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Bush Tax Cuts to the Rich – Do they balance the budget or break it?

One would think conservative working people would see that a major part of the Bush tax cuts to the rich was spent in paying management more. Just compare what happened to management’s salary to the blue-collar conservative’s salary.

 

A common sense look at the Bush tax cuts to the rich

It surprises me quite a bit that conservatives have not been able to see and feel the gap between rich and poor growing, as many of them are quite poor, themselves. They persist in the belief that giving tax cuts to the rich employers — their employers — will increase the number of jobs and their own prosperity.

One would think conservative working-class people would see that a major part of the Bush tax cuts to the rich was spent in paying management more. Just compare what happened to management’s salary, which skyrocketed, to the blue-collar conservative’s salary, which did nothing at all.¬†Almost nothing trickled down to working-class people. This, to me, seems easy to see. On top of that, there were clearly far fewer jobs at the end of Bush’s term than when he began. So much for tax cuts to the rich “job creators” doing anything to actually create jobs. Many of the jobs fled overseas, which is where the rich invested their money.

Conservative laborers are swayed by the argument that tax cuts to the rich stimulate the economy when, in fact, tax cuts to ANYONE stimulate the economy. On the other hand, they are blind to the reality that you cannot cut taxes as much as you want and continue to stimulate greater and greater government revenue.

 

The Tax-Cut Equation

Clearly, the more you cut taxes, the more you stimulate the economy. There is no question about that, but at some point lowering rates starts to decrease government revenue more than it stimulates the economy. That’s the point at which lower rates starts moving the government into deficit territory.

What is needed is to know the equilibrium point at which you get the most tax revenue. Obviously, if you cut taxes entirely, that would have the greatest economic stimulus. Just as obviously, you would have no government revenue to operate with at all. So, you cannot continually increase government revenue by lowering tax rates. One-hundred percent tax rates also generate no government revenue, for then no one bothers to work or invest.

So, the only question that SHOULD be of interest to anyone who is concerned about our government debt is trying to calculate the balance point at which taxes generate the maximum government revenue. The only thing we need to know in setting tax rates is the point along that sliding scale that maximizes government revenue, as that right now has to be our biggest national concern — raising the revenue as much as we can to pay down debt while lowering spending as much as we can bare to not incur debt. It’s the only way to tune the economic engine for maximum performance and power out of this mess.

 

Ideologues are killing the country

Instead, we have ideologues on both sides who have no interest in finding the truth. We have long had liberals who want to tax as much as possible under the belief that this will buy as much social welfare as possible and conservatives who want to tax as little as possible (and especially don’t want to tax the rich).

The Clinton administration seemed to have hit closer to the magic balance point than any other with the help of a Gingrich Congress, but is the nation even talking about steering back to that balance point? Those two forces working against each other found a good balance, which was completely blown apart in the Bush years. We should probably aim for that same level of taxation and military spending, even though it gave plenty to displease both sides, as it was, at least, producing a surplus, which we could sure use. We were for the first time in my adult life actually paying down our national debt.

I don’t see anyone in Congress willing to make that kind of sacrifice to their own ideals in order to do what is fiscally responsible and attainable.

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