11/23/2012

The Ideological Underpinnings of the Tax Rate Debate

Via-PJ Media


Posted By Rand Simberg

Long-time readers know that I’ve bemoaned the lack of distinction between the phrases “tax cuts” or “tax increases,” and “tax rate cuts” or increases, in policy discussion. For over a decade now, we’ve been arguing about the “Bush tax cuts,” as though anyone knows whether they were tax cuts or not. As I explained here almost four years ago:

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.

…When the “cost” of a tax rate reduction is “scored” by the Congressional Budget Office, they do a “static” analysis, which means that they assume that the change in rates will have no influence on the behavior of the taxed, which is arrant nonsense. When a politician tells you that he knows how much revenue a tax change will result in, he is either lying or deluded.

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