HOME | POLITICS | SPORTS | LIFE | SCI/TECH | OPEDS | HELPFUL TIPS
|
Feb. 13, 2007 The results are in for the first four months of the U.S. Treasury's 2007 fiscal year and, in terms of revenue collections and the federal deficit, they show surprisingly strong financial performance. This, of course, will virtually guarantee that we will read or hear very little about it from the mainstream media. Total receipts to the Treasury were over $834 billion from October of last year through January, almost 10% above the total from the same period last year. In addition, the federal deficit for the period, which was over $98 billion last year was cut to just over $42 billion, a 57% decline. Still, the deficit for the full fiscal year is forecast at $240 billion. The longer term outlook is looking even more favorable. The Congressional Budget Office, in fact, is projecting a break even status by 2011 and an actual surplus for the 2012 year. Detractors claim that the future projections do not include enough provision for the ongoing war on terror or the cost of revamping the Alternative Minimum Tax, which was established to nail high income taxpayers but is increasingly impacting middle America in a very negative way. It should also be pointed out that former President Clinton's so-called surplus when he left office was also based upon projected revenues which also did not include these factors. The favorable budget results are even more noteworthy given that we are in the midst of a costly war and in the aftermath of the Katrina disaster in New Orleans. What should be relatively clear in this picture is that President Bush's tax cuts certainly have not had the deleterious impact predicted by opponents, either on the nation's economy or deficit status. Revenues to the Treasury continue to reach record levels, even when discounted for inflation. The details of the report indicate that, if Congress could enact a reasonable degree of fiscal control, we could see a surplus even sooner than what has been projected. Reasonable tax cuts do not lead to budget deficits. In fact, the evidence demonstrates that income tax cuts can actually help improve the budget status by helping to foster additional economic activity to be taxed. In the current environment, the low unemployment rates which have existed for an extended period of time means that more people are working and paying income taxes. In addition, businesses in general are thriving and are also paying their share of the federal tab. In addition to the increased revenue generated by higher levels of economic activity, another factor likely at play here is that there is a tendency for people and businesses to be more honest and straightforward about reporting income and expenses when tax rates are relatively lower. That's right, as Uncle Sam raises tax rates, there is a higher incentive, more to be gained, by avoiding taxes altogether--through legal or illegal means. Individuals and businesses are less likely to report all of their income when the government is taking more of it. The belief is that the level of cheating and use of tax shelters drops substantially with when the IRS demands less from us from the start. It certainly stands to reason that this is true: If the tax rate was zero, one would guess that nobody would be cheating while a rate of 75% would likely result in plenty of unreported income. Another criticism of the Bush tax cuts has been that they somehow have contributed to the disparity between "the rich" and "the poor," which somehow makes life more burdensome for "the poor". This theory, however, is quickly dispelled by the facts. There is little question that it is better to make more money than less money or to be more rich than poor; this, after all, is a big reason why parents want their kids to stay in school and perform as well as possible while they are there. Tax policy has little to do with being rich or poor, however. The income tax structure is theoretically designed to fund the government's necessary operations in as fair a way as possible. It does not exist as a means to redistribute wealth from one group of citizens to another (this is what so many people find difficult to comprehend). The truth is that the top 50% of wage earners in this country are paying virtually all (almost 97%) of the income tax tab, even after Bush's tax cuts. In fact, many poor workers actually receive income tax refunds from taxes they never paid in the first place. A child can see, therefore, that any income tax cut is going to "benefit" higher income workers (and higher tax payers) more than those at the lower end of the scale. This, however, and this is key, in no way means that lower or middle class workers are being harmed in any way. If I receive a 10% reduction of my income taxes, that is not less meaningful because Bill Gates receives a 10% reduction of his taxes, which amounts to more real dollars. Mr. Gates was paying much more to begin with and is only getting to keep more of the money he earned after all. My life does not get worse because of Mr. Gates' tax cut, despite the wailings of those who play the class warfare card. Many of us are manipulated, by politicians and the media, into believing that we are worse off in this instance; and many of us do indeed believe it, because we do not know any better--and, in the absence of knowledge, emotions are sure to take over. Not only do tax cuts not make anybody's life more miserable, as demonstrated by actual results, they do not take money away from the federal government and they, therefore, do not lead to cuts in social programs for the poor. The reality of the situation is that these cuts lead to higher revenues to the public coffers while providing liquidity to the economy to help keep it growing, even during otherwise difficult times. It is important to keep this in mind the next time politicians tell us why a tax increase is needed. We also need to ask why we hear so little of this good news from a media that is so intent on delivering "the truth". ------------ About the author: Ed Abraham is a concerned citizen living in flyover country, U.S.A., who happens to be truly disgusted by the loss of common sense in our society and is doing all he can to try to reinstall it. Email: eabra@myway.com Comment on this article here! ------------ All articles are EXCLUSIVE to Useless-Knowledge.com. Please link to this article rather than copying and pasting it onto your site (which would be unauthorized and illegal). |
||||||
|
|
|||||||
|
