Each of the front-running Democratic candidates has promised to raise taxes, to remedy the “disastrous” tax cuts that President Bush put into place. What I’ve somehow missed from them, though, is any explanation about why the tax cuts are so disastrous. I’m not saying the Dems don’t have an explanation. I’m just saying I haven’t heard it.
There are a couple of things that I am aware of, though, and they seem to indicate that, in terms of both your and my economics and the government’s economics, the tax cuts have been a good thing:
First, the economy continues to do well, despite wars and oil prices. This is probably because people have more money to work with, to invest with, to buy with, and to feel secure about. Second, almost certainly because people are allowed to hold onto their money to make money, there’s more tax money available for the government. The unsurprising byproduct is that tax revenues have been increasing. (Although the NY Times, which resolutely refuses to believe that people, not government, make money, keeps expressing surprise that lower taxes actually result in higher government revenues, as you’ll see here and here in its annual articles about the revenue increases.) And third, with increased revenues you get regular news reports that the budget deficit is shrinking, with 2007 marking the third year in a row that it’s done so (a benefit unfortunately offset by a spendthrift Congress and White House, both of which are working hard to increase the national debt).
So, to me, it looks as if the tax cut resulted in more, not less, money for the government. And if that’s true, the Democratic promise to increase taxes the moment they get into office should inevitably decrease the money supply. While it’s true that, in the short term, only you and I will have less money and the government will have more (that is, it will now have more of my money), as time goes by, and people whose money is being hijacked by the government stop being productive, the government will end up having less money too. That sounds like a bad deal all around.
If I’m wrong, please explain this to me. Absent a convincing coherent explanation, I’ve got to believe a pattern showing that lower taxes result in higher government funding, while higher taxes, within a year or two, result in lower government funding.