Tax and spend

As the elected officials in Washington debate how they will solve the budget problems we are faced with two arguments. The Democrats say we must cut spending and raise the tax rates but the Republicans say cut spending and reform the tax laws. Obama wants to raise taxes on those making more than $200,000 and use that money to invest (spend) on education and infrastructure. This is what we used to call tax and spend. His theory is that by spending this money we will cause the economy to grow. We know that the so called shovel ready projects are not ready. It takes years to get environmental approval and planning can only start after these approvals. As far as spending on education this may keep some teachers from getting laid off but there are good reasons to doubt that spending more will improve education.

On the other side there is evidence that shows when you increase taxes on those who provide jobs you slow down the economy. I believe both sides concur that reforming the existing tax law can help. When large corporations pay zero tax it is not because the tax rate is too low it is because there are too many loopholes in the tax code. We could easily lower the corporation tax rate from the current 35% to 25% and eliminate the loopholes and end up with more revenue.

The question remains, is it better for the economy if the government spends our money or is it better if we spend our money. Remember that taxation is merely the transfer of money from one group of people to another group with the government deciding who gets what and from whom. If you are a cynic you see it as taking money from those who earn it and giving it to those who don’t. Most people realize that there are times in the lives of people that they need help and most are ready to give help but when it gets to the point of more people in the wagon than pulling the wagon then no one is helped. Currently there are 310 million people in the US and 40 million receive food stamps, 10 million get unemployment benefits, 58 million on Medicaid and 52 million on social security and if you do the math you see there are more in the wagon than pulling the wagon.

Wake up people!