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July 16, 2005

Bush Tax Cuts Perform

Despite reverberations of the Democrats' whiny doomsaying about the Bush tax cuts on dividends and capital gains(yes, they were so loud they still echo a couple of years after the cuts went into effect), you know, despite the shouting about how the tax cuts only help the rich, etc, the tax reductions are proving out. Per an editorial in yesterday's Opinion Journal,

Let's see if we can get this straight:When tax revenues fall and budget deficits go up, it's bad news. But when tax revenues rise and deficits decline, it's still bad news.

At least that seems to be the way a sizeable chunk of Washington is reacting to this week's report from the White House budget office that the federal deficit is down by nearly $100 billion this fiscal year, that the deficit as a share of GDP is down to 2.7%(very near its historical average), and that this is all happening because tax receipts are surging by more than 14%: Uncle Sam is having a better year so far than even Paris Hilton, but half of the Beltway is depressed.

John Spratt, the ranking Democrat on the House Budget Committee, seems especially upset that this revenue surge isn't coming from wage income, but rather from investment income--that is, the so-called non-withholding income tax collections, which have skyrocketed some 30% this year. "These are typically taxes paid on one-time capital gains, bonuses, stock-options income that may not recur, he laments.

Well, sure, Congressman, the 2003 reduction in the tax rates on dividends and capital gains seem to be resulting in much higher tax revenues on...dividends and capital gains. This is called the Laffer Curve effect, and we think Mr. Spratt is validating it. If he wants those revenues to "recur," maybe he'll vote to make these tax cuts permanent.

So, once again events have, as they say, overtaken the tax hungry left, who refuse to acknowledge that the revenues of big business and wealthy investors can be better spent for good of country by being reinvested, generating more taxable income than by being sucked up and spent by the government.

This brings to mind four lines from the 1971 Ten Years After song, I'd Love To Change The World:

Tax the rich

feed the poor

'til there are no

rich no more...

So then what?

Asshats!

The Laffer Curve is a graph that illustrates the relationships between tax rates and taxes collected by a government.

It shows that when tax rates hit certain levels, productivity declines and as a result, less taxes are collected.

Makes sense, doesn't it? If you know the government's going to snatch up most of your profits, anyway, why bother making an effort? Here's a lesson we can learn from Europe--and Canada, for that matter. In those countries taxes are significantly higher than they are in the U.S., and none of them comes anywhere near the level of productivity we enjoy in the United States. Hell, the output of the vast majority of our states, individually, is higher than the collective output of the European Union. 

No matter what the port side of politics, even while brandishing rabid, anti-Bush leftist economist/columnist/stooges like drooling Paul Krugman tries so hard to make "go away," the truth remains: The capitalists in our capitalist republic are the entities that pay most of our taxes as it is.

If the tax man charges less, the freed-up profits of the taxee are invested and generate more taxes on profit volume.

Duh! Wake up, Democrats!

Of course they won't, and not because of any logical or patriotic reasons, simply because the Democrats have evolved, since being indoctrinated by their liberal faction, into a party whose leanings tend toward socialism. We are the richest and most powerful nation on earth because we are who we are. Don't fix what ain't broke.

And yes, I can understand why the Democrats on the Hill are distressed by the positive results of the Bush tax cuts; they are once again standing there, looking forlorn. Being proven wrong time and time again has to be a frustrating experience. I tend to think, for some reason, of Rita Repulsa when she is beaten still again by her becostumed super hero teenage enemies, or of Snidely Whiplash after Dudley Do-Right has again cleaned his clock. "Curses, foiled again!"

But you have to give the Dems credit where credit is due: It's awfully hard work trying to make a strong President fail at his job, and to that end they have thus far shown a level of dedication and perseverence that even our enemies would have to admire. Then again, our enemies probably appreciate their efforts, since those efforts are in anything but our country's best interests. If the Dems applied the same tenacity for this country that they do against it, they'd have a lot more people in Congress and maybe even a shot at winning the White House in 2008.

I mean, the Democrats aren't serious about believing all this crap they spew, right? They aren't really that stupid, right?  It's all politics, it's gotta be, because if it isn't it means that over there on the left side of the aisle are a whole lot of folks with issues that need to be resolved with professional help, or something.

Nah! It's only partisan politics.

Right?

By the way, we don't recall Mr. Spratt and other Democrats lamenting when a similar spike in taxes from investment income was boosting tax revenues to historic heights as a share of GDP during the dot-com bubble of the late 1990s, as per the nearby chart. Then it was all said to be an economic miracle; now it's a windfall for the wealthy. This selective budget criticism couldn't be related to who's sitting in the White House, could it?

Posted by Seth at July 16, 2005 04:12 PM