The Democrats are howling mad about George Bush's proposal for an across the board tax cut. "Robin Hood In Reverse!" they cry. "Unfair to the poor" they scream. "Death to the intellectual bourgeoisie" they shout, because sometimes they forget where they are.
Considering the popularity of the "For Dummies" series, we thought we'd try that approach to educating those who think the proposed tax cut is unfair.
Chapter One: Robin Hood Wasn't Real.
The left adores Robin Hood so much they've become robbing hoods themselves. But their fantasy is faulty. Robin Hood stole from the rich and gave to the poor, except for the stuff he kept for administration, overhead, salaries for him and his merry men, mead, green felt uniforms, fact finding trips across Maid Marion, etc. The tax cut now being considered would let both the rich and the poor keep more of their own money. It would be as if Robin Hood took an extra day off every week, leaving everyone with a bit more in their purses.
Chapter Two: Basic Tax Math
In their ongoing struggle to keep class warfare alive and well, the Democrats insist this plan is wildly unfair because the wealthy will get to keep more money than the middle class, and the middle class will get to keep more than the poor. They are right about the difference in dollar amounts, but wrong about the unfairness.
In order to understand how the numbers work, let's simplify them by creating two hypothetical taxpayers.
Frederick Filthyrich has so much money he doesn't measure it in dollars and cents, but in buttloads. One buttload = more than you'll make in your entire lifetime. "I lost a buttload of money in the market last week," says Frederick, "but that's OK, because I made two buttloads the week before! Har har har." Frederick is not very witty. He is also homely and smokes very smelly cigars. He thinks he looks good dressed in green.
Like 70% of all U.S. millionaires, he earned his fortune himself by starting businesses and making them profitable. He has a gorgeous, 22 year old supermodel trophy wife with a perfect ass, huge breasts, and a Doctorate in Tantric Sex. She spends most of her free time in the back yard, playing on the trampoline next to the Olympic-sized pool. She's only in this scenario to increase your jealousy and make you hate Frederick even more.
Frederick has an office full of accountants and tax experts, and he still pays $500,000 a year in taxes.
Ed Budlite, who lives next door to Joe Sixpack, manages to get by. He works hard, plays hard, loves his wife and kids, and like most Americans, pays $10,000 a year in taxes to the federal government. Also like most Americans, he doesn't realize he's paying that much, because most of those taxes are hidden. But for the sake of simplicity we'll treat the entire amount as income tax.
Scenario #1: A ten percent tax cut is passed. This puts an extra $50,000 in Frederick's pocket, and an extra $1,000 in Eddy's.
Joanie Compassion-Monger, a lifelong Democrat who is thinking of registering as a Green next election, is appalled. Appalled! "90% of the benefit goes to 2% of the taxpayers," she fumes, eyes ablaze. "Frederick can use his windfall to buy another Lexus! Ed can only buy, like, a refrigerator. A nice one, with the automatic icemaker thingy and a cold water dispenser, but still, it's just a refrigerator! That's grossly unfair!" (Joanie ends most of her sentences with exclamation points.)
Joanie fails to mention that Frederick is still paying $450,000 a year in taxes. She never considers that if 2% of the taxpayers are paying 90% of the taxes in the first place, their tax cut is going to be bigger. Before the cut Frederick was paying fifty times more than Ed. After the cut he still pays fifty times more than Ed. But conjuring up pictures of luxury cars and referring to Ed as if he were a miserable loser lets Joanie and her fellow do-gooders enjoy a refreshing round of righteous indignation and moral outrage.
Scenario #2: In order to get the cut past the Democrats in congress, the bill is rewritten. Lower and middle class taxpayers will get a 10% cut, but the top 2% of income earners will only get 5%.
Joanie is appalled! "How can we justify giving the hard working middle class a measly $1,000 when the filthy rich get $25,000! The workers have to settle for a rowboat and the filthy rich get yachts!" (Joanne hasn't priced yachts lately. Or rowboats, for that matter.)
Scenario #3: The Democrats water down the bill, giving the rich a mere 2% and everyone else 15%.
Frederick still comes out ahead, saving $10,000 to Ed's $1,500. Joanie and her cronies continue to howl at the injustice.
Review: Any tax cut is going to give the most benefit to those who are paying the most taxes, if you're only considering the dollar amounts. Even if you give smaller cuts to those earning the most, they'll come out ahead. Remember this whenever you hear lefties complaining about tax cuts favoring the rich.
Chapter 3: Whose Money Is It, Anyway?
The left likes to talk about people being "given" a tax break, or "receiving" a benefit. In reality, everyone starts with their own money. Then the government grabs about 40% of it. If the government grabs less, no one is being "given" anything. No one is "receiving" anything. They are simply keeping a bit more of they earned.
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Painfully Obvious Publishing, Inc.
© 2001 Dave Hitt