Monday, August 13, 2007

Having some fun with arguing fiscal policy 
...if arguing fiscal policy can be fun, over at Megan McArdle's place.

My argument, in a nutshell:

I'd like to address the ridiculous practice of regarding deficit reduction as if it were the only applicable metric [when used to assess the efficacy of tax cuts - JVS]. That's absurd.

Tax cuts are a good thing in and of themselves. Granted, Government needs a base of revenue in order to maintain basic services and defense and security functions, so the tax rate needs to be somewhere above zero, obviously.

But even if the deficit reduction benefit through economic stimulation is zero, tax cuts have a beneficial effect on the people themselves.

I know it's hard for libs to wrap their brains around this concept, but here it is: All else being equal, a family that pays lower taxes is wealthier and has a higher standard of living than a family that pays higher taxes.

Another commenter, Stan, suggests I read Isaiah 3:15. Essentially, he's accusing me of "grinding the faces of the poor."

I replied that if I were planning on grinding the faces of the poor, reducing the 15% marginal tax rate to 10%, and paying for a lot of prescription drugs, would probably be a stupid way to do that. Further, from me:

For any given family that receives an income tax cut - which in 2001 was EVERY family that paid income taxes - that family experiences a net increase in revenue equal to the tax cut, dollar for dollar, PLUS interest earned on the money, AND/OR PLUS the value of any lifestyle improvements that money can finance.

This is before you factor in one iota of economic growth.

After that, any stimulatory effect on that money is gravy.

I know it's hard for liberals to wrap their brains around that concept, but I wouldn't think it ought to be very hard. The presumption ought to be in favor of the enterprising individual who earned the money in the first place.

The notion that maximizing revenue to the government ought to be the sole criteria for evaluating a tax cut is ridiculous. You also have to give the benefits to the wage earner and his or her family some weight. As in, above zero.

Yeah, it seems unseemly to quote myself in my own blog. But I like to have my own writings in one place, where I can easily search for them if I want them later, and to compare my beliefs in future years against where they are now.

So there.

Splash, out


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