Wednesday, February 28, 2001
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Wednesday, February 28, 2001 |
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Tax cut opponents getting harder to find By DAVE HAMRICK Amazingly, after all the bitterness and division that occurred during the election, America is uniting. No, it's not young George's charisma that is uniting us, but a single, pervading issue that binds young and old, liberal and conservative (except for extremists), those with pale skin, dark skin and olive. It's the tax cut. With the economy wavering and daily news of layoffs, there seems to be not only a growing support for the idea of tax cuts, but also a growing impatience with the length of the process required to put it in place. I'm basing this on things I hear from my friends, even the liberal Democratic ones, letters to the editor, columns, talk show talk not just on conservative shows, and not just from the hosts. And the seeds of class envy being sowed by Democratic Party leaders their strategy for keeping as much money in Washington as possible don't seem to be taking root. I don't hear many people out here among the great unwashed worrying about how much the other guy gets. Let's just get on with it, seems to be the cry. But the arguments against a tax cut are still out there, and Dick Gephardt et al will be working as hard as they can to prevent us from getting one. So in case you are one of the few who is opposed or perhaps you're in favor but have the nagging, guilty feeling that maybe you shouldn't be so selfish here are some of the arguments and some points to ponder about those arguments. 1. A tax cut may put us in danger of going back to deficit spending. It will reduce the surplus at best, and possibly erase it altogether. Therefore, the more conservative plan would be to sit on that surplus and wait for a rainy day. In fighting against a tax cut (even though he promised to fight for it) President Clinton was fond of phrasing the argument in terms of how we "spend" the surplus: Do we spend it on important things like Social Security or do we squander it (actually I think Gore used that word quite often in his campaign) on tax cuts? First, even if a tax cut does erode the surplus somewhat, returning the money to the people who earned it is not squandering it. If you think about it, that concept should be as insulting to you Democrats as it is to me. The pertinent question is: Do you want to leave the money in Washington where politicians will use it to buy votes, or do you want to return it to the people it belongs to. Second, there's no reason to assume that a tax cut will cut into the surplus at all, if Congress exercises some discipline and doesn't go hog wild on spending at the same time. Following the Reagan tax cuts back in the '80s, deficits went through the roof, which seems to support the concern that the same would happen now. But the facts are clear: revenues increased every year following the tax cuts, and the reason deficits increased is because spending increased faster than revenues. Our new senator, Zell Miller, a Democrat, put it very well: "I thought I had seen it all. But when I came to Washington last year I was not prepared for the shock of just how matter-of-factly Congress ate into the surplus, gobbled it up indiscriminately and without hesitation on both sides of the aisle. ... If we don't send this overpayment of taxes back to those who paid it, much of it will be frittered away. ..." 2. A tax cut won't really mean much to each individual. It'll just be pocket change. Why not improve services rather than cut taxes? I don't know about you, but if I get to keep 40 bucks a month that I've been sending to Washington, it will help. Bush says the average taxpayer will pay $1,600 a year less than currently. Those who pay a lot more taxes will have a much greater impact, and those who are paying very little won't see that much. There are Web sites where you can go punch in your numbers and see how big your tax cut would be. But there are benefits of a tax cut that those numbers don't show. The first thing I noticed after the first Reagan tax cut went into effect was that my paycheck got bigger. What was doubly exciting about that was that, although it was only about $40 a month, it was $40 a month TAX FREE. Think about that. If your employer gives you a $40 a month raise, your paycheck only goes up $25 or so. Taxes eat the rest. You don't have to pay taxes on a tax cut. The second thing I noticed was that when I did get an actual pay increase, the portion of that increase that was eaten by taxes was less than before, and it took more pay raises before I got bumped into a higher bracket. Taking all those factors into account, the actual effect of my $40 tax cut ended up being more like $150 a month within a year or so. For millions of Americans struggling to make ends meet, it was the first time in their lives they could see some daylight. I know because that's how it was for me. Of course, what that translates into is more money going into savings, more into investments, and more being spent for goods and services, which translates into companies expanding, more jobs, bigger pay increases for those who earn them. And what does all that translate into? More taxes being paid, that's what. 3. There is no 3. That's about it as far as arguments against a tax cut, other than the ones about how you should envy someone else because his tax cut is bigger than yours. Bottom line: a tax cut means people get to make their own decisions about what to do with more of the money they earn, and those decisions inevitably improve the economy. No wonder everybody's getting on the bandwagon.
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