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Taxes and Hyperbole

There is a new tax code in the U.S., and this is indeed a “Yuuuge” deal. As far as I can tell, it is as close to an unmitigated home run for America as can be. Is it perfect? Of course, it’s not. The code retains its unwieldy size and complexity, largely as a result of compromises made in order to bribe congressmen and senators for their votes. Until we get term limits, it seems we’re stuck with a tax code that is big and complex. However, it does hit the mark on a few key issues: most every taxpayer will now pay less to the federal government (except those in states with ridiculously mismanaged economies who now will be forced to hold their state politicians more accountable); and our businesses, large and small alike, will remit less of their profits to the federal government and will be liberated to invest that savings into growth – which will surely create job and wage growth in the productive private sector.

As important as the changes to the code, has been the national discourse. The media, and the progressive ideologues who seemingly write their script, have been screaming from the rooftops how this bill favors the rich. The thing is, when pointing out these statistics they unwittingly make the exact opposite point. In 2014, the last year for which statistics are available today, the top 1% of American earners took home nearly 21% of all income but they paid nearly 40% of all taxes. In that same year, the top 50% of earners paid more than 97% of all taxes, while the bottom 50% paid less than 3%. It goes without saying, then, that when there is a tax bill that lowers taxes, that the benefits will accrue disproportionately to those who actually pay taxes. How can it be otherwise? So, a “fair” tax bill would have benefits shared in proportion to the liability, meaning that 97% of the breaks would go to the top half of earners, and some 40% of the breaks would go to the top 1%. The thing about tax law changes is that the benefits of having the government take less of the private sector’s funds will surely accrue well beyond those folks who get the first direct benefit of reduced tax bills, as the stimulus of heightened efficient deployment of that capital will be felt broadly.

Shrinking Government
In the end, tax policy is an extension of the philosophy upon which a society is organized. Our founding fathers, who fled the king’s overreaching taxation, understood that more taxes would always lead to growing government, which they feared and abhorred. Their vision was of a small government whose role was mostly to protect our borders. They knew how naturally inept government would be in matters of economy, finance, housing, education, and healthcare, and they understood very well the corrupting nature of the twin powers of taxation and incarceration. It is the rare and extraordinary moment when government cedes power, which is what a tax reduction means. The fact that each and every citizen doesn’t appreciate this is a reflection of how powerful the progressive distortion machine is, and how convoluted our collective consciousness has become as a result.

Jobs, not handouts
Further to the issue of philosophy, there are those, like me, who believe that gainful employment is essential for citizens, inasmuch as it furthers self-esteem and a sense of belonging to a society, and we advocate for a tax code that encourages this. On the opposite side (a side I admittedly cannot comprehend), there are those who believe that taking from producers and redistributing in handouts to non-producers somehow creates a functional society. These are the ones who are furious today, as their idea of fairness is being challenged.

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