Liberals, tell me where I'm wrong?

The way to improve the economy is through tax cuts, not tax increases. Tax cuts work because it give employers of small businesses and even large, the ability to pay their employees a higher salary and create more jobs. If you begin to tax the so called "rich business owners" they will not take a cut in their own salary, but rather lay off workers or decrease wages. Also giving money back allows more opportunities for investment in the market and spending in general. Increasing taxes would discourage a person from starting their own business because the risks would greatly outweigh the potential rewards.

In addition to hurting the economy, redistributing wealth through taxes is simply un-American and anti-capitalism. What people like Hillary Clinton want to do is a direct play from the communist book in Soviet Russia.

2 Answers

  • meg
    Lv 7
    1 decade ago
    Favorite Answer

    I will leave others to argue about the amount services that the government should provide, but your argument that tax cuts in and of themselves are good for the economy do not make economic sense,. Tax cuts without spending cuts lead to government deficits so the government must either go to the financial markets for the money or create money causing inflation. Since you are conservative you understand the problem created by inflation but their are also problem created by government borrowing, If taxes are cut some of the money is spent on consumption and some is invested and added to the money that is available for activities that grow the economy. However the government borrows from this same pot of money so the net effect of a tax cut financed by a government deficit is to reduce the amount of money available for economic growth , not increase it, all else being equal.

    Because of this supporter of deficit financed tax cuts rely on arguments that the incentives provided by lower taxes will increase work effort and saving enough to overcome the negative effects of government deficits. All empirical evidence indicates that it does not, and fact the net US savings rates have declined to zero over the last 25 years.

    Small business owners must compete in a competitive labor and goods market and so can not cut wages or layoff workers to increase their own income, They hire the number of workers and pay the wages necessary to maximize their profits, and their income comes from profits. So again you must relay on the incentive argument that a businessman will not work as hard if he is highly taxed.

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  • NC
    Lv 7
    1 decade ago

    First of all, the way to improve the economy may not necessarily be through tax cuts. Taxes serve a useful purpose; they pay, among other things, for the legal system that enforces contracts and property rights. Imagine that taxes are cut to the point where no contract or property rights enforcement is possible. Would this still be a good environment for business? Not likely... In fact, such an environment would be eerily reminiscent of present-day Bangladesh or Myanmar.

    Taxes also pay for the public infrastructure, most notably, roads. Again, use your imagination and visualize taxes cut to the point where no road maintenance takes place. Would this be a good environment for business? Again, not likely...

    Further, assuming we agree that taxes need to be cut, there is still a question of which taxes to cut. Any tax cut benefits different groups of people to a different extent. Expanding the Earned Income Tax Credit would primarily benefit the poor, while raising the gift tax threshold would primarily benefit the wealthy. Similar collisions may occur along employer-employee, borrower-lender, or tenant-landlord lines...

    Now, on to discouraging people from starting their own businesses. The greatest discouragement actually is the absence of universal healthcare in the U.S. When you quit your job to start your own business, you lose valuable health coverage provided by your employer and have to make up for it somehow or just go without. Compared to a paid employee, a business owner is about twice as likely to have no health insurance at all and more than 50% as likely to be insured as someone else's dependent.

    As to "the communist book in Soviet Russia," the Bush administration uses it, too, especially when it comes to justifying generous handouts to the defense contractors... If you want to see something un-American and anti-capitalism, just take a look at all the wars that the U.S. has fought in the recent years. Recall that Thomas Jefferson suggested that the U.S. should have "peace, commerce and honest friendship with all nations; entangling alliances with none"...

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