Thompson On Taxes
Fred Thompson appeared on the pages of the Wall Street Journal yesterday to assess tax policy and its impact on the American economy. To no one's great surprise, Thompson favors tax cuts to incentivize capital investment -- and to no one's great surprise, he articulates that vision very, very well:
The results of the experiment that began when Congress passed a series of tax-rate cuts in 2001 and 2003 are in. Supporters of those cuts said they would stimulate the economy. Opponents predicted ever-increasing budget deficits and national bankruptcy unless tax rates were increased, especially on the wealthy.In fact, Treasury statistics show that tax revenues have soared and the budget deficit has been shrinking faster than even the optimists projected. Since the first tax cuts were passed, when I was in the Senate, the budget deficit has been cut in half.
Remarkably, this has happened despite the financial trauma of 9/11 and the cost of the War on Terror. The deficit, compared to the entire economy, is well below the average for the last 35 years and, at this rate, the budget will be in surplus by 2010. ...
The richest 1% of Americans now pays 35% of all income taxes. The top 10% pay more taxes than the bottom 60%.
The reason for this outcome is that, because of lower rates, money is being invested in our economy instead of being sheltered from the taxman. Greater investment has created overall economic strength. Job growth is robust, overcoming trouble in the housing sector; and the personal incomes of Americans at every income level are higher than they've ever been.
Thompson doesn't mention that we could have been heading towards surplus sooner if Republicans hadn't spent like drunken sailors for the past six years, mostly without Thompson's participation. He does mention that politicians now want to rescind the tax cuts to fund "pet projects", but doesn't note that his former colleagues did plenty of that between 2002-6 themselves. Discretionary, non-defense and non-entitlement spending went up by 29% during the first five years of the Bush presidency.
It's not enough to lower taxes; Republicans need to stop the spending spree as well. It's great that federal revenues have increased through economic growth rather than increased confiscation, but so far we have seen Congress increase spending as a result in attempts to ensure the re-election of individuals. Thompson alludes to that in his article by noting the pending debacle of Baby Boomer entitlements, but he needs to complete the circle on fiscal discipline.
At the end, he postulates that "we need to maintain economic growth and healthy tax revenues. That is why we need to reject taxes that punish rather than reward success." He's absolutely right about that and his follow-on point about redistribution of wealth as a poor goal for tax policy, but he misses one point. In a free society, it is not the government's role to redistribute wealth among its citizens. A free government should raise taxes to fund its Constitutional and statutory responsibilities, not to fund the Charles Rangel Center for Public Service and other pork-barrel nonsense. The collection of taxes for those purposes make us less free and more the subjects of an autocratic class of incumbents who use our money to perpetuate their power. Reducing taxes reduces their ability to warp the electoral processes for their purposes.
Thompson has the right idea, and he's ahead of the pack in explaining why tax increases hurt the economy. I'd like to see at least one of the Republican candidates explain why they damage our freedom and perpetuate the ruling class in Washington. The first candidate to do so effectively will probably find themselves at the head of that pack.
Comments (15)
Posted by jroosh | April 15, 2007 11:33 AM
Great post - well done. I am becoming a rabid Thompson fan.
Posted by WryCoder | April 15, 2007 12:38 PM
When Bush took office, the country was beginning to slide into a recession. The tax cuts largely averted serious economic damage.
If you're a Keynesian, you can also make a case for deficit spending to prime the pump and help pull the country out of the recession. However, once the economy began to perform, that excess spending should have been eliminated, and that's what didn't happen.
Posted by patrick neid | April 15, 2007 1:02 PM
had the repubs spent only to fund the war and meanwhile cut discretionary spending to the bone as they pushed through their tax cuts to stimulate the economy--which it did, as it always does--the repubs would still in power with added seats.
while they fooled themselves that their road to nowhere was better than the dems it cost them the house and senate. the politico's who are still in denial blame it on the war. dems are expected to toss $100's in the air. when repubs do the same the voters want the real mccoy......ie. hillary's forth coming universal healthcare next spring.
Posted by Michael Smith | April 15, 2007 1:12 PM
The Captain said:
In a free society, it is not the government's role to redistribute wealth among its citizens.
