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April 14, 2008
Democrats Admit Tax Cuts Work
proposed, and Congress quickly passed, an economic stimulus package in
the form of tax “rebates” that could total $150 billion dollars back in
the pockets of most Americans.
The president and
Congress agreed that as much as $600 would be returned to individual
Americans, or $1,200 per couple, and even more to households with
children. The reason given for the rebates is that it will give the
economy a needed shot in the arm and likely avoid or lessen a recession.
Does any of this sound vaguely familiar? The president’s proposal should
forever end the debate whether or not more money in the hands of
taxpayers stimulates the economy.
Republicans have long
maintained that when people pay less in taxes and have more of their own
money to spend, they will do just that, as evidenced by the Reagan tax
cuts reversing the disastrous Carter years. The additional spending
stimulates the economy as demand for goods and services increase. More
people are employed, and they pay taxes that fill the treasury’s
But the Democrats have
for decades argued the opposite. So why are they suddenly embracing the
idea of more money in taxpayers’ pockets now? Are they admitting that
lowering taxes work every time it’s tried, or are they demonstrating
that they have no core principles? Which one is it?
In case you’re keeping
score, someone whose adjusted gross income exceeds $75,000 gets nothing.
But someone who earns at least $3,000 and doesn’t pay income taxes gets
$300 of your tax dollars to spend as he or she pleases.
The Democrats maintain
that lower-income people who do not pay income taxes should receive a
rebate because they are the group most likely to spend the rebates, thus
achieving the intended goal of stimulating the economy. Well no kidding.
I guess their theory is based on the outrageous FEMA debit card giveaway
program for Katrina victims who promptly used them to buy everything
from alcohol to breast implants. Spending someone else’s money is always
Democrats contend that
any rebates “rich” people receive would be deposited into their bulging
bank accounts and forgotten. They think the wealthy should pay a
disproportionate amount of taxes, also known as redistribution of
income, simply because they are successful and they “should give
The Democrats also
argue that these “working poor” may not pay income taxes, but do pay
payroll taxes, and thus should be entitled to a rebate. Well, the last
time I checked, I pay FICA and Medicare taxes too, but I don’t qualify
for a rebate because I earn too much money. However, I do see their
Payroll tax money is
co-mingled with income taxes in the treasury’s general fund and is used
to pay for everything, not just Social Security and Medicare. Contrary
to what Al Gore claimed in 2000, there is no “lockbox” for Social
Security or Medicare tax money that is waiting to be disbursed when you
reach retirement age. It’s all thrown in the mix with income tax
revenues. Because the amount of money you pay for these programs is
based on a fixed percentage of your income, it is just a clever way of
raising your overall income tax rate whenever you get a raise; don’t let
anybody tell you otherwise. And Barack Obama says as president he’ll
remove the cap you pay on FICA taxes.
Why not just lower
everyone’s FICA and Medicare tax rates by say, half? Keep it that way
for a few months to see what good it’s doing. This way everyone would
immediately benefit from the lower taxes, and the economy would start
turning around sooner. It would also save all the administrative costs
involving cutting checks and mailing them to millions of households.
Democrats see rebates as an election year opportunity to buy votes with
your tax money. It will be interesting to see how long it will be before
they revert back to their tired mantra of raising taxes to pay for their
out-of-control earmark spending.
Gregory D. Lee
writes for North Star Writers Group. He can be reached through his
© 2008 North Star
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