The Disingenuous Tax Cut Debate

One of the important drivers of political dysfunction in America is the dishonest framing of debates Americans need to observe. Among the many controversies misrepresented by the commentary class is the tax cut debate. At the heart of the misrepresentation is the “cost” of the tax cut. Tax cuts do not cost money and empirically, they are almost certain to increase revenue to the United States Federal government.

In the current debate, we are told as we have been told by the commentary class since at least the 1980s, that the tax cut will be costly. It will “cost” more than a trillion dollars. It will blow a hole in the deficit. This rhetoric fills newspaper articles designed to attack the tax cut as illegitimate and a plain political contradiction to the conservative conventions of balanced budgets and fiscal responsibility. This turns the tax cut into a wedge device asking conservative Republicans to choose between party affiliation and philosophical fidelity. At the heart of this fallacious misrepresentation is an insidious civic assumption: all taxpayer money belongs to the government. Therefore, any failure to collect potential taxpayer assets is a “cost.” The government owns all and allows individuals to keep assets after it has discovered the true priorities for money in the economy. This all coming from a government that also has the power and freely practices the printing of money for its own ends beyond those found in the assets of the taxpayer. None of this prevents the commentary class from falsely intoning that the tax cut will cost the government.

Beyond the faulty assumption of who owns the money behind taxes, is the flawed analysis of what tax cuts do. Inevitably, the cost argument rests upon the expectation that tax cuts reduce revenue to the government every year they remain in effect. That makes sense since the rate of extraction from taxpayers is reduced by a percentage. However, tax cuts are not a theory. Tax cuts are a plain and clear empirical reality that we can observe. There are at least three important examples of tax cuts in U.S. fiscal history: the Kennedy tax cuts of the early 1960s, the Reagan tax cuts of the early 1980s and the Bush tax cuts of the early 21st century. What do those tax cuts demonstrate with regard to costs?

JFK as a democrat promised to cut taxes in the 1960 campaign for the Presidency. He got his wish with his election. Here are the facts on government revenue in millions of dollars for 1961-1963:

1961 - $94,388

1962 - $99,676

1963 - $106,560

The JFK tax cuts provide no empirical support for the contention that tax cuts reduce revenue or constitute a cost to the government or the public as a whole. Government revenues increased by more than 5 billion dollars each year which was a 5% increase in revenue each year. There is no observable decline in government revenues during the entire decade of the 1960s.

Reagan promised tax cuts in the 1980s and with his victory, cuts were implemented by 1982. The data for 1982-1987 gives us a fiscal picture for revenue into the federal government:

1982 - $617,766

1983 - $600,562

1984 - $666,438

1985 - $734,037

1986 - $769,155

1987 - $854,287

1988 - $909,238

Here the case for cost has some founding. Between 1982 and 1983, revenues declined by 17 billion dollars. That is a 2.8% decline in government revenue. In 1984, revenues surged well above 1982 levels. They increased by 11% and 66 billion dollars more than three times larger than the 1983 loss. The revenues to the USFG continued to move in a profoundly beneficial direction: 10% growth in 1985, 4.8% in 1986, 11% again in 1987, and finally 6% in 1988. Government revenues grew by more than 50% between 1983 and 1988. It was a staggering benefit to the coffers of the federal government.

George W. Bush promised to return government surpluses to taxpayers in the form of tax cuts in election 2000. By 2002, his tax cuts were law. The results are also clear:

2002 - $1,853,136

2003 - $1,782,314

2004 - $1,880,114

2005 - $2,153,611

2006 - $2,406,869

2007 - $2,567,985

Here again, we some indication of a cost in the first year of the tax cut. Government revenues declined by 5% in 2003. But again, the increase is 6% in 2004 and surpassing the revenues of 2002. There is a 14% increase in revenue in 2005. There is a 12% increase in revenue in 2006 followed by a 7% revenue increase in 2007. This is a 39% increase in government revenues over 5 years.

