Sunday, August 07, 2005

Tax Cuts

George Bush took a lot of heat in certain circles for cutting taxes during his first term. This is one of the few times I'll defend Bush. The tax cuts were a good idea because income taxes are a bad idea. Sound economics does not provide a disincentive to work, yet that is what income taxes do. The more productive a person is under current tax policy, the more as a percentage they must contribute to Uncle Sam.

My biggest problem with the tax cuts is twofold: they weren't large enough. I know, third biggest in history, but I'd rather one up The Gipper than play second-fiddle to JFK. Tax reform--like abolishing the IRS--would be great, but sometimes one has to be a realist. The other problem with the tax cuts is that they are not, as some conservatives might suggest, the cure-all for economic woes. I know Cheney believes that, "deficits don't matter", but I think they do. Cutting taxes is well and good, Mr. Bush, but cutting spending would be swell, too.

We are now five years into Bush's presidency and his tax cuts have had time to work. The verdict...according to Bush:

Bush was upbeat in his weekly radio address a day after the Labor Department reported the U.S. economy added 207,000 jobs last month, a stronger-than-expected gain.

"Recent economic reports show that our economy is growing faster than any other major industrialized nation," he said from his ranch in central Texas.

Well, I guess since China isn't "industrialized", we win. Exporting jobs has been a problem that is not receiving significant attention, but Greenspan is handling inflation and Bush has jobs being created.

Still, I doubt if tax cuts will get the credit. They never do. If high taxes were all it took to keep an economy running smoothly, we'd see a good example of an "industrialized" economy over in progressive Europe. Last I checked, Germany still has an unemployment of about ten percent.

A query then: if tax cuts are not the reason that the economy is doing well, what is? I realize that the status of a multi-trillion dollar economy cannot be reduced to depend soley on one variable, but surely, tax cuts are helping, no?

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