The Tax Fairy, Debunked

Editorial in the WPo:

TAX CUTS don't pay for themselves. This might sound like dog-bites-man news, except for one thing: This rather unremarkable statement comes from Jim Nussle, the new director of the Office of Management and Budget in an administration whose president is given to saying things like "You cut taxes, and the tax revenues increase" (February 2006) and "We have cut taxes, causing economic growth, which caused there to be this year alone 187 billion more tax dollars coming into the Treasury" (August 2007).

As Mr. Nussle acknowledges, "There are those including myself who . . . in the passion of the argument have made statements -- I think I even made a statement once -- that tax relief did pay for itself." In fact, Mr. Nussle said yesterday at a breakfast with reporters sponsored by the Christian Science Monitor, "Some say that was a total loss. Some say they totally pay for themselves. It's neither extreme." This is not a merely academic debate, although no serious academic, including Mr. Bush's own economists, has argued that tax cuts produce enough additional economic growth to make up for lost revenue. Congress is debating whether a proposed $50 billion-plus "patch" exempting millions of taxpayers from the alternative minimum tax should be paid for, as Democrats have argued, or can simply be added to the national credit card bill, as congressional Republicans prefer. "Tax relief pays for itself," House Minority Leader John A. Boehner (R-Ohio) declared this month, explaining why no one should fuss about another $50 billion.

Read the rest:
http://www.washingtonpost.com/wp-dyn/content/article/2007/11/14/AR2007111402085.html

As an advisor to Bush1 (Greg Mankiw) remarked: "Any politician who says tax cuts raise revenue is peddling snake oil".

Boehner is peddling snake oil, as well as the present Bush. If a politician believes it, he should be considered incompetant, and unfit to hold public office.

When you cut taxes, you cut your services. Has anyone here received Pell Grants, for instance? Gone to a public school? Taken unemployment insurance? Ever had to use the interstate and its bridges? Anybody here on Medicare or Medicaid? Any of you gotten help through food stamps and other poverty relief programs? How about very important job training programs?

You cut taxes, you're cutting all of those. I don't mind tax cuts for the working poor and the middle class provided the burden of taxation is shifted up the income ladder to offset or more than offset the potential loss in funding for these programs.

Taxes go to maintaining roads, providing safe drinking water and safe food, and many other services.

I think that the reason people want tax cuts is that they only pay attention to news stories that tell how tax dollars are wasted. Trouble is, when you cut taxes, you never cut wasteful or frivolous spending. That always seems to stay.

Once, decades ago, the old Mad Magazine suggested that there be a line on the income tax form where the taxpayer could note where they wanted their tax dollars spent. That might not be such a bad idea.