That is an important political truth. However, to reject the idea that redistribution of wealth is a proper function of government, one must be prepared to reject the moral principle on which it is based. That principle is altruism, which holds that virtue consists of sacrificing one's interests for the sake of others -- or, as it is more popularly expressed, altruism is the idea that those "in need" must be helped by those "not in need" or "less in need".
The welfare state is based on this moral ideal. If morality demands that those “in need” be helped, there is only one way for government to do it: government must tax some people for the sake of giving benefits to others, i.e. government must redistribute wealth from those who properly own it to those who do not.
Nothing on earth justifies the notion that one man’s need entitles him to another man’s property -- and no justification for this idea has ever been articulated. Instead, we are simply told that to oppose this ideal is to be “selfish” and that term is considered the self-evident brand of evil.
To be selfish, we are told, is to be willing to trample the rights of others. The “selfish” man, according to this view, is the man who sacrifices others for his own benefit; he lives by harming others.
This view of morality presents us with the following alternative: either agree that other people -- the “needy” -- have a right to our money, or be damned as the sort of person who is willing to violate everyone else’s rights.
This, of course, is an utterly false alternative. To defeat it, one must be willing to champion the idea that it the opposite of altruism: namely that each of us has the moral right to exist for our own sake, neither sacrificing ourselves to others nor demanding that others sacrifice themselves to us. This, in fact, was the moral meaning of the language of the Declaration of Independence: that ALL men are born with the right to pursue their own happiness.
I am waiting for a Republican with the moral courage to stand up for this idea.
Posted by Cornellian | April 15, 2007 1:53 PM
The top 10% and top 1% are paying a greater percentage of taxes because they're getting a greater percentage of total income.
Posted by awbtf | April 15, 2007 2:07 PM
In a free society, it is not the government's role to redistribute wealth among its citizens
I largely agree however I think I would support an increase in the Earned Income Tax credit. It's a tradeoff on principle for pragmatism too give a little help to those on the low end without doing as much harm as something like a raise in the minimum wage.
Posted by Count to 10 | April 15, 2007 4:18 PM
It is only altruism if you give your oun money to someone to help them. It is not altruism to force other people to give there money to others that you think are more diserving.
Private charity is altruism. Tax suported welfare is something else. Under certain cercomstances, welfare can be considered in the interest of the general populus for purely selfish reasons (public inoculations is the best example I can think of), but it is not altruism.
As such, I would prefer that government stick to doing things based purely on agragate self interest, and leave attempts at altrusim to individuals (though exceptions should be made for cercumstances involving military force, which can't reasonably be left to the individual).
Posted by Chris G. | April 15, 2007 7:51 PM
Please note that even drunken sailors spend their own money, not the money of others.
Posted by Lew | April 15, 2007 9:42 PM
Cornellian, you're just about 99% right!
You only missed it by one single little word; they aren't "getting" a greater percentage of total income, they're "earning" it. And that makes all the difference in the world to anyone with the slightest shred of moral sensitivity.
Have a nice day!
Posted by Rose | April 16, 2007 12:09 AM
That is an important political truth. However, to reject the idea that redistribution of wealth is a proper function of government, one must be prepared to reject the moral principle on which it is based. That principle is altruism, which holds that virtue consists of sacrificing one's interests for the sake of others -- or, as it is more popularly expressed, altruism is the idea that those "in need" must be helped by those "not in need" or "less in need".
Posted by: Michael Smith
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Sounds "nice" on paper - in taxes, in real life, it is Socialism - DICTATORSHIP - and nothing less.
There is NOTHING altruistic about taking OTHERS' money to spend AS YOU see fit.
Pretty words to drape fine perversions of reality to justify micromanaging powermongering over others, over whom some few feel uniquely qualified to administrate their affairs FOR THEM.
You seek HONEST men among the Republicans.
And well you should, since you find few if any in the Dim Party of Socialists, drunk on Marxism and slushfunds of others' tax dollars.
What you call "Altruism" is in fact nothing but common thievery, when the "elected representatives" are NOT representing the voters IN FACT when THEY vote largesse for their own pet projects, with total disregard for those they vote this "LARGESSE" to be taken FROM.
If YOU are so willing, DONATE YOUR OWN and keep your hand OUT of OUR pockets, and let US decide for ourselves WHO IF ANY shall receive charity form our own hand!
