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Plenty of myths on both sides of the taxing aisle

December 24, 2010|By TIM ROWLAND

They tell me that we're all going to get a tax cut for Christmas -- which is fine, I suppose. 

If it goes the way of other tax cuts, we'll get an extra $6 per pay period — and then no one will be able to figure out why this didn't spur an economic recovery.

It's a fact that for all the talk about tax cuts, we never seem to notice when we get them. In his first two years, Obama cut taxes, but polls show that a full third of the nation believes that he actually raised them.

The debate over taxes is fun to watch, but it probably overstates the impact to one side or the other.

For example, there's one good argument to be made for extending tax cuts to the wealthy. And the same good argument can be applied to the middle class or anyone else, for that matter. That argument centers on private property, and is one of the founding tenets of this nation.

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It is assumed that the people should be allowed by government to hold on to as much of their property, in this case cash, as is feasible. 

In America, I believe that this line of feasibility is frequently bent, but seldom broken.

The government takes money from the people to pay for stuff that isn't absolutely essential —parklands, for example. But we don't suffer from the wholesale government cash grabs that citizens of European nations frequently contend with.

I remember a conversation with a bed-and-breakfast owner in Nova Scotia who was mildly fussing the government for taking nearly half of her earnings.

I asked why people stood for that kind of robbery.

Because Canadians are polite, she said. They don't like (French-Canadians excepted, I assume) to make waves and so the government walks all over them.

Ever since then, I've always given our own no-tax crowd and their, shall we say, zeal, a bit of a pass. I realize that I have benefited from their passion. But I do believe there are plenty of myths on both sides of the taxing aisle, such as:

Tax the rich because they can afford it. There was never a worse reason for taxation policy than this one. Tapping into a surplus just because it exists is akin to the idea that the wealthy should somehow be punished for their affluence.

Yes, opulence can be obnoxious — it is with reason that old money holds its nose at the nouveau riche -- but we must bite out tongues. Taxes must be fair, not punitive.

Tax cuts create jobs. If that were the case, we wouldn't have an unemployment problem right now because these "Bush-era" tax cuts that we're talking about have been in effect for close to a decade. By now, shouldn't they be creating jobs out the gazots?

If tax cuts create anything, they create greed. 

Tax cuts will boost small business. Ask any nonpartisan small-business person at the moment on this particular subject, and here's the answer you'll get: Yes, business is hurting. But they don't need tax cuts, they need customers. 

Matter of fact, they would love to pay a lot of tax because if they did, that would mean they have a lot of revenue. Unfortunately, at the moment, they have neither.

Tax cuts for the wealthy increase the deficit. True, but tax cuts for the middle class increase it more. The plain fact is that no one in government who supported these tax cuts in any form can be considered to be serious about deficit reduction.

What was the big message of the 2010 election supposed to be? Stop mortgaging our future by running up these big deficits.

So what happens. We extend a big tax cut, which can only be achieved by a "compromise" that enables us to spend a lot more.

Glad the politicians were listening.

Tax cuts stimulate the economy. No, financial prudence stimulates the economy. If you slice away a major chunk of revenue while, at the same time, starting two wars and passing a massive new prescription drug entitlement -- see 2006-2010.

What does all this mean? Surprisingly little and surprisingly much. Taxes are like any other issue, no more, no less. We ignore tax policy at our peril, but when we begin to think that tax cuts alone can create prosperity, cure cancer and facilitate world peace — well, when we begin to think that, it means we have stopped thinking.

Tim Rowland is a Herald-Mail columnist. He can be reached at 301-733-5131, ext. 6997, or by e-mail at timr@herald-mail.com. Tune in to the Rowland Rant video on antpod.com or on Antietam Cable's WCL-TV Channel 30 at 6:30 p.m. New episodes are released every Wednesday.

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