It looks like we’re getting tax reform more than tax cuts. And there’s a difference.
The top income tax rate will remain 39 percent. An income tax cut would lower the marginal tax rate. President Ronald Reagan, even when faced with a Democratic House, got the top income rate down to 28 percent back in 1981. Today, with a tax-cutting Republican President and a totally Republican Congress, we can’t get it below 39 percent. And we can’t even get the Republicans to lower the top rates!
It’s true that the corporate tax rate, if the Trump-Republican bill passes, will go down to 20 percent from 35 percent. That’s significant, and it is a tax cut, even if it’s still too high and the corporate tax shouldn’t exist in the first place (and neither should the income tax). The purpose of these taxes is wealth redistribution, not revenue to raise money for the Constitutionally mandated limited federal government. If the federal government only did what the Constitution authorizes, we would not need all these taxes to finance it.
Senator Rand Paul (R-Kentucky), one of the only members of Congress to whom I will listen, summed it up best:
“If you don’t cut the top 1 percent, you don’t really have a significant tax cut,” Paul said. “What they’ve done is, they’ve bought into the class warfare on the individual side.” Those at “the top part of the spectrum” need tax relief “because the top part of the spectrum pays most of the taxes.”
“We have to understand that the owners of our businesses — the people we work for — are richer than us. They pay more taxes,” he said. “But if you lower their taxes, they will either buy stuff or hire more people. If you raise their taxes, it goes into the nonproductive economy, which is Washington, D.C., and it will be squandered.”
It’s not rocket science. It’s just the way it is. We keep expecting our vast American economy to churn out riches and grow like it used to; and yet we keep operating on the class warfare argument that tax rates must be higher for the rich.
You can’t have both wealth and income equality. If you don’t like the existence of rich people, then you have to get rid of the ability to make money. The more you impair the ability of people to make money, the less wealth there will be. The income tax should not be progressive, meaning higher for those who make more money. It should be a flat rate, the same for everybody whether they make $10,000 or $1 billion a year. The percentage of taxes people pay should be the same across the board, assuming we even have an income tax.
Much is made today of populism, both on the “left” and the “right”. The populist masses want economic expansion and riches. But they don’t want there to be so many rich people. You can’t have it both ways.
“So at the top, there’s not going to be much of a tax cut. There will be some. And in the middle, there’s going to be a little bit — there’s mostly going to be eliminating deductions. And at the bottom, the bottom already don’t pay much income tax and will continue not to pay much income tax,” Paul said.
The Trump tax cut, if it passes, will likely be a good thing, and we should strongly support it, particularly since it cuts the corporate tax rate. But we should only support it as we support any halfway measure. And the rights of people to keep the wealth they earn is a fundamental individual right.
Class warfare advocates might lose the battle on this particular tax bill. But they continue to win the overall war promoting the idea that people should be punished in proportion to their success. And they’ve gained ground since the Reagan years. Sadly, this tax bill proves my point.
If liberty, economic freedom and prosperity for the human race are to survive, we’ve got to defeat class warfare advocates on their own terms. The real battle is moral, more than economic.
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