THE LIBERALS DON'T WANT YOUR MONEY
When the tax rates are lowered, the government receives more money. For some reason, the liberals can't or maybe won't understand this. They think of the U.S. economy as a zero-sum game. They want us to believe that if we lower taxes on the so-called "rich", that means that the middle income and lower income people are going to have to pay more. If the economy was a zero-sum game, they would be right. But it's not and so they are not. I'm going to try to break it down in simple terms.
If the economy was a zero-sum game, like the liberals seem to think, it would work like this. I am going to use nice round numbers just to make this article easy to read. They are not the actual numbers. The people of the United States work and together they all earn say $5,000,000,000,000.00 (5 trillion dollars). In a zero-sum game, there is only a finite amount of money that can be made. People tend to think in finite numbers. This means that if "Rich Person A" gets a raise from $500,000.00 to $600,000.00 that somewhere the other people are making $100,000.00 less. In this world, the higher the tax rate, the more money the government brings in. The lower the tax rate, the less money the government brings in.
Let's start with a tax rate of 35%. 35% of $5,000,000,000,000.00 would be $1,750,000,000,000.00. In this zero-sum game world, if you raise the tax rate to 38%, now the government would bring in $1,900,000,000,000.00. Conversely, if you lower the tax rate in this fictional world to 32%, the government would only bring in $1,600,000,000,000.00. This is how the liberals want you to think our economy works. This way they can continue to play "class warfare" games. To be honest, if you don't want to think about it, this might make sense. The liberals can point to the upper-income people and tell the lower-income people, "The reason you are poor is because they have so much." In other words, the upper-income people have your share of the pie.
Now on to how the economy really works. There is no finite amount of money that can be made. The people of the United States could collectively earn $5 trillion, $7 trillion, $12 trillion or more. Or less. Tax rates have a lot to do with whether it is more or less. In the real world, "Rich Person A" can get a raise from $500,000.00 to $600,000.00 and this wouldn't affect anyone else's income. If the collective amount of money earned went from
$5,000,000,000,000.00 to $5,000,000,100,000.00, "Rich Person A" made more money and no one else "lost" money.
How can this happen? It's actually very simple. Let's take an average middle-income family making $50,000.00 a year. Forget about deductions and actual tax rates for this discussion. If they are taxed at 20%, they would have $40,000.00 left to spend. So this family pays it's bills, buys what it needs, but maybe not everything it wants. Maybe they put a little away in savings. Cut the tax rate to 15%. Now this family has $42,500.00 after taxes. This family now has an extra $2,500.00 to either buy some of the things they want or to put even more money into savings. Let's say they decide to buy something they want with that extra money. They decide to buy new bedroom furniture. They spend the $2,500.00 at the furniture store. Guess what? Now part of that $2,500.00 is getting taxed by the government again because it is now part of the profits of the furniture store. Not only that, but now the furniture store has more money to reorder more furniture. It just sold an "extra" set of furniture. They order there normal order plus an "extra" set because of the "extra" set they just sold. Now the manufacturer has to make their normal amount of bedroom sets plus one "extra" set. Now that money is taxed again as part of the profits of the manufacturer. The manufacturer needs more wood and supplies to make that "extra" bedroom set. So the manufacturer orders more wood and glue and accessories. Guess what? That money is taxed yet again as part of the supplier's profits.
Now if you multiply this out nationwide, it would not be one "extra" bedroom set. It would be thousands. There would "extra" car purchases...."extra" clothing purchases (I know where you can get some nice Conservative T-shirts)...."extra" vacations..."extra" electronic purchases...."extra" home remodeling expenditures...etc. etc. With thousands of "extra" bedroom sets to make, the manufacturer needs to hire more workers to build the furniture. With thousands of "extra" bedroom sets to make, the suppliers need to hire more people to cut the wood or make the glue or make the handles. With thousands of "extra" bedroom sets to sell, the furniture store needs to hire more salespeople and more stockroom people and more delivery personnel.
That original $2500.00 that was taken out of the tax revenues has now been taxed several times over as profits by the furniture company, as profits by the manufacturer, as profits by the suppliers, and as income to the workers of said businesses. Because the middle-income family had the extra $2,500.00 to spend, several business and their employees were taxed on new sales and new incomes. Now the original $2,500.00 that the government "gave up"in tax breaks, it has brought in maybe $3,500.00 in new tax revenues. Yes, the rate was lowered and the government brought in more money. It happened when Reagan lowered tax rates. It happened when JFK lowered tax rates. It will happen when any President lowers tax rates. The economy also grew which means there was more money earned by the people of the United States.
It is a fact, person A can earn more money without that money coming from another person's earnings. It is a fact, when tax rates are lowered, the government brings in more revenue. This brings us to the real question. If lower tax rates bring in more money to the government, why aren't liberals for lowering taxes? They would have more money to spend on their social agenda. You would think this would be great for them. The simple answer is if they lower tax rates, more people will have more money and thus not need the liberals' social programs any longer. If they don't need the liberals' social programs any more, they don't need the liberals any longer. It's not about money. It's about power. Read my previous editorial "ISN'T BEING FOR THE RICH A GOOD THING?"
