Today's above-the-fold story in my local paper (the Attleboro Sun Chronicle) is entitled, "Selling the sales tax cut." Included in the article is the story of Robert Gaudette, owner of Bridal and Gift, a bridal shop on Route 1 in South Attleboro. Mr. Guadette points out that because the sales tax in Massachusetts is 6.25 percent, many brides-to-be come into his store, pick out their gowns, then go to Rhode Island to buy them (clothing is exempt from the sales tax in Rhode Island). The savings on a $15,000 dress is $937.00. This is an example of how taxes directly impact businesses. Not only is Mr. Gaudette losing business, the state loses the revenue from the sales tax because he has lost the sale (due to tax policy). Since Mr. Gaudette is losing sales to Rhode Island, he may not be able to hire another person for his business,--the volume of business does not warrant it. If you want to see businesses in Massachusetts grow, support the rollback of the Massachusetts sales tax. This may force layoffs in the public sector, but those job losses will be more than made up for by gains in the private sector. The question we need to ask ourselves is, "Do we want a smaller state government and a larger private sector or a smaller private sector and a larger state government?"
The Laffer Curve (see Heritage.org) is a graph that shows that when taxes are cut, economic activity increases, and revenues go up. Ryan Dwyer at the Washington Times posted an article in February of this year showing how the Bush tax cuts increased government revenue--they did not cause the deficit--increased spending caused the deficit.
Mr. Dwyer points out in his article:
"By 2003, Mr. Bush grasped this lesson. In that year, he cut the dividend and capital gains rates to 15 percent each, and the economy responded. In two years, stocks rose 20 percent. In three years, $15 trillion of new wealth was created. The U.S. economy added 8 million new jobs from mid-2003 to early 2007, and the median household increased its wealth by $20,000 in real terms."
He also explains:
"But the real jolt for tax-cutting opponents was that the 03 Bush tax cuts also generated a massive increase in federal tax receipts. From 2004 to 2007, federal tax revenues increased by $785 billion, the largest four-year increase in American history. According to the Treasury Department, individual and corporate income tax receipts were up 40 percent in the three years following the Bush tax cuts. And (bonus) the rich paid an even higher percentage of the total tax burden than they had at any time in at least the previous 40 years. This was news to the New York Times, whose astonished editorial board could only describe the gains as a "surprise windfall.""
Another thing to keep in mind is the Democrat talking point that we cannot afford to extend the Bush tax cuts. We can't "give tax cuts to the rich." Something needs to be explained (and shouted) here--we are not giving tax cuts to anyone--WE ARE SIMPLY NOT INCREASING ANYONE'S TAXES--IF WE EXTEND THE BUSH TAX CUTS WE ARE SIMPLY KEEPING TAX RATES WHERE THEY ARE--WE ARE NOT CUTTING ANYONE'S TAXES!!!!!
One of the reason the economy is not growing is that businesses are reluctant to hire in a climate of uncertainty. Because Congress has not yet passed a budget for next year, has not indicated whether it will extend the current tax rates, and really has not given businesses any idea of how their costs will change because of Obamacare, businesses are reluctant to spend the money to hire and train new employees. If you want to see the economy grow, leave the tax rates where they are, repeal Obamacare, and get the government out of the private sector.
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