Saturday, July 2, 2011

Cut Taxes, Raise Revenues

Oblivious as they are to the immorality and danger of saddling future generations with our excesses, Democrats aren't really interested in eliminating the deficit or reducing our debt burden. When feeling political pressure to address the problem, the solution proposed is invariably "revenue increases". In the language of President Obama and Democrats, "revenue increases" means tax hikes.
As Thomas Sowell so clearly explains in his book "Basic Economics", tax increases and revenue increases are two separate, though not necessarily unrelated, issues. This was nicely illustrated by the following factoid which appeared in a recent WSJ editorial (6/30).

After the Bush investment tax cuts of 2003, tax revenues were $786 billion higher in 2007 ($2.568 trillion) than they were in 2003 ($1.782 trillion), the biggest four-year increase in U.S. history.

(My emphasis).

Revenue began falling after 2007 as Government interference in the housing market crashed the economy. The deficit, (which was actually decreasing from 2004 to 2007), was caused by spending increases which accelerated under Bush (and the Democratic Congress) and went ballistic under Obama.

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