Distorting the Tax Policy Debate

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George Orwell
warned us about the use of “meaningless words” in politics,
words that are endlessly repeated by sloganeering politicians until
they have no meaning at all. Meaningless words certainly were on
display during last week’s congressional debate over the latest
tax bill.

Over and over
again we heard trite, empty phrases like “tax cuts for the
wealthiest 2%,” “tax giveaways,” “tax earmarks,”
and “borrowing money to give to millionaires.” Time and
time again the same falsehoods were presented as fact, and reported
as such by a credulous media.

But all of
these clichés about taxes are based on the presumption that
government has a right to all of your income, and so government
“gives” you something when it allows you to keep a portion
of that income. To this mindset, tax cuts represent a “cost”
to government. After all, they argue, money that really ought to
go to the most noble of purposes – wealth redistribution via taxation – is
being kept by greedy people and corporations who just don’t
want to pay their fair share.

Far too many
Americans truly believe that tax cuts represent a government giveaway,
indistinguishable from an outright subsidy or entitlement payment.
To combat this mindset, we need to be clear with our language.

A subsidy,
properly understood, occurs when government takes tax dollars and
gives them to favored individuals, companies, or industries. A tax
cut, by contrast, simply means government takes less from an individual,
company, or industry. When government takes less from you, it has
not given you anything; it merely has harmed you less. This is the
critical distinction that has been lost in the endless, tired debate
about tax policy.

Of course the
bill passed last week did contain some actual spending, mostly in
the form of an extension of unemployment benefits for another 13
months. The total spending in the bill amounted to about $60 billion.
But the tax savings in the bill, meaning the amount of money that
will remain in the hands of taxpayers rather than being sent to
Washington, is approximately $850 billion. So while a clean tax
bill certainly would have been preferable, the tax relief it contains
is significant. It means $850 billion will be spent, saved, or invested
by American citizens rather than being sent into the black hole
known as the federal treasury.

The media,
however, dutifully reported that opposition to the bill came from
concerned members of Congress who felt the $850 billion “cost”
of the bill was too high, and would add too much to the deficit.
As always, they could not distinguish between government giving
and government taking away. The American people already pay plenty
in federal taxes; the deficit is the result of a spending problem,
not a revenue problem.

Had the bill
not passed, millions of Americans would have seen their paychecks
shrink in January due to increased tax withholding. That is the
plain and simple truth, and that is why I voted for the bill.

See
the Ron Paul File

December
21, 2010

Dr. Ron
Paul is a Republican member of Congress from Texas.

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