All this jabber about the Bush tax cuts begs a few questions. They are questions that should be obvious. Nobody seems to ask them, so maybe they aren’t. Or maybe people are embarrassed to ask them.
First, the debate is an old one. Should we cut taxes for this group? Should we not? Should we leave taxes as they are? These days the President says he wants to keep the Bush cuts for those in the middle class. But, of course, he is on the hustings, headed for November.
What it all boils down to is that politicians and economists know that tax cuts encourage economic activity. They know it as well as they know the sun heats us. Otherwise, why do they offer to cut taxes whenever they want to perk up some part of the economy?
These days the President sees small business struggling. So last week he offered some tax cuts for them. When politicians see industrial areas rusting up, what do they do? They set up special zones. Where taxes are waived or lowered.
This is not brain surgery. Tax something, you get less of it. Reduce the taxes and you get more of it.
Raise the tax on gas and we drive less. Lower the tax on smokes and we smoke more.