadn't gotten the cut his $100K more in taxes would have paid ONE Federal employee, as the average Federal employee earns about $72K, and there would have been $28K left over for government waste.

Instead now 21 more folks are paying taxes. They're also buying stuff keeping other folks working, other manufacturers making their goods for the newly employed to purchase and so on. This isn't really a hard concept to grasp.

Let me be clear as well on a favorite concept of progressives - targeted tax cuts. These are a misnomer. The "targeted tax cut" is GENERALLY one where if you do "X" you'll get a tax break of some sort. A college loan tax break is a targeted tax cut. So is the mortgage interest deduction. Only one who has a mortgage on their primary residence can claim the interest deduction on the interest of that mortgage. Only one with kids in college can claim the college loan tax break if one is implemented.

Targeted tax cuts are NOT across the board of benefit to all, but progressives love to offer a targeted cut in place of across the board ones. It's a trick...don't fall for it. For the record, Obama's claim of "cutting "X" amount of taxes" thus far are ALL targeted cuts whereby one must buy something - Cash for Clunkers is the quintessential example. Spend a fortune, get a tax break! Home renovations and "green" windows, thermostats, etc., and the accompanying tax breaks are more "targeted cuts" where one must spend "X" amount to save money on the back side. My daughter bought her first home in '09 to take advantage of the "targeted tax break for first time home buyers." But she had to BUY a home to get the break...get it? Not denigrating the break she got, but still, it is not the same at all as a general, across the board tax cut in rates for all taxpayers.

Progressives don't much care for free enterprise. When we hear folks in the ether running down capitalism, it is always a lefty. They are Keynesian, whereby government is the source of wealth, the sole arbiter, the holder of all power. Free market types adhere to Friedman economy, whereby each person unfettered will generate more revenue than they need, thus the surplus will go toward investment. But even if one only generates as much as they need and no extra, they still pay taxes, rent, buy food, cars, etc, so they too replenish the cash pool in the system. They are moving the money around and that generates wealth.

By the way, Obama knows this...he's not an idiot. But his ideology will not allow him to admit this. To admit his Keynesian economic wishes are flawed would be to open the door to further examination of all his ideological positions - social, governmental and economic. Can't have that, now can we?

Folks, the sheer reality is tax cuts of the GENERAL, ACROSS THE BOARD manner, ALWAYS pay far more into the system than was excused in the cut in the first place. BTW, this is NOT true of targeted tax cuts, and don't let 'em snow ya with that one...it's a complete BS lie. But as I have shown, every penny not taken by government is either spent on something, saved or invested. Even if placed into a passbook savings account or Christmas Club at the local Savings and Loan or Credit Union, that money is still used by financial institutions to lend, thus generating more economic activity, thus generating more future tax paying, either through more employees working and paying in, or more money spent and sales taxes paid. Every dime a person or business spends is enriching someone else, thus they are paying taxes.

When we hear progressives claim extending the Bush tax cuts for all will cost "$700 Billion" in revenue over some period of time, that is BS. Here's why. I think the claim is "$700 Billion in 10 years" of revenue the government will not get if the cuts for the top 2%, the legendary 'those making over $250K' are not collected from them. But for that to be true, which it's not, that $700 Billion would have to be buried in Mason Jars for it to not be circulated throughout the system. If the infamous "top 2%" don't pay that "$700Billion" in taxes, they will spend it or invest it somehow.

Either way one can reasonably expect that over ten full years of Friedman economy in this nation that "$700 Billion" will turn into $4 or $5 Trillion dollars, if allowed to circulate through the system and be invested, paid in wages and spent on goods and services. No doubt. And the taxes on $4 or $5 Trillion in economic activity will be well more than the original $700 Billion sacrificed. See how it works? It does take money to make money!

Every penny earned is spent or saved unless one is lighting cigars with it, wiping their butt with it or burying it in Mason Jars in Granny's back yard. I don't know anyone who does any of those three things, so.... Every penny saved, spent or invested is circulating through the system generating more wealth for more people, who will then pay more taxes and spend more money. Once money is given to government, can anyone show me how it generates more money other than the salary of an employee of government?

Government does not enrich anyone. Capitalism does. Government uses resources. Capitalism uses resources and generates wealth. So, which is the best use for that $700 Billion dollars again? If one were to part with their hopeful ideology and just answer the question I asked, the answer is obvious. But they can't abandon the ideology, now can they? Nope, cause as Rush says "Liberals are liberals first, before they are anything else." I used to not believe him, but damn, he's right. Long before a fact is a fact, to most liberals said fact is examined in the light of "how does this effect what I believe?" If they think it works out for them, we hear it ad infinitum. If not, it is ignored and spun as if it never existed.

Across the board tax cuts have always generated far more revenue that they "cost" government in tax revenue. That "$700 Billion" in 10 years will turn to well more than $5 Trillion in 10 years if left in the private sector to grow and generate more wealth, thus more future tax revenues. DUH! These are the simple facts. Check up on me...if ya have an honest bone in your body, you'll agree.