The Democrats objection to President Trump’s tax plan is that it is ‘tax cuts for the rich.’ That is always their objection to any sort of tax break for Americans. Never mind that the rich pay most of the taxes, Democrats do not want to give them a break.
The graph below is from the Pew Research Center last year. It shows who is paying taxes in America:
Obviously it does not make a lot of sense to cut taxes for people making less than $50,000 a year–they don’t pay a lot of income taxes to begin with.
Yesterday Thomas Sowell, a senior fellow at the Hoover Institution, Stanford University, posted an article at Investor’s Business Daily about the Democrats’ cry of ‘tax cuts for the rich.’
Here are some highlights from the article:
One of the key arguments of those who oppose what they call “tax cuts for the rich” is that the Reagan administration tax cuts led to huge federal government deficits, contrary to “supply side economics” which said that lower tax rates would lead to higher tax revenues.
This reduces the whole issue to a question about facts — and the hard facts are available in many places, including a local public library or on the internet.
The hardest of these hard facts is that the revenues collected from federal income taxes during every year of the Reagan administration were higher than the revenues collected from federal income taxes during any year of any previous administration.
How can that be? Because tax rates and tax revenues are two different things. Tax rates and tax revenues can move in either the same direction or in opposite directions, depending on how the economy responds.
The article explains:
Before we turn to the question of “the rich,” let’s first understand the implications of higher income tax revenues after income tax rates were cut during the Reagan administration.
That should have put an end to the talk about how lower tax rates reduce government revenues and therefore tax cuts need to be “paid for” or else there will be rising deficits. There were in fact rising deficits in the 1980s, but that was due to spending that outran even the rising tax revenues.
Congress does the spending, and there is no amount of money that Congress cannot outspend.
As for “the rich,” higher-income taxpayers paid more — repeat, more tax revenues into the federal treasury under the lower tax rates than they had under the previous higher tax rates.
That happened not only during the Reagan administration, but also during the Coolidge administration and the Kennedy administration before Reagan, and under the G.W. Bush administration after Reagan. All these administrations cut tax rates and received higher tax revenues than before.
The article concludes:
As a source more congenial to some, a front-page story in The New York Times on July 9, 2006 — during the Bush 43 administration — reported, “An unexpectedly steep rise in tax revenues from corporations and the wealthy is driving down the projected budget deficit this year.” Expectations, of course, are in the eye of the beholder.
The problem is not the revenue–it’s the spending. Unfortunately, Congress has not yet heard the cries of the American people to stop overspending. It may take another election to cause them to listen.
