Posted by: Rational Voice | August 26, 2010

The “Cost” of Tax Cuts

If you’ve been paying attention to the debate over the deficit and whether or not to extend the Bush tax cuts, you’ll likely hear about how these tax cuts are “costing” us money. Vice President Joe Biden said if they are extended for everyone it would cost $700 billion dollars. This is all wrong. Tax cuts have been shown to actually increase revenue because it allows people and companies to have more money to spend, save, hire, or invest which boosts the economy which will lead to increase corporate revenues and a larger tax base, thereby generating more government revenue. And if for some reason it does “cost” the government money, well tough. It’s not the government’s money. It never was. If it creates a budget shortfall, then maybe the government should cut their spending. It’s pretty simple: tax cuts don’t create deficits; rather, spending more than you have creates deficits. The Obama Administration created a commission to study the deficit problem and to find solutions to it. The solution is pretty obvious: cut the spending. If the average person is in debt, they cut their own spending so they can balance their checkbook. It’s no different for the Federal government. They may think we need to keep spending more and more to solve our problems so they can “stimulate” the economy but in reality the spending is the problem because it perpetuates these deficits which leads to Democrats saying we need to raise taxes to make up for them. Raising taxes will only strangle our already struggling economy but they just don’t seem to get it.

The bottom line is this: tax cuts don’t cost anything. That money is ours, not the government’s. If there is a deficit, there is no need to raise taxes. There is only a need to cut government spending.


  1. Also, like you said before, tax credits don’t do any good. Look at housing sales now that the FTHB program ended…they’re stagnat. Also, ditto for Cash For Clunkers. Only people planing on buying whatever featured good will benefit. If you’re planing on buying house you’ll do it then, but you aren’t going to go buy a house you weren’t planing on getting. Credits only create the false impression of a boost. Not real gains. That’s what this “summer of recovery” still has 9+% unemployment and higher still under-employment.

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