Many of the candidates running in the Republican Presidential Primary have been hitting the airwaves lately touting their plans to get our country back to prosperity. Many of these plans include across the board tax cuts which is in direct contradiction of the Keynesian approach that this current administration adores.
To counter this, many so-called “experts” on Capitol Hill (i.e. politicians who think they know what they are talking about) have been hitting the airwaves recently too with the message that any tax cut will result in a corresponding amount of additional deficit and debt. On the surface this is true…but only of they do not stop spending!
For example, lets say our Federal government currently takes in $2.2 trillion in taxes and spends $3.8 trillion in 2011 which would leave us with a $1.6 trillion deficit (this is pretty close to the actual numbers). For the purposes of this example lets also assume that any tax cut would reduce tax receipts by $200 billion. This would increase our deficit to $1.8 trillion and add this same amount to the debt. That make sense to most…but not to me! Any reduction in tax rates, if accompanied by an equal reduction in spending, does not add to the debt and the deficit! So when you hear the big government, tax and spend, entitlement minded politicians spin it as adding to the debt what they are basically telling you is that they have no intention of cutting spending!
The point of cutting taxes is to put more money in the hands of the private sector to spur on economic growth. If you cut spending AND cut taxes at the same time then any added economic growth from the tax cuts is an added bonus. More money in the hands of the private sector equals growth. Growth equals increased tax receipts. Increased tax receipts coupled with a reduction in spending equals lower deficits.
Some will argue for tax increases which we should be vehemently against because our Federal government has a history of taking the extra tax revenues and increasing the size of government. Since the dawn of recorded time governments around the world have never done what they say they are going to do. If politicians say increased revenue from a tax increase will go to directly reduce the deficit…don’t believe them!
Blaise Ingoglia, Producer
Government Gone Wild!
To counter this, many so-called “experts” on Capitol Hill (i.e. politicians who think they know what they are talking about) have been hitting the airwaves recently too with the message that any tax cut will result in a corresponding amount of additional deficit and debt. On the surface this is true…but only of they do not stop spending!
For example, lets say our Federal government currently takes in $2.2 trillion in taxes and spends $3.8 trillion in 2011 which would leave us with a $1.6 trillion deficit (this is pretty close to the actual numbers). For the purposes of this example lets also assume that any tax cut would reduce tax receipts by $200 billion. This would increase our deficit to $1.8 trillion and add this same amount to the debt. That make sense to most…but not to me! Any reduction in tax rates, if accompanied by an equal reduction in spending, does not add to the debt and the deficit! So when you hear the big government, tax and spend, entitlement minded politicians spin it as adding to the debt what they are basically telling you is that they have no intention of cutting spending!
The point of cutting taxes is to put more money in the hands of the private sector to spur on economic growth. If you cut spending AND cut taxes at the same time then any added economic growth from the tax cuts is an added bonus. More money in the hands of the private sector equals growth. Growth equals increased tax receipts. Increased tax receipts coupled with a reduction in spending equals lower deficits.
Some will argue for tax increases which we should be vehemently against because our Federal government has a history of taking the extra tax revenues and increasing the size of government. Since the dawn of recorded time governments around the world have never done what they say they are going to do. If politicians say increased revenue from a tax increase will go to directly reduce the deficit…don’t believe them!
Blaise Ingoglia, Producer
Government Gone Wild!
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