The big news this campaign season has been the debate between the candidates over what to do with the Federal budget surplus. Depending on how you massage the numbers, the surplus of tax revenues over government expenditures is forecast to be in the trillions of dollars over the next decade, and such a tremendous amount of money has Congress and the Executive branch salivating.
What’s particularly interesting is that having a surplus is proving to be more difficult than having a deficit, and a profound debate has broken out among politicians over what is the best use of surplus funds. The gist of the dilemma is centered on a philosophical issue: whether one believes that the government knows how to spend taxpayer’s money better than the taxpayers.
Throughout history, government has shown an uncanny tendency to grow larger, and tax revenues have consistently been the fuel that has fostered that growth. Today, marginal tax rates are at an all-time high, and have even surpassed the ranges recommended by John Maynard Keynes, who believed that personal income taxes should never be greater than 25%.
Indeed, given the situation now, when tax revenues are so much greater than government expenditures, it seems clear that the only fair and reasonable thing to do is return the money to the people who worked so hard for it – by cutting taxes.
Proponents of statist government try to muddy the waters by saying ridiculous things like “tax cuts only benefit the rich”, but thankfully, many people understand that this is simply not the case. The fact is, tax cuts benefit anyone who pays taxes.
How does one define “rich”? Do you ever wonder why these big government boys don’t ever describe exactly whom they’re talking about?
To many people, saying “the rich” or “the top ten percent of income earners” evokes images of posh aristocrats drinking champagne on the bows of their yachts. But are those the only people who will benefit from tax cuts? The simple answer to that question is “no”.
The fact is, people who have yachts normally have expensive tax attorneys and accountants. The fact also is that the largest benefactors of tax cuts are not the superwealthy, but working, middle-class families. Indeed, most people would be shocked to realize that an income in the top ten-percent is equal to $72,000 per household (If you’re talking about a two-income family, that means two spouses each making $36,000 a year!) Do advocates of big government really believe that the American economy would be in better shape if a household at that income level was saddled with even higher taxes?
There’s no question about it, surplus revenues in the government coffers will surely be spent. But a cut in marginal tax rates, effectively placing money back in the hands of the people who deserve it, could be the fiscal elixir that sustains America’s economic expansion well into the 21st century. Let’s hope that all this debate over the big government surplus ends up in a sound decision to cut taxes.
