State of the Union: The Brief, But Powerful, Case for the Tax Cuts

The President's State of the Union speech, substantively, was fairly typical. "We need to balance the budget in the next five years" is something we have heard for six years and this time Bush can blame others if (when) it doesn't happen since he will be long out of office.

I will say that I am glad that he doesn't see tax increases as part of the solution to the deficit problem. One thing the President did articulate, but was largely ignored by the "talking head" news pundits, was that the deficit has been decreasing rapidly over the last few years. This without a tax increase? The economic growth driven by the tax cut has created more taxable activity, leading to a reduced deficit. Why would Democrats increase tax rates, which would likely reduce business tax activity, and thus reduce revenues? It is the politics of greed. They would rather crush economic growth, even if it hurts revenues and jobs, as long as it also hurts the very wealthy. It simply doesn't make sense. There is a quote, attributed to Abraham Lincoln, which was "you can't help America's poor by making America poor." This statement should be on the walls of both Houses of Congress.

The Democrats claim they have no problem with tax cuts, they just want them geared towards the middle or lower classes. These tax cuts are called "demand side" cuts, which leads to people buying a new stereo or TV. The President's tax cuts, on the other hand, are geared towards "supply" and lead to great economic formation, job creation, increased business activity, and (eventually) higher tax revenues, which we are seeing is true in the Bush cuts. I hope Americans are not fooled by the rhetoric. The Democrats tax approach will hurt more poor than help, destroy more jobs than create, and hurt revenue rather than generate.

If people are having a hard time understanding how cutting taxes increases revenue, just think of Wal Mart. Wal Mart has among the lowest price points for any retail company in the world, yet it is also the most profitable store of its kind. The lower cost per item, leads to more items sold, and then higher revenue. The same is the case for tax cuts. Such policies reduce the cost of business, leads to higher production, lowers prices, more items purchased, and higher revenue. Tax cuts work, let's keep them working for America.