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All Da King's Men

The Tax Fallacy

By Da King Published: April 12, 2011

I don't know a softer way to put this. When it comes to federal spending and revenue, left-wingers are shameless liars, or morons. The standard talking point from the left goes like this - the Bush tax cuts caused huge deficits, and are the major reason we have a $1.6 trillion deficit today.

In a word - Bull.

This is the easiest of all the phony talking points of the left to debunk. All you have to do is look at the government's actual spending and revenue numbers during the Bush years. It's right there in black and white for all to see. In fact, this phony talking point it SO easy to debunk that it is mystifying as to why the mainstream media hasn't set the record straight yet (okay, it's not THAT mystifying. As anyone paying attention knows, the mainstream media is in the pocket of the Democrats and not prone to airing inconvenient truths).

I'm going to compare year 2000 federal spending and revenue numbers to year 2007 spending and revenue numbers in order to eliminate the effects of the Great Recession from the equation. That's the only fair way to measure, because the recession has caused a serious drop in revenue to the government, something along the lines of $400-500 billion annually.

First, let's look at revenue.

In 2000, pre-Bush, the revenue of the federal government was $2.025 trillion dollars.

In 2007, after six years of Bush tax cuts, the revenue of the federal government was $2.568 trillion dollars.

This means that following the Bush tax cuts, the revenue to the federal government increased by $543 billion PER YEAR over six years, an increase of nearly 27%, much more than the rate of inflation. That's a big jump in revenue, yet the lefties want us to believe our deficit problem is due to a revenue shortage from the Bush tax cuts. Not hardly. Revenue went way up under Bush, prior to the recession.

Now, let's look at spending.

In 2000, pre-Bush, the federal government spent $1.789 trillion.

In 2007, the federal government spent $2.729 trillion.

In six short years, the federal government was spending a trillion dollars more every year than it was previously. That's a spending increase of over 52%. A huge jump. Way, way, way, way, way more than can be accounted for by inflation.

Yet the lefties would have us believe the Bush tax cuts is the problem. We should all be laughing at the stupidity of such a silly and easily refutable talking point.

The worse news is, the government's spend-a-palooza only just began under Bush. Following 2007, things got even crazier on the spending side. The federal budget for 2011 is expected to be over $3.8 trillion. That means we've added ANOTHER trillion per year in spending over the last four years, with most of that being done under President Obama. In a single decade, federal spending has gone up by $2 trillion PER YEAR. In light of this, anybody who thinks taxes are the problem should be checked for Alzheimers or something. A drug test would also be in order.

Yet liberals would have us believe the problem is revenue (taxes). In a normal world, those liberals would be laughed right out of the country. We'd be comparing their intellects unfavorably to Homer Simpson. But this is not a normal world. This is the world of politics, where some folks can be convinced that the ludicrous is reasonable. I call those folks liberals, for lack of a better word. I'd rather call them idiots, but, you know, I don't want to be overly cruel. Idiots are people too.

The inescapable truth is, FEDERAL SPENDING IS THE REASON WE HAVE A $1.6 TRILLION DEFICIT, along with the recession. There are no other reasons. It's the spending side that went way out of kilter, not revenue. My blogger pal the Reverend likes to repeat the intentionally misleading lefty talking point that federal revenue is at a 60-year low. He declines to mention that is due to the Great Recession, not the Bush tax rates. I've just shown that revenue increased following the Bush tax cuts.

Here's another interesting fact regarding revenue and taxation. Our left-feathered fiends keep harkening back to those good old days when the top tax rates were in the 70-90% range. Don't ask me what is good about confiscatory tax rates that high. I can't tell you. Sounds pretty horrid to me, but I believe in freedom and equality, unlike liberals.

Anyway, the following graph shows the percentage of tax revenue compared to the top marginal tax rates over time:

Notice that tax revenue remains relatively constant compared to GDP, regardless of the top marginal tax rates. This puts the lie to the left's "soak the rich" talking point. It doesn't work. When marginal tax rates were much higher than they are now, federal revenue still checked in at about 19% of GDP. In order for a tax increase to be effective, it can't only apply to the top 2%, as the liberals desire. Rich people can easily change their behavior in response to tax rate increases. The only way a tax increase can effectively raise more revenue is if it is broad-based, applying to most, if not all of the citizenry. Liberals miss the boat here too, by constantly arguing for increasing taxes only on the wealthy, arguing against taxing anyone else. As I said, that will not work. History instructs us.

The most effective way to raise federal revenue is not via minor tax rate manipulations anyway, even though you'd think it was if you listen to the endless left-right arguments over Clinton-era tax rates versus Bush-era tax rates. The most effective way to raise federal revenue is via something known as job creation. Implementing policies promoting job creation are the best thing we can do. What would be very bad is to implement huge tax increases now. That would be like throwing an overhand right into the face of an already staggering economy. That's only desireable if we're looking to score a knockout. I'd rather opt for economic revival.

We'll find out on wednesday what President Obama thinks. He's going to present his deficit reduction plan, because he wants to continue the illusion that he's leading this country. Obama's leadership style is this - he stands on the station platform until he sees which way the train is heading, then he runs after it, jumps on the train, and pretends to be the engineer.

Speaking of deficit reduction plans, the Congressional progressive caucus has released a sort of a plan, finally, though it's really more of an outline. I'm sure it took them almost an entire day to come up with it. I think we should call it the Tax The Hell Out Of Everything Plan, because it aims to drive federal revenue up to 22.3% of GDP, far above the 18-19% historical average. If that 3-4% difference sounds small, it isn't. Federal taxation has never reached 22.3% of GDP in all of American history, with the exception of WWII. In other words, the "progressives" want to "progress" us to the highest tax burden in American history. But they do it because they love us, or something. Thanks progressives, but please STOP loving me so much, before your love leaves me penniless.

If we can't call the progressive plan the Tax The Hell Out Of Everything Plan, maybe we could call it the Let's Destroy The Rest Of Our Jobs Plan. Either one works for me.

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