Ron Paul's Texas Straight Talk - A weekly Column

February 19, 2001

Tax Cuts Benefit All Americans

Last week, several prominent members of Congress held a press conference outside the Capitol to criticize President Bush's new tax proposal. The usual class warfare rhetoric was marshaled against the President, even though his plan proposes an exceedingly modest tax cut. The tired arguments against tax relief, even in the face of growing single-year tax surpluses, are not only wrong but also inherently deceitful. We've heard it all before: tax cuts favor the rich, who ought to pay more so the government can save us with wonderful federal programs. This emotionalist approach should have zero credibility with an informed public, particularly in light of decades of evidence that the economic benefits of lower taxes help far more Americans than any government "benevolence."
Beyond the deceit, however, is the unmistakable Washington mentality so clearly exhibited by the assembled politicians. One Member told the audience with a straight face that the Bush proposal needed further study to "see who gets what." In the surreal world of Congress, your income presumptively belongs to the government, which decides what members of society deserve federal largesse. Any income you get to keep is generously "given" to you by the federal government. Tax cut proposals are studied to determine the "cost" to government, and opposition is rallied with the cry "we can't afford it." Perversely, this mentality is touted by politicians who claim that tax cuts are fiscally irresponsible. They endlessly repeat the lie that Reagan-era tax cuts caused deficits, when in truth it was the inability of Congress to control spending which ballooned our national debt. In fact, 1980s tax cuts increased federal revenues, because economic output expands when government takes less. To hear big spending, pro-tax politicians claim they represent fiscal responsibility strains the limits of believability.
The factual rebuttals to the pro-tax argument seem to receive little play in the popular media. The class baiters are wrong when they claim our tax laws favor wealthy Americans. Nothing could be farther from the truth, as high-income taxpayers pay the vast majority of taxes collected in this country. In fact, Americans making over $100,000 annually represent only 6.6% of the population, yet they pay more than 55% of all income taxes! Americans making less than $50,000 annually, who make up 75% of the population, pay only 17% of all income taxes. These figures cannot be challenged by the pro-tax politicians, as they come directly from IRS reports. Our progressive tax rate structure insures that more affluent Americans pay a disproportionate amount of income taxes, yet politicians and the media continue to get way with insinuations that the sinister rich somehow don't pay their fair share.
Also, the class argument that average Americans do not benefit from tax cuts cannot be supported by facts. The Bush proposal, though far too modest in my view, is very straightforward. A key feature of the plan simplifies and lowers all marginal rates. Every taxpayer, regardless of income, will pay taxes at a lower rate than before under the plan. An American with a modest income might save $1,000 on his yearly tax bill, which could mean more to him than a million dollars would to a very wealthy taxpayer. This benefit is ignored in Washington and in the popular press. The focus, as always, is on overhyped disparities in wealth. The assumption is that government, rather than individual achievement in the marketplace, should determine who becomes wealthy.
With more Americans involved in the stock market, however, the politics of envy may fail to attract the average voter. Collectivist politicians forget that the American dream of becoming wealthy is alive and well. They seek to encourage resentment of the wealthy, when in truth most Americans admire successful people. They forget that upward mobility, the chance to start from humble beginnings and achieve wealth and position, is virtually impossible in high-tax socialist societies. Most of all, however, the pro-tax politicians forget that your money belongs to you. As a society, we should not forget their dishonesty when we go to the polls.