The Myth of Tax Cuts
Feb. 24th, 2005 07:55 pm![[personal profile]](https://www.dreamwidth.org/img/silk/identity/user.png){kind=small}
forsythPresident Bush likes to gloat that he's "cut taxes". Nobody ever questions it, either. Taxes went down, that's a cut, right? Democrats, Republicans, media, random people, everybody.
Well, no. Not really. Elizabeth Anderson over here at Left2Right goes into more detail, but I'm gonna summarize and expand some on my own.
Like she says, Bush hasn't cut taxes, he's just postponed them. Let's take an imaginary country, Fredville. To start with, Fredville has tax income of $200,000,000, and expenditures of $200,000,000, all that comes from an income tax of 10%. After debate and lobbying, Fredville reduces their income taxes from 10% to 9%. So now the government takes in $180,000,000, but they don't cut any spending, so they're still spending $200,000,000. Where's the extra $20mil come from? Usually, loans. Either the government sells bonds (to citizens, banks, and other countries), or takes out a loan from the IMF or somebody. That $20million is going to be paid back, with interest. That's how loans work. So ten years down the road, when the loans come due, the government of Fredville's going to have to raise taxes to 11%, to cover the interest and pay back the original loans. Or higher, if they don't change anything, because they'll have been falling short by $20mil each year. There's a lot of other factors involved, but that's what it comes down to.
If I use my credit card to pay half of a $100 bill, did I "cut" my bill to $50? No. I have to pay the other $50, plus interest to the credit card company. If you buy a $200,000 house and take a loan for $100,000, do you pay $100,000 or $200,000+interest?
Well, you say, we should cut programs? That's fine and dandy as a sentiment, but it's utterly unrelated to what the Bush Administration's been doing. They've been "cutting" taxes and spending like drunken sailors. Bush's fancy Medicare prescription bill that was supposed to only cost $400 billion over the next ten years? Latest estimates from the Bush Administration's own figures put it at 1.2 TRILLION. Bush certainly isn't going to spend less on the military, not even nonfunctional boondoggles like "missile defense" (which has yet to work).
George Bush's bills are going to come due. But he'll be out of office then, and guessing at the average ages of people reading this, we'll be the ones paying it. Slightly lower taxes now and big reductions for the rich, for much higher taxes later. That's a bad trade, it seems to me.
And yes, I know there's another option for people who can't pay their bills, you can declare bankruptcy. Trust me, you don't even want to try and imagine a world where the US government defaults on its debts. That would be bad. Like the Twinkie in Ghostbusters bad.
Tags: Politics, Links, Mindscribbles
Well, no. Not really. Elizabeth Anderson over here at Left2Right goes into more detail, but I'm gonna summarize and expand some on my own.
Like she says, Bush hasn't cut taxes, he's just postponed them. Let's take an imaginary country, Fredville. To start with, Fredville has tax income of $200,000,000, and expenditures of $200,000,000, all that comes from an income tax of 10%. After debate and lobbying, Fredville reduces their income taxes from 10% to 9%. So now the government takes in $180,000,000, but they don't cut any spending, so they're still spending $200,000,000. Where's the extra $20mil come from? Usually, loans. Either the government sells bonds (to citizens, banks, and other countries), or takes out a loan from the IMF or somebody. That $20million is going to be paid back, with interest. That's how loans work. So ten years down the road, when the loans come due, the government of Fredville's going to have to raise taxes to 11%, to cover the interest and pay back the original loans. Or higher, if they don't change anything, because they'll have been falling short by $20mil each year. There's a lot of other factors involved, but that's what it comes down to.
If I use my credit card to pay half of a $100 bill, did I "cut" my bill to $50? No. I have to pay the other $50, plus interest to the credit card company. If you buy a $200,000 house and take a loan for $100,000, do you pay $100,000 or $200,000+interest?
Well, you say, we should cut programs? That's fine and dandy as a sentiment, but it's utterly unrelated to what the Bush Administration's been doing. They've been "cutting" taxes and spending like drunken sailors. Bush's fancy Medicare prescription bill that was supposed to only cost $400 billion over the next ten years? Latest estimates from the Bush Administration's own figures put it at 1.2 TRILLION. Bush certainly isn't going to spend less on the military, not even nonfunctional boondoggles like "missile defense" (which has yet to work).
George Bush's bills are going to come due. But he'll be out of office then, and guessing at the average ages of people reading this, we'll be the ones paying it. Slightly lower taxes now and big reductions for the rich, for much higher taxes later. That's a bad trade, it seems to me.
And yes, I know there's another option for people who can't pay their bills, you can declare bankruptcy. Trust me, you don't even want to try and imagine a world where the US government defaults on its debts. That would be bad. Like the Twinkie in Ghostbusters bad.
Tags: Politics, Links, Mindscribbles