The data is clear and the debate can only be about the choices the Congress makes in spending taxpayer money -- not in how it is raised in relation to tax cuts. The fact that Congress spends so recklessly is a fact understood by most voters but used to form the basis of faulty assumptions by the commentary class directing readers to the risk of “deficits” caused by tax cuts. In every case, one-year shortfalls are immediately erased and surpassed by revenues in the next year. In fact, it is rather extraordinary how much additional revenue has poured into government coffers since 1960.

The neo-Marxist assumption of the commentary class rarely focus their critical lenses on the world’s truly largest corporation: the United States Federal Government. Why should revenues not grow when the public is able to breathe the sigh of relief that this 4-trillion-dollar annually spending monstrosity might have encountered the fiscal limits symbolized by tax cuts? It is not surprising that private sector and consumer spending confidence rises in response. Tax cut legislation is rarely perfect and often inclusive of undue political favors. Nonetheless, constraints on the consumption habits of the largest corporation in the world leaves its involuntary contributors with a greater degree of freedom and liberty. The commentary class indicts any reduction in tax gathering power while ignoring spending abuses outside the Defense budget -- probably the clearest Constitutional obligation of the Federal government. Take for example TARP 2008. The Temporary Asset Relief Program was ostensibly temporary. Because of a banking emergency -- the Federal Government would temporarily provide roughly 3/4 of a trillion dollars to banks and GSEs. The spending was well more than 15% of all government spending. Did the spending budget of the USFG drop a corresponding 10-20% once the crisis passed? No. Does the commentary class think this is wrong? No. This rhetorical abuse has allowed the USFG to abound as “no good crisis goes to waste” in the words of former Chief of Staff Rahm Emmanuel. Whatever the flaws of the current tax cut legislation, a reduction in revenue gathering power of the USFG is a step toward economic freedom that will reduce poverty here at home and abroad.

Dr. Ben Voth is an associate professor of Corporate Communication and Public Affairs and Director of Debate at Southern Methodist University. He is an advisor to the George W. Bush Institute and the Calvin Coolidge Debate fellow. He examines our current political struggles in a book with Dr. Robert Denton titled Social Fragmentation and the Decline of American Democracy [Palgrave Macmillan-2017].

One of the important drivers of political dysfunction in America is the dishonest framing of debates Americans need to observe. Among the many controversies misrepresented by the commentary class is the tax cut debate. At the heart of the misrepresentation is the “cost” of the tax cut. Tax cuts do not cost money and empirically, they are almost certain to increase revenue to the United States Federal government.

In the current debate, we are told as we have been told by the commentary class since at least the 1980s, that the tax cut will be costly. It will “cost” more than a trillion dollars. It will blow a hole in the deficit. This rhetoric fills newspaper articles designed to attack the tax cut as illegitimate and a plain political contradiction to the conservative conventions of balanced budgets and fiscal responsibility. This turns the tax cut into a wedge device asking conservative Republicans to choose between party affiliation and philosophical fidelity. At the heart of this fallacious misrepresentation is an insidious civic assumption: all taxpayer money belongs to the government. Therefore, any failure to collect potential taxpayer assets is a “cost.” The government owns all and allows individuals to keep assets after it has discovered the true priorities for money in the economy. This all coming from a government that also has the power and freely practices the printing of money for its own ends beyond those found in the assets of the taxpayer. None of this prevents the commentary class from falsely intoning that the tax cut will cost the government.

Beyond the faulty assumption of who owns the money behind taxes, is the flawed analysis of what tax cuts do. Inevitably, the cost argument rests upon the expectation that tax cuts reduce revenue to the government every year they remain in effect. That makes sense since the rate of extraction from taxpayers is reduced by a percentage. However, tax cuts are not a theory. Tax cuts are a plain and clear empirical reality that we can observe. There are at least three important examples of tax cuts in U.S. fiscal history: the Kennedy tax cuts of the early 1960s, the Reagan tax cuts of the early 1980s and the Bush tax cuts of the early 21st century. What do those tax cuts demonstrate with regard to costs?

