It Just Finally Dawned On Me

When some economist or other reasonable person says to his friends on the Left, we should lower the highest tax rates, that way we will actually take in more total tax money: they are not actually listening, or if they are, then they are thinking to themselves how can anyone take in more money by lowering the taxes on the rich? Crazy conservatives. And the conservatives point to what happened when the tax rates were lowered in the early 60s and again in the mid 80s and they say Yes, when we lowered the taxes the deficit went up, forgetting that the spending also went up.

They never hear the phrase tax rate, with emphasis on the last word. I'm pretty sure that they think all those whose tax rate went down actually paid a lesser amount in taxes, i.e. 'tax breaks for the rich.' But somebody paid more taxes, probably only a small amount from the increase of people actually working. Most of the increase in the money taken in by the IRS would come from the few people in the highest tax bracket who actually paid more money to the IRS even if the rate was lowered.

An example: $1 million income paid 50% tax= $500,000 to Uncle Sam and $500,000 to your mattress or maybe your IRA, or maybe to the business so it can expand; then rate was lowered to 40%, encouraging the guy to expand his business; and the guy made $2 million and paid in $800,000 to the IRS. Uncle Sam makes $300,000 more than the previous year and the guy makes a total of $1.2 million, some to his mattress and even more into the rest of the economy.

So lowering the tax rate or percentage actually results in more income for the payer and the payee, that is, Uncle Sam. But I suppose if you must 'spread the money around' then having someone making more money than the rest of us is anathema, even if Uncle Sam makes more money too. Is this attitude related to Aesop's fable, the one where a dog prevents the horses from eating the hay in the manger, even though he can't digest it for himself? Or is this a reversal of the old saw about My pain is someone else's gain?

But then why should we try to raise more money for the feds? They will simply spend it and more. Catch 22? At least a variation on that theme.