And it’s Nick in a knockout. As always, though, phrases like this seem jarring, and oxymoronic:
What I showed in the post is that in fact federal revenue increased nicely under Bush, despite the tax cuts. Revenues tailed off at the end of his reign of error, because of the recession and the financial crisis (caused largely by idiotic government policies).
How can federal revenue increase when we cut taxes? The answer is that we didn’t cut taxes. We increased taxes. What we cut was the tax rate. This misleading phraseology makes me crazy and if we could get it right, we’d have a strong rhetorical upper hand, but both conservatives and libertarians almost always feed the left with it. As I wrote a while ago:
Both sides of the aisle continually make the mistake — though it’s no mistake on the part of the Democrats — of confusing a tax rate cut with an actual tax cut. Here is a commonsense, as opposed to the Alice-in-wonderland, definition of a real tax cut. It is a reduction in the amount of taxes paid. Conversely, a tax increase is an increase in the amount of taxes paid to — and revenue received by — the government.
That’s it. Almost too simple, isn’t it?
When a politician says that he’s going to either cut or increase your taxes, he is engaging, wittingly or not, in a conceit and a deceit. He says it as though he has the power to do any such thing, when in fact he does not. He has no power except to reduce or increase the rate at which you pay taxes, whether on property, income, or whatever.
Think of it as the difference between a joystick and a mouse. With a computer mouse, you can point directly to the place that you want to be on a screen. With a joystick, you can only control the rate at which you move toward it, and in so doing, the target may move, and it may move faster or in a different direction than you can keep up with using your rate control. Politicians talk about tax cuts as though they have a computer mouse that allows them to pass a law and a specified amount of revenue will roll in, but the reality is that they have a slow joystick, with a nebulous relationship to the eventual goal.
For instance, he can raise your top income tax rate from, say, thirty to ninety percent. Did he increase your taxes by that amount? Only if you’re as stupid as he is. More likely, you’ll just cut back on how much you work, settle for the lower bracket, or do more work off the books, and he’ll end up getting less in taxes from you than before. So did he increase your taxes? Nope.
Similarly, he could cut your rate, and you might be motivated to go out and earn even more, perhaps enough more that you pay more taxes, even at the lower rate. So did he cut your taxes? No. But the wealth of the nation — including your own — was increased.
I also note in that piece the implicit assumption of the statists that all of your wealth belongs to them, and that you should be brimming with gratitude for whatever they allow you to keep, an assumption that some in the UK want to bring to its logical conclusion:
The UK’s tax collection agency is putting forth a proposal that all employers send employee paychecks to the government, after which the government would deduct what it deems as the appropriate tax and pay the employees by bank transfer.
But of course! Why hasn’t the IRS thought of that?
Anyway, the simple addition of the word “rate” as a modifier of “cuts” in Nick’s sentence renders it non-oxymoronic and sensible, and more care with phrases like this in general would reduce both confusion and obfuscation on this issue by the Chaits of the world.