Monday, April 17, 2006
Tax Cuts are for the Wealthy: a mantra of the Left
Today is Tax Day and if you owe money to the Feds then you’ve probably waited until today to file and pay….and you’re probably not too happy about it. The Washington Post feels your pain which probably explains today's editorial about proposed tax cuts. Using predictable liberal jargon, they rail against the proposed cuts because:
“Paying for tax cuts for the wealthy with . . . more tax cuts for the wealthy!”
Now, you may be asking: How do these proposed tax cuts benefit the likes of Ted Kennedy, Jay Rockefeller and the Clintons?
“…when Congress comes back from its recess, it's expected to take up a deal to extend President Bush's capital gains and dividend tax cuts.”
Of course, Washington being Washington – cuts in the tax rates are the same as cuts in taxes and such cuts have to be “paid” for. It is this “payment” proposal that really has the Post editorial staff steamed up:
“To make their budget-busting tax policy appear less costly than it is, the lawmakers are resorting to a gimmick that is even more egregious than their usual tactics.”
Apparently, there is a proposal to extend the use of the Roth IRA. Currently joint filers with an Adjusted Gross Income (AGI) of $160,000 and single filers with an AGI of over $110,000 are phased-out of allowable contributions. The Post explains the dangers the proposal portends:
“With traditional IRAs, taxpayers get to deduct the contributions they make from their income for that year; they pay taxes on the savings once they are withdrawn. Roth IRAs flip that arrangement around: Contributors pay taxes on the income they put into the accounts, but their savings then grow tax-free. So letting more people put money into Roth IRAs would increase tax revenue for a while -- offsetting, at least in theory, the cost of the capital gains cuts. But the Roth change would cost money down the road, as revenue once subject to taxation would grow tax-free.”
A particular pet-peeve of mine is this asinine assumption that cuts in taxes “cost” money. Taxes cost YOU money, not the government. The Post and others of their ilk seemingly assume that we already had in place rational tax rates, borne of trial and error, that were beyond reproach and that any lowering of them runs the risk of depriving governments of that which is naturally theirs.
Here, another asinine assumption rests on top of that one; that whoever can potentially benefit from this change in the Roth IRA rules is wealthy. A couple making $175,000 a year is doing okay for themselves – better than most – but they would laugh at the idea that such an income level made them wealthy. Such talk is demagoguery but is all too familiar in the left’s ongoing assault on income-producers.
The Post is using static-line assumptions when figuring the impact of these proposals. It does not take into account the positive impact of any increased savings held in Roth IRAs or the ongoing surge in investments resulting from the continuation of tax rate cuts applicable to capital gains and dividends. The Post snarkily comments:
“…No one who's serious about controlling the deficit -- whatever one's position on extending the tax cuts -- could support this dishonest approach.”
Count me among the unserious, I guess. Despite the demonstrated efficacy of lower tax rates, the Post editorialists continue to adhere to the myth that such cuts only add to the deficit. Of course that's nonsense – increased spending adds to the deficit. (see Supply Tax Cuts And The Truth About The Reagan Economic Record). But if the Post writers only know what the Post has reported on, then they may have an excuse for missing this lesson of the last 25 years.
- They benefit the wealthy and
- They “cost” too much.
“Paying for tax cuts for the wealthy with . . . more tax cuts for the wealthy!”
Now, you may be asking: How do these proposed tax cuts benefit the likes of Ted Kennedy, Jay Rockefeller and the Clintons?
“…when Congress comes back from its recess, it's expected to take up a deal to extend President Bush's capital gains and dividend tax cuts.”
Of course, Washington being Washington – cuts in the tax rates are the same as cuts in taxes and such cuts have to be “paid” for. It is this “payment” proposal that really has the Post editorial staff steamed up:
“To make their budget-busting tax policy appear less costly than it is, the lawmakers are resorting to a gimmick that is even more egregious than their usual tactics.”
Apparently, there is a proposal to extend the use of the Roth IRA. Currently joint filers with an Adjusted Gross Income (AGI) of $160,000 and single filers with an AGI of over $110,000 are phased-out of allowable contributions. The Post explains the dangers the proposal portends:
“With traditional IRAs, taxpayers get to deduct the contributions they make from their income for that year; they pay taxes on the savings once they are withdrawn. Roth IRAs flip that arrangement around: Contributors pay taxes on the income they put into the accounts, but their savings then grow tax-free. So letting more people put money into Roth IRAs would increase tax revenue for a while -- offsetting, at least in theory, the cost of the capital gains cuts. But the Roth change would cost money down the road, as revenue once subject to taxation would grow tax-free.”
A particular pet-peeve of mine is this asinine assumption that cuts in taxes “cost” money. Taxes cost YOU money, not the government. The Post and others of their ilk seemingly assume that we already had in place rational tax rates, borne of trial and error, that were beyond reproach and that any lowering of them runs the risk of depriving governments of that which is naturally theirs.
Here, another asinine assumption rests on top of that one; that whoever can potentially benefit from this change in the Roth IRA rules is wealthy. A couple making $175,000 a year is doing okay for themselves – better than most – but they would laugh at the idea that such an income level made them wealthy. Such talk is demagoguery but is all too familiar in the left’s ongoing assault on income-producers.
The Post is using static-line assumptions when figuring the impact of these proposals. It does not take into account the positive impact of any increased savings held in Roth IRAs or the ongoing surge in investments resulting from the continuation of tax rate cuts applicable to capital gains and dividends. The Post snarkily comments:
“…No one who's serious about controlling the deficit -- whatever one's position on extending the tax cuts -- could support this dishonest approach.”
Count me among the unserious, I guess. Despite the demonstrated efficacy of lower tax rates, the Post editorialists continue to adhere to the myth that such cuts only add to the deficit. Of course that's nonsense – increased spending adds to the deficit. (see Supply Tax Cuts And The Truth About The Reagan Economic Record). But if the Post writers only know what the Post has reported on, then they may have an excuse for missing this lesson of the last 25 years.
