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“Millionaire and billionaires aren’t paying their fair share!”
“It’s time to ask the wealthy to pay a little more!”
“I’m for the middle class. The other side is for the big corporations!”
Unless you spent the 2012 election season in a cave, you undoubtedly heard liberal politicians repeat these talking points until their faces–and America’s electoral map–turned blue. As frustrating as they were to hear again and again and again, these lines worked, and help President Obama win re-election and Democrats expand their ranks in Congress.
Progressives are able to successfully run on high-tax messages because their strategy revolves around appealing to the heart and to our emotions. A plan may not be fiscally sound, but if they can convince people that it’s “fair” or “morally right,” they’ll win. They’ll lose, however, when citizens vote with their head–which is why appealing to the head has never been more important.
The American Legislative Exchange Council (ALEC) has put out a new study rebutting the left’s most popular tax myths. Of particular interest are the 7 most popular myths liberals use to promote tax hikes, and strategies that free-market advocates can use to rebut each one:
1. More government spending will stimulate our economy! And we need more taxes to pay for the spending!
This theory, first promoted by John Maynard Keynes and made popular by FDR, is wrong: more spending, printing, and borrowing devalues the dollar and stifles recovery. ALEC’s research also shows a steady decline in gross domestic product (GDP)–the total wealth of a country–as government spending grows. The same is true at the state level: states with stronger economies are spending less, not more.
2. Tax cuts will hurt our economy in a recession!
Liberals believe that tax cuts, and the government spending cuts that accompany them, will doom the economy. But ALEC’s evidence shows that tax reductions tend to lead to periods of economic boom and job creation–not to recession. The numbers in the report debunk the notion that “tax cuts don’t pay for themselves”; in fact, the wealth created by tax cuts more than makes up for the brief dip in government revenue.
3. Raising taxes doesn’t hurt economic growth and recovery!
The left points to the 1950′s, when taxes were high and the economy was stable. But, as they are wont to forget, the 1950′s were six decades ago. Today, higher taxes not only reduce take-home pay, they lower GDP and stifle investment and risk taking. At the state level, higher taxes give businesses incentive to move out of state–and take jobs with them. ALEC cites the example of Oregon, which began losing jobs at a higher rate than the country shortly after passing income tax hikes.
4. Spending cuts will hurt growth and keep unemployment high!
“Austerity,” the term for deep spending cuts that has become popular since the start of the global economic crisis, is never popular, but it’s only enacted to control a nation’s overwhelming debt, which harms an economy much more than spending cuts do. ALEC’s report includes examples by which austerity can aid long-term growth, and questions whether Europe’s struggling “austerity” programs are even fitting of the name.
5. Recent tax cuts haven’t increased household income!
Although gross household income hasn’t dramatically risen, these figures don’t keep up with the expansion of entitlements over the last 30 years. When the sum of income and entitlements that the average family earns today is compared to that of 30 years ago, it’s a far different picture–tax cuts are clearly allowing families to keep more of their own money.
6. The rich are getting richer and the poor are getting poorer!
Although the top 20% of earners has seen their wealth grow faster than the rest of the country, upward mobility is as strong as ever–according to ALEC’s research, more than half of the poorest 20% in America moves out of that tier within 10 years, and the wealthy were far more likely than the poor to move to a lower income level. The image of the poor getting poorer is created by immigrants and entry-level workers, who replace the upwardly mobile working class as they move up in income.
7. Go ahead and raise taxes on the rich–it won’t hurt anyone!
Raising taxes on the wealthy is, politically, the easiest way to increase revenue–after all, when given the choice, who would choose to raise taxes on themselves when they could raise them on people with more money? But it’s a bad idea. Not only do wealthy people put their money “to work” by investing it, there simply aren’t enough of them to tax to generate the revenue our country needs. Taxing the rich is therefore a politically popular band-aid move that doesn’t solve the serious problems with our debt and budget deficits.
ALEC’s full study includes extensive research, charts, and figures to support their dismissals of each of these liberal tax myths. It’s well worth a look, whether you’re interested in holding tax-hiking politicians accountable, or simply want one more tool in your arsenal for your next water-cooler debate with a liberal.
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