Fidelity to Truth: Tax Credits are Not Tax Cuts

Politicians shamelessly abuse the English language in an effort to confuse and mislead the American people. In no area is this more prevalent than in matters of taxation. There are two related areas I'd like to focus on right now: first, tax cuts are not spending; second, tax credits are not tax cuts. We're told ad nauseum that tax cuts have to be paid for, and that tax credits are the same as tax cuts. Both are lies.

First, a reduction in the rates of income tax paid by the American people requires absolutely no spending by the federal government. What they mean when they say this is, "We have less money to spend on all of the stuff in the budget, and who is going to pay for that?" It is reflective of the fiscal irresponsibility that has plagued us for decades. It is also a deliberate attempt to confuse the American people into thinking that income tax rate reductions are a line item in the bloated budget that requires financing.

Let's do a simple math exercise with round numbers. If you had taxable income of $100,000.00 in 2009 and a tax rate of 30% you'd owe $30,000.00. If we reduced that rate to 20%, you'd owe $20,000.00. This has created a revenue shortfall for the government of $10,000.00 that has to be "paid for" somehow, someway, because the bloated budget doesn't get reduced by a corresponding $10,000.00. Of course, any person who had to adjust their budget would reduce spending to cover the difference, but that nugget of wisdom never seems to occur to those stealing our future (aka Congress and Obama).

Next, tax credits are not tax cuts. Tax credits ARE actually spending!!!! Tax credits are a form of socialist wealth redistribution masked as tax cuts. These are checks cut from the Treasury (spending!) that do, in fact, have to be paid for, usually in the form of tax rate increases on the evil "rich". Where does that $400.00 check come from, if not from your neighbor? When Obama says that we should lick his boots and thank him for reducing taxes, what he really means is that he has raided the Treasury to give us a crappy $400.00 check, furthering his goal of wholesale wealth redistribution.

There is no moral or practical equivalence to tax credits and tax cuts. Tax credits are socialist welfare policy, and tax cuts are reductions in how much income tax responsibility we have. Tax credits, bad. Tax cuts, good. Spending cuts, better!