Thursday, July 21, 2011

Dissecting The Demagoguery About
'Tax Cuts For The Rich'

by Thomas Sowell - June 18th, 2011 - Investor's Business Daily

First Of Three Parts
Part Two
Part Three

At various time and places, particular individuals have argued that existing tax rates are so high that the government could collect more tax revenues if it lowered those tax rates, because the changed incentives would lead to more economic activity, resulting in more tax revenues out of rising incomes, even though the tax rate was lowered.

This is clearly a testable hypothesis that people might argue for or against on either empirical or analytical grounds. But that is seldom what happens.

Even when the particular tax-cut proposal is to cut tax rates in all income brackets, including reducing tax rates by a higher percentage in the lower-income brackets than in the upper-income brackets, such proposals have nevertheless often been characterized by their opponents as "tax cuts for the rich" because the total amount of money saved by someone in the upper-income brackets is often larger than the total amount of money saved by someone in the lower brackets.

Moreover, the reasons for proposing such tax cuts are verbally transformed from those of the advocates — namely, changing economic behavior in ways that generate more output, income and resulting higher tax revenues — to a very different theory attributed to the advocates by the opponents, namely "the trickle-down theory."

"Trickle down" is not an economic theory.

No such theory has been found in even the most voluminous and learned histories of economic theories, including J.A. Schumpeter's monumental 1,260-page "History of Economic Analysis." Yet this nonexistent theory has become the object of denunciations from the pages of the New York Times and the Washington Post to the political arena, and has been repeated as far away as India.

It is a classic example of arguing against a caricature instead of confronting the argument actually made.

This is a tactic employed by those who either know they are wrong or are too stupid to actually counter the arguments of those who they recognize are smarter than they will ever be. That is what is happening here. Keynesian's are stupid. Like most of the theories underpinning the socialist delusion they always fail when put into practice. Yet no matter how often these theories fail, those who propose them resort to killing their opponents rather than dealing with their own failure.

That is the reason that the last century is a repeated history of bloodbath after bloodbath in nation after nation of failed experiments touting socialism. Standard reaction of the socialist Utopians? "Socialism has never honestly been tried." In other words, no facts or history will ever get in the way of the socialists delusions. They remind me of the 'birthers'. At least 'birthers' are simply a fringe element of the Republican Party rather than the dominant ruling majority as the socialists are in the Democrat Party.


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