"A subsidy, properly understood,
occurs when government takes tax dollars and gives them to favored
individuals, companies, or industries. A tax cut, by contrast, simply
means government takes less from an individual, company, or industry.
When government takes less from you, it has not given you anything; it
merely has harmed you less. This is the critical distinction that has
been lost in the endless, tired debate about tax policy."
Distorting the Tax Policy Debate
by Ron Paul
Listen to Ron Paul.
George Orwell warned us about the use of “meaningless words” in
politics, words that are endlessly repeated by sloganeering politicians
until they have no meaning at all. Meaningless words certainly were on
display during last week’s congressional debate over the latest tax
bill.
Over and over again we heard trite, empty phrases like “tax cuts for the
wealthiest 2%,” “tax giveaways,” “tax earmarks,” and “borrowing money to
give to millionaires.” Time and time again the same falsehoods were
presented as fact, and reported as such by a credulous media.
But all of these clichés about taxes are based on the presumption that
government has a right to all of your income, and so government “gives”
you something when it allows you to keep a portion of that income. To
this mindset, tax cuts represent a “cost” to government. After all, they
argue, money that really ought to go to the most noble of purposes –
wealth redistribution via taxation – is being kept by greedy people and
corporations who just don’t want to pay their fair share.
Far too many Americans truly believe that tax cuts represent a government
giveaway, indistinguishable from an outright subsidy or entitlement
payment. To combat this mindset, we need to be clear with our language.
A subsidy, properly understood, occurs when government takes tax dollars
and gives them to favored individuals, companies, or industries. A tax
cut, by contrast, simply means government takes less from an individual,
company, or industry. When government takes less from you, it has not
given you anything; it merely has harmed you less. This is the critical
distinction that has been lost in the endless, tired debate about tax
policy.
Of course the bill passed last week did contain some actual spending,
mostly in the form of an extension of unemployment benefits for another
13 months. The total spending in the bill amounted to about $60 billion.
But the tax savings in the bill, meaning the amount of money that will
remain in the hands of taxpayers rather than being sent to Washington, is
approximately $850 billion. So while a clean tax bill certainly would
have been preferable, the tax relief it contains is significant. It means
$850 billion will be spent, saved, or invested by American citizens
rather than being sent into the black hole known as the federal
treasury.
The media, however, dutifully reported that opposition to the bill came
from concerned members of Congress who felt the $850 billion “cost” of
the bill was too high, and would add too much to the deficit. As always,
they could not distinguish between government giving and government
taking away. The American people already pay plenty in federal taxes; the
deficit is the result of a spending problem, not a revenue problem.
Had the bill not passed, millions of Americans would have seen their
paychecks shrink in January due to increased tax withholding. That is the
plain and simple truth, and that is why I voted for the bill.
--
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