JFK as a democrat promised to cut taxes in the 1960 campaign for the Presidency. He got his wish with his election. Here are the facts on government revenue in millions of dollars for 1961-1963:

1961 - $94,388

1962 - $99,676

1963 - $106,560

The JFK tax cuts provide no empirical support for the contention that tax cuts reduce revenue or constitute a cost to the government or the public as a whole. Government revenues increased by more than 5 billion dollars each year which was a 5% increase in revenue each year. There is no observable decline in government revenues during the entire decade of the 1960s.

Reagan promised tax cuts in the 1980s and with his victory, cuts were implemented by 1982. The data for 1982-1987 gives us a fiscal picture for revenue into the federal government:

1982 - $617,766

1983 - $600,562

1984 - $666,438

1985 - $734,037

1986 - $769,155

1987 - $854,287

1988 - $909,238

Here the case for cost has some founding. Between 1982 and 1983, revenues declined by 17 billion dollars. That is a 2.8% decline in government revenue. In 1984, revenues surged well above 1982 levels. They increased by 11% and 66 billion dollars more than three times larger than the 1983 loss. The revenues to the USFG continued to move in a profoundly beneficial direction: 10% growth in 1985, 4.8% in 1986, 11% again in 1987, and finally 6% in 1988. Government revenues grew by more than 50% between 1983 and 1988. It was a staggering benefit to the coffers of the federal government.

George W. Bush promised to return government surpluses to taxpayers in the form of tax cuts in election 2000. By 2002, his tax cuts were law. The results are also clear:

2002 - $1,853,136

2003 - $1,782,314

2004 - $1,880,114

2005 - $2,153,611

2006 - $2,406,869

2007 - $2,567,985

Here again, we some indication of a cost in the first year of the tax cut. Government revenues declined by 5% in 2003. But again, the increase is 6% in 2004 and surpassing the revenues of 2002. There is a 14% increase in revenue in 2005. There is a 12% increase in revenue in 2006 followed by a 7% revenue increase in 2007. This is a 39% increase in government revenues over 5 years.

The data is clear and the debate can only be about the choices the Congress makes in spending taxpayer money -- not in how it is raised in relation to tax cuts. The fact that Congress spends so recklessly is a fact understood by most voters but used to form the basis of faulty assumptions by the commentary class directing readers to the risk of “deficits” caused by tax cuts. In every case, one-year shortfalls are immediately erased and surpassed by revenues in the next year. In fact, it is rather extraordinary how much additional revenue has poured into government coffers since 1960.

The neo-Marxist assumption of the commentary class rarely focus their critical lenses on the world’s truly largest corporation: the United States Federal Government. Why should revenues not grow when the public is able to breathe the sigh of relief that this 4-trillion-dollar annually spending monstrosity might have encountered the fiscal limits symbolized by tax cuts? It is not surprising that private sector and consumer spending confidence rises in response. Tax cut legislation is rarely perfect and often inclusive of undue political favors. Nonetheless, constraints on the consumption habits of the largest corporation in the world leaves its involuntary contributors with a greater degree of freedom and liberty. The commentary class indicts any reduction in tax gathering power while ignoring spending abuses outside the Defense budget -- probably the clearest Constitutional obligation of the Federal government. Take for example TARP 2008. The Temporary Asset Relief Program was ostensibly temporary. Because of a banking emergency -- the Federal Government would temporarily provide roughly 3/4 of a trillion dollars to banks and GSEs. The spending was well more than 15% of all government spending. Did the spending budget of the USFG drop a corresponding 10-20% once the crisis passed? No. Does the commentary class think this is wrong? No. This rhetorical abuse has allowed the USFG to abound as “no good crisis goes to waste” in the words of former Chief of Staff Rahm Emmanuel. Whatever the flaws of the current tax cut legislation, a reduction in revenue gathering power of the USFG is a step toward economic freedom that will reduce poverty here at home and abroad.

Dr. Ben Voth is an associate professor of Corporate Communication and Public Affairs and Director of Debate at Southern Methodist University. He is an advisor to the George W. Bush Institute and the Calvin Coolidge Debate fellow. He examines our current political struggles in a book with Dr. Robert Denton titled Social Fragmentation and the Decline of American Democracy [Palgrave Macmillan-2017].

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