Monday, March 12, 2007

Cut in Deficit Shows Tax Cuts Work

Newspapers around the country are reporting that there was a significant drop in the deficit for the first five months of the budget year. How significant? More than 25 percent than it was a year ago.

Was this due to a significant decline in spending? No, federal spending is at an all time high.

Was this due to a huge tax increase? Not yet, but we do know future tax cuts are going to the way side because the Democrats have pledged to not support new ones and abolish as many as they can of the ones on the books.

According to the White House and the Congressional Budget Office, the reduction in the deficit is due to a dramatic increase in revenue. The San Diego Union Tribune reports "for the first five months of the budget year, revenues are up by 9.3 percent to a record $954.4 billion." If not due to a new tax increase, what is the cause of this increase in revenue? The tax cuts passed earlier in this decade would be the single biggest contributor.

Tax cuts make it cheaper to participate in economic activity and makes the potential for profit worth the risk of lost income. This is, of course, tax cuts that are geared towards those who are paying the most in taxes, because they also are the creators of wealth. I have argued this point over and over again. The tax cuts work and we should demand Congress to remove more barriers to wealth creation in order to get more revenue, more jobs, and more prosperity. Remember what John F. Kennedy stated so eloquently: "A rising tide lifts all boats." The tide he was talking about was tax cuts that would have a profound ripple effect on the whole economy. He was right then and it is right now.

Labels: , , , , ,


Post a Comment

<< Home