"Revenue" Talk: How Liberalism Is A Confessional Faith
by Larry Perrault on July 26, 2011 at 9:53 AM
Several days ago, a Facebook Friend posted the question as to why Social Security checks are the first thing threatened when a shortfall on the existing budget is a possibility, in this case, unless the debt-ceiling is raised. This provoked a long string of comments with the typical left-wing contribution that Republicans are defending the wealthy against taxation. I have recently posted an explanation of why, sometimes outside of the awareness of the wealthy themselves (which I am not one of, sad to say) that while the wealthy are not hurt by additional taxation, other workers and consumers ARE: "Revenues," Hamburgers And The Costs Of Corrupted Liberty and Ben Stein Is A Bright, Wonderful, Rich Man Who's Heart Overwhelms His Mind". But when I asserted how tax cuts in the past had greatly increased revenue, that’s when I struck liberal dogma gold.
Rather than the liberal denial that I’ve gotten before, the response was that you can’t really count a revenue increases except as a percentage of GDP. Now, that’s consonant with all of the liberal wailing we hear recently, including from the president, that increased tax rates are necessary because government tax revenues are lower than they have been since the days of Eisenhower 59 years ago. They are, as a percentage of GDP. Otherwise, the statement is preposterous. Think about what the ridiculous qualification “as a percentage of GDP” is saying. The reason revenues increase is because of GDP growth, not higher tax rates And GDP growth and the expansion of the work force and compensation is what we are after! On the other side, I’ve heard conservatives challenged and some actually wary about the supposed contradiction to conservatives of ceding projected revenue increases in a plan that proposes to close tax exemptions while dramatically lowering tax rates! Lowering tax rates will spur the commercial activity to increase GDP and tax revenues as a result of higher earnings! Does it bother you to pay more gross tax dollars if they are a smaller percentage of a dramatically larger income? I’d gladly pay 20% of $100,000 ($20.000) rather than 30% of $50,000 ($15,000).
When they come as always after tax cuts, revenues increase as GDP does, not as a percentage of it. The only way tax revenues can increase as a percentage of GDP is for economic expansion to be stifled and market to be consolidated away from small and new business and to large corporations that are happy to pay higher taxes in return for suppressing competition and increasing their market share. This is stagnation for the aspiring and middle and lower classes. And that’s what socialistic (use any euphemism you like) governments do. They suppress the lower and middle classes and consolidate commerce into large corporations that they can tax the heck out of. Society becomes a cooperation of government and big business and social mobility is calcified for the remaining populace. That’s called fascism.
In fact, if for example with a tax cut from 30% to 20%, annual revenue increased from 3 to 4 trillion dollars, they will have increased in quantity, but 30% of a $10 trillion Gross Domestic Product would be $3 trillion, and 20% of a post-growth $20 trillion GDP would be $4 trillion. So if after tax cuts, GDP would have doubled and federal revenues increased by a $trillion (a third of the pre-tax $3 trillion), revenue as a percentage of GDP would obviously have dropped from 30% to 20%. Liberals would call this a revenue decrease; a “loss” to the government coffers.
This is a perceptual disorder about how wealth is created. And, the confusion is augmented by ambiguity in language. Liberals now refer to tax rate hikes as “revenue increases.” But they are two different and independent things. A calculated “revenue increase” from a tax rate hike, based on existing GDP (what is often called “static analysis”) will not be accurate because behavior, productivity and GDP will change. And actual revenues can and do increase from cuts of tax rates. Leftist/statist social engineers have, in spite of all common-sense and historical experience, made this miscalculation of human nature consistently since Karl Marx wrote over 150 years ago, and I’m sure beyond that: the short-sightedness is as natural to humans as the truth about how wealth is actually produced.
After the “industrial revolution,” Marx wrote that the capitalists were necessary to industrialize before workers revolted and took control of the means of production. But while “the industrial revolution” described a dramatic step in it, it was not in fact the consummation of technological progress, which is constant. When the Soviet Union collapsed, it was weighted by retarded production from the result of restrained human liberty, and inability to compete with the progress of liberty elsewhere. And restraining liberty and consolidating commerce is what Obama and Democrats have done with health care and financial reform and their steroidal growth of regulatory imposition. This static analysis and misunderstanding of human nature, is leftist dogma; stubbornly impervious to reason and experience.