| The Liberals Don't Want Your Money Written by: Trent 10-4-05 |
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?"
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?"
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