Republican Tax Plans are Misguided

Predictably, Republican candidates are showcasing tax plans offering goodies for everybody. When some spoilsport has the nerve to point out the worsening deficit that would result, the most common retort is that the tax cut will spur economic growth enough to overcome the higher deficit. Some day. Somehow.

Of course lower tax rates will spur growth so that the loss in tax revenue will be less than proportional to the cut in tax rates. But it is foolish to think that we’re ensconced on the far side of the Laffer curve, for those who know that phrase, which simply means that tax rates are so high that cuts will produce higher revenue.

What about the claim that a flat tax is fairer than the graduated rates we have now? Perhaps, but how does one judge the fairness of any tax? The usual answer is that taxes should be based on the taxpayer’s ability to pay. But that is a nebulous concept at best. It means that somehow we figure out how much income is necessary and how much is up for grabs by politicians  Do we need a cell phone, cable TV, air conditioning? Who’s to say?

At least a flat tax would treat everybody alike. Or would it? Under a flat tax, where everybody hands over the same percentage of their income, those who earn a lot pay more money than those who don’t. Why? Do the high earners consume more government services? Are high earners bad people who deserve punishment?

I concede that some tax schemes could be fairer than others. For example, much as I might like the idea of complete tax exemption for septuagenarian European-American males, I’ll grant that would be a bit unfair. But in the end no tax can be entirely fair because taxation is coercive activity: stealing if you like.

Don’t get me wrong: I like tax cuts, preferably across the board, but targeted cuts are fine with me too. But the focus on the tax code is misplaced. The root problem is the amounts of real goods and services that are consumed by politicians and bureaucrats. Whether they are financed by taxation or borrowing is a secondary issue.

Republicans should be drawing up lists of programs to reduce or eliminate. “Defense” spending should be at the top of the list. The list should be broad enough that everybody’s ox is gored. Who knows, this approach might actually gain some traction with the fed-up electorate.

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2 thoughts on “Republican Tax Plans are Misguided

  1. I think they should focus on rolling back the Obama tax hikes while shrinking the government until the budget balances, and the debt is paid down. That would be my approach.

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