Tax Cuts

A reduction of taxes is an important step toward keeping the economy moving. We all know that taxes must be levied by a government in order for it to be able to perform its basic functions, which include national defense and enforcing laws. Yet we also know that too much money in the hands of government is wasted.

The wealth of a country is equivalent to what is produced in that country. The number of pots and pans, the number of computers, the number of automobiles created - altogether - equals a nation's wealth. It is important to understand that every dollar spent by the government creates nothing. Every dollar spent or invested by the private sector is a dollar creating goods and services that add to the value of what the society possesses.

By keeping money in private hands the money becomes more quickly spread among all of society's classes allowing all to procure these goods and services. Employers who have more money from a tax cut create more jobs. Factories increase production to meet demand, creating more factory jobs. This mass production (because of the economies of scale) also lowers the price of goods - making the dollar of every citizen worth that little bit more. Of course, more money for individuals in every class is a good thing spurring saving, investing, entrepreneurship, security, charity and even a sense of well-being.

Tax increases, even for the most noble purposes, have the opposite effect. Dampening investment, curtailing entrepreneurship, making saving impossible. Often the projects funded with high taxes are unworthy of a government and frequently have a detrimental effect on the society it was meant to improve. By simply transfering money from one class to another we are creating disincentives to produce the true wealth of society in two ways - first by punishing the success of the wealthier class and second by rewarding individuals for not producing for the society.

Though compassion dictates that some sort of safety net be provided for the unfortunate. This safety net must be limited to prevent it from becoming like a medicine meant to dull the pain of a broken leg in an emergency only to become, later, an addictive substance that prevents the patient from walking on their own two feet.

Thus we see that tax cuts (for any and all members of a society) are inherently good. Tax increases - especially punitive taxes that discourage ambition and investment are inherently bad.