Affording Tax Cuts, or Whose Money Is It, Anyway?

The logic of paygo for taxes is backward, in that it starts from the assumption that all tax revenue is Washington’s in the first place and thus any tax cuts must be “offset” so Congress can be made whole. But of course the money belongs to the taxpayers who earned it, and the burden ought to be on the politicians to spend less so Americans can keep more. Republicans claim to believe this. (“Budget Irresolution,” The Wall Street Journal, March 14, 2005)

“Paygo” refers to the “pay-as-you-go” budget rules, which require that any tax cuts be offset by other tax increases. Alternatively, we often hear politicians at all levels claim that we can’t afford tax cuts.

If we stop and think for a moment, we should easily be able to recognize the absurdity of politicians claiming we can’t afford tax cuts. The mindset behind this is that the tax money belongs to the government in the first place, and if we are lucky enough, the politicians might cut our taxes a little, if they decide they can afford it.

As the Wall Street Journal editorial rightly says, the money is ours to begin with! How have we descended to the level where politicians don’t understand this, that is the taxpayer that can’t afford to pay taxes, that taxes are a drain on the growth of our economy?

Part of the answer may be found in the small book “The Law” by Frederic Bastiat. A link to an online version of it may be found on the “Other websites, resources” section of this website.

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