What's My Take: Tax Cuts and Bad Beliefs

In his article "Irrational Condemnation of All Taxation," Jim Stillman makes some very astute observations about the political climate surrounding taxation issues. "The very word 'tax,'" he correctly writes, "is made a dirty word." He continues by claiming that the common argument that taxes are wasted on fraud and corruption is false.

Like Mr. Stillman, I cannot stand people who whine "if only my taxes were lower" and politicians who pander to them.

The superficial American aversion to taxes has a long history. Every year, American students are taught that our Founding Fathers had to suffer the grave injustice of "nonsensical" British taxes - the Stamp Act and the Townshend Acts to be specific. Fast forward two centuries and Ronald Reagan got America to bend to his slick words by denouncing taxes, spending, and the previous political generation's economic policies. Much of Republican power today is built upon the ideology of slashing spending and taxes, even if they do the opposite when in power.

Well, here is the news. The patriots' only real beef with Britain was that they were not being fairly represented. The fact is that the British had every right and cause to tax the bejesus out of the colonies, considering they spent years fighting previous wars on our soil with no repayment.

And as for Mr. Reagan? Despite all the crap chanted by right-wing economists about massive tax cuts generating economic growth, I'd like to point out a few simple facts. The first is that our greatest decade of proportionate economic growth came in the 1950s, when our federal statutory corporate tax rate was 53% and the highest income taxes paid 91%. For the geniuses out there, they're now both drastically lower. Yet, despite paying those high tax rates, our country's economics thrived in the middle of the twentieth century.

But how could this be? Are the hackneyed conservative economists just plain wrong?

In a nutshell, yes. In fact, I would argue that the Reagan tax cuts actually hurt the United States economy in the long run. While the short term gains are noticeable, no heed is paid to the long-term damage caused by the slashing of the old tax structure.

Here is an important one: wealth disparity has risen astronomically since 1980. For all the rhetoric out there thrown around about how the top 1% pay so much in taxes, much of that is because the relaxed tax code has allowed the top 1% to build wealth. Meanwhile, the low-income individual has less of a proportional decrease, and therefore "loses out." This is simple math, yet it gets lost in fallacious rhetoric.

Much of the "economic growth" spurred on by tax cuts in fact only occurs because the wealthy have their reserves increase faster than the rest of the population's drops.

And why does it drop? Because the value of all currency is relative. Conservative economists will jump up and down and scream that middle- and lower-class income is rising, but if the incomes of the rich increase at a greater proportion than the incomes of the middle-class and lower-class, then by golly the middle- and lower-class is actually losing money.

People who advocate tax cuts will tell you that "with a tax cut, people will start businesses and buy more things," but for that to actually happen, something somewhere has to be sacrificed. American currency is a finite product regulated by the government. All gains or losses should be taken relative to the supply pool. The point? If everyone has their taxes cut, then no one really gains anything. If the tax rates are adjusted to favor the wealthy (see, flat tax), then the rich will get richer because their gains will outdo those of the poor. This is not a good thing for 90-95% of us. Do not be duped by the propaganda of the wealthy and powerful.

So here's a question: if money is a finite pool who's value is dictated by the government, why do people complain about paying taxes? Frankly, it's beyond me. Conservatives always bemoan that they have to work until May or whatever it is to pay for the government, but honestly, since everyone's paying the same rates, who is being treated unfairly? Do they believe that a magical tax fairy will slice only their taxes and not everyone else's?

Another common complaint made by economic conservatives is the tired, old "It's my money! It's not the government's!" I hate to break it to you, Mr. Right-wing, but every dollar you have is technically property of the United States treasury. It is a lease from the United States government. Currency is not property in the traditional sense; it's a regulated catalyst for the economy, and you have no right to keeping what the government leases you.

In fact, considering that you, Mr. Conservative, are actually a small fraction of the federal government, I'd say you're being silly and hypocritical in calling it evil.

Do I want to see less waste in our government? Yes, absolutely. I'd like to see less pork going to lesbian nursing facilities in northern Vermont. I'd also like to see our military budget come down to a reasonable level (are you listening, Mr. Conservative?). But taxes are not evil, and slashing them will not do a bit of good in the long term.

Don't believe me? Well, in the 25 years since we've restructured the tax system, race relations have actually become worse, the modern ghettos developed and then go worse, health care has gotten worse, and we've sat back and watched most of Northern and Western Europe, Australia, New Zealand, and Japan pass us in terms of quality of life ratings, according to objective institutions like Amnesty International and the U.N.

The next time someone gushes affectionately for Ronnie Reagan and demands tax cuts, kindly remind them that the "greatest generation" paid 91% and did fantastically, that it's not "their money" in the first place, and that chances are they have absolutely nothing to gain from lowered taxes.