Cutting Taxes = Increasing Revenue
Taxes were very high, but no real revenue was coming in. That’s because the system of taxes at that time was an early form of income tax that centered on the government taking a large percentage of a farmer’s crops.
So Ching Ti did something bold and innovative: he cut taxes.
Overnight, taxes went from over 50% down to about 3%. Farmers, who had fled to the hills to escape draconian tax rates, now came home and began farming again. To make a long story short, Ching Ti’s greatest problem while governing was trying to keep all the grain in his barns from spoiling.
It seems that ancient Chinese history is good for more than just cutesy script on a fortune cookie.
Today, Democrats in Congress are defending Barack Obama’s plan to increase taxes on people making more than $250,000 a year. These are the folks Democrats consider “rich.” They represent white-collar America—small-town doctors, lawyers, small business owners. In short, they are some of the most productive people in our country.
These are the people who create most of the jobs in America. They are also some of the biggest spenders in our consumer-based economy. Raising taxes on these people will create the same problem that Ching Ti’s predecessor faced— people stopped hiring, producing, and spending, and revenue plummeted.
After an initial spike in revenue (which may not even happen, since we’re in the greatest economic downturn since the Great Depression), tax collections for President Obama’s government will not meet expectations. And since our government perpetually spends more than it takes in, our deficit will continue to grow unless massive spending cuts are enacted.
And that brings up a related point.
Speaker of the House Nancy Pelosi and her liberal colleagues blame the Bush tax cuts for the present deficit disaster. But they’re wrong—100% wrong.
Tax cuts did not create our current deficits—over-spending did. Federal Revenue collection during the Bush years went through an initial drop (down to mid-1990s levels) but gradually angled up during his second term to eventually exceed collections prior to implementing the tax cuts Democrats blame for the deficit problem. However, federal spending kept exceeding revenue collection during all eight years of the Bush administration.
The bottom line is that we don’t have a revenue problem in Washington—we have a spending problem.
But President Obama and Nancy Pelosi’s answer is to increase revenue through tax increases—not spending cuts. The result will be disaster. Over the long run, less revenue will come in to the treasury, but people will not get any richer.
Cutting taxes means people get to keep more of their own money. Tax cuts on the “rich” mean the people who produce the most wealth in the country can continue to be rewarded for creating wealth. This incentivizes them to keep creating jobs and investing in our country.
Reaganomics has not failed. Reaganomics has never been fully implemented—even under Reagan! Which leads to my final point: Republicans don’t get off the hook.
One major reason we’re in the mess we’re in is because of President Bush’s duel-personality political convictions. On the one hand, Bush wanted to be the fiscal conservative, cutting taxes. On the other hand, he wanted to be the “Compassionate Conservative,” doling out government funds like they were going out of style.
To say Bush spent money like a drunken sailor is a slam on the good name of drunken sailors everywhere. Even if you remove spending for the Iraq War, Bush was one of the biggest spending presidents in modern history.
Republicans in Congress today are blasting President Obama’s budget and stimulus package for its excessive spending on liberal wealth redistribution—and rightly so. But their credibility is severely damaged when one considers that for several years, many of these same Republicans gave President Bush whatever he wanted—including several $ trillion in new debt to finance his own version of “compassionate conservative” wealth redistribution.
If Republicans are to gain back any trust from the American people, they must honestly and candidly admit (as Gov. Bobby Jindal did recently before a national television audience) that Republicans governed badly when they held the reins in Washington.
I am glad to see a renewed vigor among many conservatives in Washington to tread the “ancient paths” once again and fight tax and spending increases. The current path President Obama and Nancy Pelosi has us on will likely make Americans pine away for the “good ol’ days” of the Carter Administration.
My recommendation is that Republicans nominate a Ching Ti for President in 2012.
Related Webpage: Useful Facts on Who Pays the Nation’s Taxes