All this jabber

All this jabber about the Bush tax cuts begs a few questions. They are questions that should be obvious. Nobody seems to ask them, so maybe they aren’t. Or maybe people are embarrassed to ask them.

First, the debate is an old one. Should we cut taxes for this group? Should we not? Should we leave taxes as they are?  These days the President says he wants to keep the Bush cuts for those in the middle class. But, of course, he is on the hustings, headed for November.

What it all boils down to is that politicians and economists know that tax cuts encourage economic activity. They know it as well as they know the sun heats us. Otherwise, why do they offer to cut taxes whenever they want to perk up some part of the economy?



These days the President sees small business struggling. So last week he offered some tax cuts for them. When politicians see industrial areas rusting up, what do they do? They set up special zones. Where taxes are waived or lowered.

This is not brain surgery. Tax something, you get less of it. Reduce the taxes and you get more of it.

Raise the tax on gas and we drive less. Lower the tax on smokes and we smoke more.

So … if we know this …why do we ever raise taxes on folks?  Why do we ever raise taxes on businesses? Why do we set up special zones?  Why not make every nook and cranny of this country a low-tax zone? If we know lower taxes work, why don’t we let them work?

Think about it. If lower taxes stimulate business activity in a special zone, do we think they won’t work in another zone? They will work everywhere, of course. If lower taxes will encourage green companies to create jobs, why won’t lower taxes help all companies create jobs?

Can you imagine your doctor thinking the way our politicians think? “If we cut back on this medicine your health will be much better. So we will do it for a month and then ratchet you back up to the old amount.” 

That is what we do with taxes. In the life of a business it will pay taxes at various rates. The rate changes every few years. At the whim of the latest guys in power.

It’s a helluva way to run a railway, a business, a country.

Low taxes stimulate economic activity. I defy any politician or economist to challenge that statement. They won’t because they know it is right. When they want to stimulate economic activity they lower taxes. 

So what’s with the picking and choosing? Maybe we don’t want to stimulate economic activity among some of our people. Why else would we be so eager to stick them with higher taxes?  Why would we be so reluctant to lower taxes for them? (I am talking about higher earners here.) Especially when they are – in large part – the creaters of most of the new jobs in this country.

From Tom ... as in Morgan.                  

For more columns, for Tom’s radio shows and new TV show (and to write to Tom): tomasinmorgan.com.

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