Tuesday, August 09, 2005

Sawicky on tax cuts/hikes

There are no tax cuts. Banish that phrase from your mind. You haven't seen any.

Republican control of the White House and Congress has yielded trillions in tax increases since January of 2001. How can this be? Simple. When you spend more, and when you pass laws that commit the government to spending more in the future, you increase taxes, sooner or later. Spending not financed by current taxes will be financed by future taxes. A debt increase is the present value of future increased taxes. If taxpayers merely pay interest on the debt incurred, forever, the present value of the interest payments is the initial increase in debt.

Suppose you raise future spending on X but later you cut spending on Y? You have still raised taxes. If you had cut spending on Y and foregone the spending on X, taxes would be lower. To spend is to tax. There are no tax cuts. There are only tax shifts....

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