One issue to be addressed in the upcoming “lame duck” Congress is whether the Bush-era tax cuts should be extended. Republicans say that the current tax rates should be extended because it makes no sense to raise taxes during a recession. The position of many, but not all, Democrats is that some of the tax cuts should be extended, but the tax cuts on Americans who earn the most income should expire — thereby increasing their taxes.
So much of the political discussion in Washington, D.C. is vacuous jousting about language! In this case, is the extension of tax rates that are about to expire a “tax cut,” or is allowing those rates to expire a “tax increase”? (I think most Americans would conclude, reasonably, that if tax rates should go from 35% on December 31, 2010 to 39% on January 1, 2011, a “tax increase” has occurred.) Even more exasperating are the arguments by President Obama and House Speaker Nancy Pelosi, among others, that if an across-the-board extension occurs, the federal government would have to “borrow” money to “pay” for “tax cuts” for those Americans who earn the most.
It is worth deconstructing such statements, because they reveal a lot about the attitude of many leading Democrats. In effect, they believe that the federal government is entitled to the money earned by every taxpayer. If the government decides to let us keep some of it we should be grateful, because the government has to “pay” for that generosity. In my view, this infuriating sense of entitlement is one reason that voters voted against so many Democratic candidates earlier this month. If the government believes that it has a right to every penny we earn, it will never learn to live within its means — and that is what voters want. If our government cannot get by on tax receipts that already exceed $2 trillion, the problem is spending, not taxes.