From: Technotranscendence (neptune@mars.superlink.net)
Date: Wed May 28 2003 - 06:06:00 MDT
THE LIGHTHOUSE
WHEN A "TAX CUT" ISN'T ONE
from "Enlightening Ideas for Public Policy..." Vol. 5, Issue 21 May 27,
2003
-------------------------------------------------------------
It sounds like a bad joke told by an economically literate stand-up
comic: When is a "tax cut" not really a tax cut? When it isn't offset by
a reduction in government spending. In that case, it is more accurate to
call the "tax cut" a deferred tax increase. (That's why the joke's not
funny!)
According to Alexander Tabarrok, research director of the Independent
Institute, this is precisely the case with President Bush's proposed
"tax cut"; it's really a tax shift, Tabarrok argues, to a future where
taxes already were expected to increase significantly to pay for growing
Social Security and Medicare liabilities.
"To grasp the difference between a tax cut and a tax shift, we must
first understand that what ultimately drives taxes is spending," writes
Tabarrok in an op-ed carried last week by United Press International.
"If spending increases, as it has under the current administration, then
sooner or later taxes must increase (or inflation, a type of tax, will
go up).... If spending isn't cut, then less taxes today means more taxes
tomorrow. Thus, the Bush tax cut plan is really a plan for future tax
increases....
"Conservatives used to argue that the public didn't want big government
but was fooled by deficit financing and other hidden taxes into thinking
that it costs less than it actually does. Today, conservatives seem to
believe that the public does want big government and that the only way
to curb government growth it is to fool the public with lower taxes
today so that the costs of government will be so high tomorrow that no
one will accept the offer. How cynical.
"Will deficits in fact force future administrations to cut spending?
It's possible but I am fearful. The combination of changing demographics
and current tax cuts is seeding out economy for a fiscal 'perfect
storm.' When the storm hits there will be a crisis, and as economist and
historian Robert Higgs has ably demonstrated in CRISIS AND LEVITHAN,
small government rarely does well in a crisis."
See "What Tax Cut?" by Alexander Tabarrok (5/22/03)
http://www.independent.org/tii/news/030521Tabarrok.html
Also see:
"Taxation, Forced Labor, and Theft," by Edward Feser (THE INDEPENDENT
REVIEW, Fall 200)
http://www.independent.org/tii/content/pubs/review/tir52_feser.html
Independent Institute archives on taxation, see
http://www.independent.org/archive/taxation.html
This archive was generated by hypermail 2.1.5 : Wed May 28 2003 - 06:08:26 MDT