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A proper understanding of tax policy

Here we go again.

The Minnesota Legislature and the United States Congress have begun their 2011 sessions. With economic malaise still everywhere and not soon departing, elected officials will propose endless solutions to our economic problems. One of the most contentious and disingenuous issues is tax policy.

None of the discussion about taxes will yield anything meaningful or intellectually honest, let’s just be clear on that right away. Why will this discussion be so fruitless? Because nobody knows what they’re talking about—or maybe they do know and do not care.

Let us begin with the Democrats’ proposals. Amid all of their high-minded objectives and proposals, they completely forget and/or ignore that people are either taxed too heavily already to the point that they cannot afford to live or else cannot afford to live because everything has become so expensive.

Democrats want to raise taxes on “the wealthy”, but the wealthy tend to run businesses that everyone patronizes. Any tax savings the lower or middle class realize through lopsided taxation will be consumed by more expensive goods and services whose pricing have taxes built in.

On the other side, Republicans speak at length about cutting taxes. While commendable for realizing the plight of everyday people, Republicans fail because their spending priorities contain as many sacred cows as the Democrats’. A police state, for example, is extremely expensive. Yet again and again, far be it from any Republican to actually cut the budget of our brave and precious “heroes in uniform”. And after all this, Republican budgets remain as unbalanced as the Democrats’.

With any unbalanced budget, money needs to be borrowed. This money does not come from nowhere; it is created out of thin air. This practice leads to inflation, which continues its precipitous habit of degrading the value of everyone’s money. Returning to Republican tax policies, any money people save from tax cuts is consumed by inflation and escalating expenses.

Regardless of political background, there is one—and only one—reasonable, rational, responsible, and moral thing to do. Government budgets need far more than just the token trimming about the edges or pruning the periphery that has pathetically passed for “cuts” in decades past. No, they need the wholesale elimination of agencies and closing of departments.

But until we muster up the moral courage to do this, our malaise will only continue…unabated.


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