We do not face just one problem, but our many problems tend to come down to one thing: trying to do too much through government.
Last weekend, at Townhall, I noted that the most wildly popular economic policy doctrine of the last hundred years, Keynesianism, has not — its proponents say — been properly given a chance during the two biggest financial contractions of our time, the Great Depression and the recent mortgage-backed securities implosion. In both cases, more money was needed for proper “stimulus.”
Ironic, perhaps, since Keynesianism has been used as an excuse to run deficits and increase debt for scores of years.
Yes, even a doctrine designed to play into the hands of politicians gets abused by politicians.
The lesson: Excuses to grow government are not revolutionary insights, they’re traps.
Yesterday I talked about how the “Laffer Curve” point where raising the tax rate actually reduces revenue is lower for capital gains than for general income. But one consequence of a revenue-maximizing capital gains rate is that there would then be rich investors who wind up paying a smaller percentage of their incomes in taxes than do common laborers.
Tax fairness is an issue that should not be ceded to those caught in the clichés of the age. Think of tax fairness, instead, as a rationale for a limit. Not as an excuse to raise tax rates punitively, hatefully, foolishly (like the current president wants).
Bring all tax rates down to the level of the tax with the lowest revenue-maximizing rate. Don’t raise capital gains taxes, lower the income tax.
Taxes would then be fair. And government would have to be reduced to accommodate the fairness, and thus more limited.
Less of a trap.
This is Common Sense. I’m Paul Jacob.
5 replies on “Avoid the Big Gov Trap”
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“We have tried spending money. We are spending more than we have ever spent before and it does not work. And I have just one interest, and if I am wrong … somebody else can have my job. I want to see this country prosperous. I want to see people get a job. I want to see people get enough to eat. We have never made good on our promises. … I say after eight years of this Administration we have just as much unemployment as when we started. … And an enormous debt to boot.“Henry Morgenthau, FDRs Secretary of the Treasury.
Now with all the spending that THEY did and decided didn’t work, then one has to kind of wonder if there is ANY amount of spending that will ever work. Or is the answer always that if it is STILL not working, then you STILL haven’t spent enough? The logical fallacy of trying to disprove a negative. Spend all you have, then all you can borrow. Still not working? Obviously the problem is you.
Keynes was asked about what happens in the long run if his stuff wan’t working. He said that in the long run, we’ll all be dead. Economic nihilism. What if we’re not dying yet?
To Drik,
Didn’t Nobama say something to the effect that if he cannot solve the problems in 4 years, HE DOESN’T SDESERVE ANOTHER TERM?
I KIND OF REMEMBER THAT. (Although not the exat wording).
And,we p — –d away 900 BILLION on a stimulus program to reward his friends.
Whatever the final percentage rate is, all I would ask is that there be one income tax — and that it not distinguish between capital gains and wages. Thanks to FICA, wages are already taxed twice. Regardless of where your income came from, all Americans should pay the same income tax rates.
If we engineers acted like Keynsian economists we would get government grants to build perpetual motion machines.