Tax Cut Non-Sequitur

I've always been an advocate of tax cuts. Reducing the amount of a bad thing, is a good thing. Leaving more of my income intact means I'll get to make more decisions about how to spend my money. And since few people know me better than I do, I'm more likely to be better off. Multiply this by many million people, and you've got the makings of a good idea.

Now that tax cuts seem to be more in vogue than in years past, one would think I'd be glad. I'm not. I'm no longer an advocate of tax cuts because in this day and age, THERE'S NO SUCH THING. Anytime someone mentions a tax cut, what they're really talking about is a forced loan.

The U.S. government has a very large deficit. That means it's spending more than it's collecting. That means it has to borrow from investors - both foreign and domestic. At some point this money will have to be repaid. That's the key fact. It means that any "tax cut" is really just Uncle Sam borrowing from Asia, to pay-off the electorate. Sooner or later he'll have to tax the electorate to repay those loans. It's like a delayed tax, with a much nicer name.

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I agree. Ideally, I'd just

I agree. Ideally, I'd just repudiate the debt. But until that becomes politically feasible, the next best alternative is to drastically cut back expenditure, sell off federal assets, and plow the savings into debt reduction.

Of course we could just have

Of course we could just have high inflation and pay back the money with cheaper dollars. Of course, that amounts to an implicit tax.

I suspect what we will see is a combination: high taxes and inflation--assuming we keep going on the same path.

I guess I don't agree that

I guess I don't agree that a tax cut means less money collected by the Government. Perhaps in my naive view, the tax cuts are a catalyst to the economy and create more jobs and will increase the overall tax base, therefore a smaller percentage on more taxable income works out in the end.

Americans who regularly

Americans who regularly travel to Europe or buy goods from there are already being taxed by the declining dollar.

Spoonie, I agree that from

Spoonie,
I agree that from the government's point of view, the "optimal" tax rate is somewhere between 0% an 100% - since either would net $0 after the first year. A lower rate does not necessarily mean less is collected.