January 3, 2018 at 4:11 p.m.
Misunderstanding all they see
Misunderstanding all they see
If we didn't know better, we'd swear Lennon had just observed life among a gaggle of U.S. liberals. As a rule, liberals certainly live their lives with eyes - and minds - closed, and they usually don't haven't a clue about what they are trying to analyze.
Either that or they are a terribly dishonest bunch, but, hey, let's be charitable in the new year.
Take the new tax law, for instance. It's a been a long time since we have encountered such incomprehensible - and plain wrong - reasoning as that being flung about by liberals of the Trump administration tax cuts.
According to their analysis, the tax cuts are nothing less than a heist of wealth from the middle class by the already wealthy. That is laughable.
To be sure, we have our own caveats about those tax cuts. But, assuming the Trump administration and Congress have the courage to cut federal spending to pay their way - and we know that's a big assumption - the tax cuts will vastly redistribute wealth away from the wealthy and to the middle and lower-income populations, both in the short term and in the long run.
That's because, while rich people will inevitably just pocket some of their tax bonanza, rich people also like to make ever more money, and so they will use much of their windfall to invest in profit-producing enterprises. And that means more jobs and higher wages for average Americans.
That's not just an idle prediction; history says that's the case. In fact, the closest model to these tax cuts are the Kennedy business tax cuts of the early 1960s, which sparked one of the largest and longest expansions of the American economy ever - an eight-year period in which growth spurted by 48 percent.
Those were prosperous times, and we believe similar prosperity is on the way.
Liberals, of course, see it differently. Where we see sunshine, they see doom and gloom. Where we see people happily taking new-found jobs and pursuing their dreams, they fear for the future of anybody who dares to leave the liberal safety nets.
More specifically, they lay out three arguments against the new tax cuts. The first is, taxes are going up right away for many people despite the new law.
Well, that's technically true for a few but let's give the assertion some context. According to the Joint Committee on Taxation, there will be some 177 million tax units in the U.S. next year, and, by all accounts, left and right, fewer than 5 percent of those units will see a tax increase in 2018.
Of that 5 percent who will get a higher tax bill, it's mostly due to affluent taxpayers in high-tax states like New York and California having their state and local tax deductions capped and to those who continue to itemize deductions rather than take the now much-higher standard deduction.
As Sen. Ted Cruz put it on the Senate floor: "The only people whose taxes are going up are the really rich. Every taxpayer, their taxes are going down, except rich people in Manhattan and San Francisco, some of them, their taxes may go up."
Indeed, the doubling of the standard deduction alone will mean a tax cut for most middle-class Americans.
But don't take our word for it, let's look at the analysis coming from the left-leaning Tax Policy Center, who apparently have had their eyes opened at least a little.
According to that group, the vast majority of taxpayers will get tax cuts under the GOP law right through the 2025 end date of the bill, while only 5 percent will see a tax hike of more than $10 this year. In 2018, taxes would be reduced by about $1,600 on average, increasing after-tax incomes 2.2 percent, TPC stated.
"We find the bill would reduce taxes on average for all income groups in both 2018 and 2025," the group's analysis stated.
But wait! While liberals wander in the darkness, they think see another black hole for the tax bill: "Taxes will begin to rise for middle and lower income groups according to that analysis all the way through 2025," the liberals protest!
Again, context is needed. That is smoke and mirrors for it is entirely due to an estimation that an end to the Obamacare individual mandate will likely cause many Americans to drop their insurance and forego their government-paid premium subsidies. Because those subsidies are treated as a tax credit rather than an expenditure, dropping them is officially considered a tax hike.
It is not, and in any event it is a choice Americans would be making, not a tax hike. Apart from that artificial mitigation of the tax reform law, lower and middle income groups fare very well all the way through 2025.
But wait! The liberals scream from their shade-drawn and darkened doors. "Most of the tax cut benefits go to the wealthy!"
Again, some eye opening and light is called for. That may be a true statement, but it's meaningless without context.
If most of the tax cut benefits go to the top income makers, that's because they pay most of the taxes. By itself, it tells us nothing about the share of taxes the wealthy will pay under the new law.
For example, say taxpayer "A" and taxpayer "B" are the only two taxpayers in a unit. "A" pays $100, two-thirds of the total, and "B" pays $50, or a third, and total taxes are $150. So simple even a blind-folded liberal can see it.
Now, let's say total taxes are cut by $50, and two-thirds of the tax cut goes to "A". That's about $33, so now "A" pays only $67. "B" gets the other $17 tax cut and now pays $33.
As one can see, "A" and "B" each still pay the same share of taxes - two-thirds and one-third, respectively. That's because, in our hypothetical example, each received a share of the tax cut equal to the share of taxes they already paid, so even though "A" got two-thirds of the tax cut, the tax burden for each remained the same, and taxes for both go down.
In the real world, as Manhattan Institute senior fellow Brian Reidl analyzed the Tax Policy Center report, the bottom 80 percent currently pays 33 percent of all federal income taxes, but gets 35 percent of the tax cuts. However, the top 1 percent currently pays 27 percent of all federal taxes, but gets only 21 percent of the tax cuts.
"So the share of all federal taxes paid by wealthy will rise," Reidl pointed out on Twitter.
Let's repeat that. Under this bill, the share of taxes paid by the 1 percent will rise, and wealth is thus redistributed to the middle and poorer classes, not the other way around.
But wait! "Can't you see?" the blind-folded liberals cry. The tax cuts for individuals expire after 2025, while the corporate tax cuts are permanent. "Taxes will spike for all us saps then! It's a ruse!"
OK, so here they have grabbed onto a speck of a point, proving that even a blind squirrel will find a nut once in a while. So just why was the law written that way?
To begin with, all of the tax cuts should be permanent. A temporary tax cut is much like a cone of cotton candy left in the sun after just one bite. Go back in an hour and see what you have left. Corporate taxes have been way too high compared to the rest of the developed world and to our primary competitors, and a permanent reduction is necessary to jumpstart investment and level the economic playing field. Just as surely, individuals deserve the same treatment. How cruel to have people build their lives and the lives of their families around one tax structure only to be punked in about seven years.
Of course, that will never happen. In the politics of it all, big business wanted a permanent tax cut and they had the clout to get the establishment of the GOP to go along. We peasants have no such clout, so we didn't get a permanent tax cut.
In addition, the GOP's deficit hawks threatened to kill the bill unless the $1.5 trillion in lost revenue was paid for somehow, and they have no courage to cut actual federal spending, so ending the individual tax cuts down the road was the way to make things balance out.
But everybody - including the hypocritical deficit hawks - know the individual tax cuts will ultimately be extended, no matter who is president and no matter which party controls Congress.
Again, there's history for that. Lawmakers extended the Bush tax cuts after Obama became president, and Obama signed off on them, precisely because no one wanted to be known as the man or woman who sharply raised everybody's taxes.
That kind of congressional thinking is as certain as death and, well, taxes.
Of course, liberals latch onto to this political convenience and cry out that the world will end after 2025, when they know full well the political reality is much different.
Somehow the liberals wander around among us still, convinced taxes will rise when actually they will fall; convinced wealth will be redistributed to the 1 percent instead of flowing as it actually will to the middle and lower incomes groups in the form of a reduced tax burden and of more jobs and higher wages; convinced like believers of Nibiru that the world will soon end.
Happy in their misery, and wishing it for everyone -Merry Misery Everyone! - liberals live forever in their strawberry fields, eyes closed, misunderstanding all they see.
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