ALTRUISM is the idea that THOSE WHO ARE WILLING shall give as they see fit!
SOCIALISM is the idea that the GOVERNMENT shall take from ALL and do as they will with the takings.
YOU have literally taken the words from KARL MARX and put another word to the end of it. Call it a lot of things, - but once you stick a gun in someone else's guts and take their income from them, whether the gun of a thug or of the government without honest representation of the voters - it is THEFT. And they are not "Robin Hoods".
Socialism hasn't got a pretty picture in any government on the planet, and never has.
Posted by Rose | April 16, 2007 12:09 AM
That is an important political truth. However, to reject the idea that redistribution of wealth is a proper function of government, one must be prepared to reject the moral principle on which it is based. That principle is altruism, which holds that virtue consists of sacrificing one's interests for the sake of others -- or, as it is more popularly expressed, altruism is the idea that those "in need" must be helped by those "not in need" or "less in need".
Posted by: Michael Smith
******************************
Sounds "nice" on paper - in taxes, in real life, it is Socialism - DICTATORSHIP - and nothing less.
There is NOTHING altruistic about taking OTHERS' money to spend AS YOU see fit.
Pretty words to drape fine perversions of reality to justify micromanaging powermongering over others, over whom some few feel uniquely qualified to administrate their affairs FOR THEM.
You seek HONEST men among the Republicans.
And well you should, since you find few if any in the Dim Party of Socialists, drunk on Marxism and slushfunds of others' tax dollars.
What you call "Altruism" is in fact nothing but common thievery, when the "elected representatives" are NOT representing the voters IN FACT when THEY vote largesse for their own pet projects, with total disregard for those they vote this "LARGESSE" to be taken FROM.
If YOU are so willing, DONATE YOUR OWN and keep your hand OUT of OUR pockets, and let US decide for ourselves WHO IF ANY shall receive charity form our own hand!
ALTRUISM is the idea that THOSE WHO ARE WILLING shall give as they see fit!
SOCIALISM is the idea that the GOVERNMENT shall take from ALL and do as they will with the takings.
YOU have literally taken the words from KARL MARX and put another word to the end of it. Call it a lot of things, - but once you stick a gun in someone else's guts and take their income from them, whether the gun of a thug or of the government without honest representation of the voters - it is THEFT. And they are not "Robin Hoods".
Socialism hasn't got a pretty picture in any government on the planet, and never has.
Posted by Rose | April 16, 2007 12:29 AM
Michael Smith - SORRY, read part of your post and exploded, before I finished reading it. I keep thinking I'll learn better - but about the time I think I did, I stick my foot in it again. My apologies, Sir.
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The top 10% and top 1% are paying a greater percentage of taxes because they're getting a greater percentage of total income.
Posted by: Cornellian
************
The top 10% are paying more because the government bureaucrats think the other 90% will support it based on the FALSE NOTION that the bureaucrats will leave THEM alone if they throw the bureaucrats "a bone".
Unfortunately, they have gauged the other 90% correctly. The bureaucrats appealed to their GREED - men think LOTS of things are "FAIR" when seen through their own eyes of GREED and ENVY.
Posted by Rose | April 16, 2007 12:37 AM
Lexington Green
April 19, 1775
SHOT HEARD 'ROUND THE WORLD.
Posted by Kent | April 16, 2007 8:41 AM
"However, to reject the idea that redistribution of wealth is a proper function of government, one must be prepared to reject the moral principle on which it is based. That principle is altruism, which holds that virtue consists of sacrificing one's interests for the sake of others -- or, as it is more popularly expressed, altruism is the idea that those "in need" must be helped by those 'not in need' or 'less in need'."
Complete, unmitigated bunk.
My rejection of government redistribution of wealth does not, in any way, shape, or form, obligate me to reject the notion of altruistically donating money to private charities I find worthwhile, for the benefit of those in need.
Posted by Mark | April 16, 2007 9:29 AM
Michael,
Just how altruistic is it to vote to have govt take someone else's money, and give it to yourself?
Atruism involves the voluntary giving away of your own resources. Nothing govt does is altruistic, nor can it be called altruistic except by those with only a marginal understanding of what words mean.