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Jewish World Review Feb. 22, 2001 / 29 Shevat, 5761

Thomas Sowell

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Taxing the living and the dead

http://www.jewishworldreview.com -- THE all-out attempt in the media to scare us away from tax cuts was epitomized by a Newsweek cover with the caption: "Bush's $1.6 trillion gamble." In other words, it is a gamble to let people keep their own money, but apparently it is safe to put that money in the hands of Washington politicians.

Newsweek's cover was turned into an editorial cartoon by creating a composite photo depicting President Bush with a come-on grin, offering packs of money. In reality, neither the President nor the Congress is giving anybody anything. They are trying to let people keep a little more of what they earned.

The latest political ploy is to say that we need to guard against reducing taxes, if the surplus that has been projected does not materialize in the years ahead. It sounds reasonable, if you don't stop and think about it -- and politicians are counting on our not stopping to think about it.

Democratic Congresswoman Ellen Tauscher of California is pushing the idea of a "trigger" mechanism that will stop tax cuts whenever there is not enough money coming in to cover government spending. Just what does that mean in practice? It means that the liberals can stop the tax cut, even after it has become law, just by spending so much money that there will no longer be a surplus.

Congresswomen Tauscher dresses this idea up as "fiscally conservative." But if a "trigger" mechanism is really a way to avoid deficits, then why was this wonderful idea never applied to increased spending? Why not have spending frozen whenever there is not enough money coming in to cover it? But the whole point of this ploy is not to stop spending, but to let it keep on growing, despite demands for tax cuts.

Among the other ploys used to try to prevent tax cuts is the claim that the Reagan tax cuts of the 1980s were the reason for the rising deficits of the 1980s. Let's confound the politicians once again by stopping to think about it. Let's even look at the facts.

The tax cuts of the 1980s cut the tax RATES. This did not reduce the tax REVENUE that came into Washington. More tax revenues were collected in every year of the two Reagan Administrations than had ever been collected in any year of any previous administration in history. Congress just spent all this money -- and more. That is why there was a deficit.

What the liberals loved to call "tax cuts for the rich" did not reduce the total taxes paid by people in upper income brackets. "The rich" paid more total taxes than before -- but they paid it out of rising incomes. That is what the liberals have never forgiven Reagan for -- that the economic boom he fostered meant that the rich were better off than before, even though they not only paid more money in taxes, they even paid a higher percentage of all the taxes than before.

If you don't hurt the rich, the left is not happy, even if your policies create a rising tide that lifts all boats. Ironically, among those now advocating redistribution through death taxes are rich people who inherited their wealth, instead of earning it. If rich heirs and heiresses like the Rockefellers feel guilty, surely they can afford to seek professional help for themselves, instead of inflicting counterproductive policies on the whole society.

Those who never earned their own money want the government to tax the life's savings left by people who did earn their own money, even though these earners already paid taxes on their incomes when they were alive. The big ploy in this argument against the repeal of death taxes is to put the burden of proof on those who earned the money to show why they should control what happens to it, rather than let politicians grab it when they die.

The argument runs like this: Although you earned this money, you could not have done it without "society." Therefore why should you have the sole say on what happens to it? The same question could be addressed to politicians: Since the individual and society are responsible for creating this wealth, why should politicians decide what to do with it? But the burden of proof is never put on those who want to confiscate some people's money and use it to buy other people's votes.

The wealth that exists today was not created by confiscations and redistributions. It was created by allowing people in all walks of life to control their own lives and their own money.

Let's stay with what has worked in the history of this country, not what has failed repeatedly in other countries around the world.

JWR contributor Thomas Sowell, a fellow at the Hoover Institution, is author of several books, including his latest, Basic Economics: A Citizen's Guide to the Economy.

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© 2001, Creators Syndicate