When income tax rates are cut we all benefit.

You’ve got to love those happy funsters we call Leftists, most Democrats and the bulk of the mainstream media types, don’t you?

They’ve labeled the GOP’s fight to reduce income tax rate cuts as “tax cuts for the rich.”

Isn’t that a hoot?

“But wait,” you ask, “doesn’t cutting income tax rates reduce taxes for all of us?”

Sure it does, but the Democrats want to argue that it’s unfair because those who pay the most in taxes get the most back. The fact is that the top 5% of income earners pay nearly 60% of the income taxes in America, so it stands to reason that when tax rates are cut, those who gain the most are those who pay the most. Still, the bottom-line fact remains that taxes are reduced for everyone.

The idea that it’s unfair for those who pay the most to get back the most is actually an argument against the graduated income tax to begin with, as it must also be, by their own logic, UNFAIR for those who make the most to pay more in the first place!

Some have even argued that those who make under $30,000 don’t get any tax break at all, but that’s because these folks don’t pay any income tax at all, in fact, those folks get the EITC or “earned income tax credit,” a sought of handout to those who don’t earn enough to qualify for income tax payment.

Now they’ve attacked the proposed abolition of the dividend tax (a blatant case of double taxation as this is a tax on already taxed money) as unfair by making the specious comparison of investment earnings and wage income.

In other words, Leftists of all stripes are now complaining that a person who makes $100,000 in stock dividends while “sitting home doing nothing,” will pay zero in taxes, while a worker who earns $100,000 will pay nearly half of it in federal, state, local and FICA taxes.

The two are apples and oranges.

The money that we all invest has already been taxed as income or, in the case of those “sitting home and doing nothing,” inheritance taxes, further, any gain made from the sale of those investments (stock or bond sales) are taxed at the Capital Gains rate.

Wages and investment income are not synonymous. They are two different and distinct animals – always were and always shall be. The problem for those who argue in favor of higher tax rates to fund government is that their premise – a fixed or static economic pie, or “only so much to go around,” is disproved by clearly observable fact.

In reality the economic pie is constantly in flux...expanding and shrinking through various boom (high yield, high demand) and bust (low yield, high demand) periods. Higher tax rates always result in reactions from those earners and investors who can afford to defer their income. Large scale wage earners and investors traditionally have been able to defer their income over time, shield it in tax shelter investments or Trusts, while the lower end workers (teachers, cops, construction workers, etc) tend to pay the bulk of the freight.

In recent years, various IRAs, 457s and 401-Ks have allowed even regular working people to defer more of their income during peak tax periods and regular working people have responded by taking advantage of these in record numbers. This is an example of a selfish action having many unintended, but beneficial consequences for all of us. These programs have decreased our nation’s savings to debt ratio by increasing the savings of average Americans and bolstered the stock market with a regular infusion of investment capital (cash).

This is why tax revenues generally decrease in response to tax increases and why tax cuts actually raise revenue. A part of the problem with the GOP tax cuts to date is that none have cut deep enough to actually reduce the revenues that government takes in and that increase in revenues only whets the appetites of government spendthrifts.

All you really have to know is that when tax rates are cut, we all benefit and anyone calling that “tax cuts for the rich,” or a “leave no millionaire behind” program is an outright liar.