bases on a report from the “non- Partisan” Tax Policy Center. The Tax Policy Center has a past of leaning left and even employs Jared Bernstein, a former chief economist for a Democrat vice president.
Wallace’s claim is erroneous in that it is based not on fact, but on arbitrary numbers, typical class warfare rhetoric, and bears no comprehension of economics as it pertains to historical data. In other words, it is clear that Wallace is an economic illiterate and has fallen for the leftist arguments that have time and again, been proven false, yet still allowed to dominate the narrative.
In truth, according to the budget director, the tax plan has not been worked out entirely. He even went pointed out that other media outlets have made opposite allegations of the tax plan and, according to him the Tax Policy Center could not actually come to its conclusions due to the limited data released thus far.
Chris Wallace also showed numbers of deficits that went up under certain presidential administrations that cut taxes. He claimed that the deficits increased as a result of the cuts, which is a complete fallacy. Unfortunately budget director, Nick Mulvaney did not dispute the claim based on actual historical economic data. The fact is that the deficit and the tax cuts are completely separate issues and relying on the data of budgetary forecasts is arbitrary when taking actual history into account.
While tax cuts are shown as deficits on proposed budgets, the reality is that the IRS takes in more money than the years prior to their implementation. Beyond the budget and into actual fiscal activity, tax cuts have historically spurred economic growth to the extent that citizens acquire more work or experience increases annual income and therefore pay more taxes overall.
Indeed, the deficit has gone up with tax cuts present, but it is has been an issue of government spending habits that raise the debt and not the lack of money brought in as a result.
In Wallace’s attack of the tax plan, he mentioned the Ronald Reagan administration specifically for raising the debt, claiming that the tax cut “added $208 Billion to deficit over four years”. He also spoke of the Bush tax cuts. His assertion is nothing less than a complete false statement. In fact both the Reagan and Bush administrations brought in substantially higher revenues than previous years.
In a 1987 press conference, President Ronald Reagan pointed out that the GDP went up as a result of tax cuts and so did the tax revenues in proportion. The problem was not that revenue at a constant 19% of GDP was insufficient. In fact GDP had risen substantially over the years since the tax cuts took place, which means that the actual dollar amounts rose as well.
The real problem, according to Reagan was that Congress was spending at a rate of 23% of the rising GDP. The words of the former President are backed up by recorded empirical data. Thus, when Wallace asserted that the tax cut resulted in a higher deficit, he was completely wrong and simply tying two unrelated actions to one another. Sadly, many Americans will hear this misinformation and take it at face value.
The same holds true with the Bush tax cuts. The cuts were a reaction to a slow economy that actually spurred growth and brought in more revenue to the IRS than the previous years. But the reason for the rising deficit was, once again, a result of over-spending due to two ongoing wars and entitlement programs.
But the level of Wallace’s economic ignorance is indicative of the average public school and especially college-educated American. Americans have been spoon-fed so many false narratives regarding taxes and economics that some refuse to actually review the mountains of empirical data on the subject. Many economists, historians, and researchers have documented this data in numerous books and publications on the matter.
For example, it is a well documented fact that the early 1920s saw its own depression that self-corrected likely due to no government intervention other than lowering taxes across the board. Harding-Coolidge administrations, upon taking office, faced the end of WWI whereby thousands of military personnel would be returning to America with the worry of having no jobs.
When President Warren Harding took office, it was suggested that his administration create government jobs by building roads across the country for the new-found automobile that had taken America by storm. But spending tax payer money to engage in any public works projects was unconstitutional and Harding had no intentions to violating the people in this way.
Instead, he worked with Congress to lower tax rates, which was 70% for the top income earners, across the board. Lowering taxes for all gave incentive to the wealthy and business class to invest in new businesses and ideas. This set about creating an enterprising atmosphere that would see an economic expansion that had never been imagined.
This era, known as the “Roaring Twenties” started out with a 12% unemployment rate that had, in two years, fallen to a low percentage of just over 2%. This is the lowest unemployment percentage ever achieved before or since in the United States.
This economic power house time for the country ushered in the modern era with inventions and mass production of products such as the home dishwasher, refrigeration, the first antibiotics, insulin, radio broadcasting, television broadcasting, air-conditioning, the airplane, and even the zipper. During this era, there was always a new idea and, with the option to keep more of one’s own money if successful came the investors willing to seed the ideas.
Ironically, even though tax rates had been cut for all, the amount of tax revenues had increased. More people than ever were working in the United States and they, of course, were paying taxes. It is worthy to note that not only did revenues go up, but government spending went down.
President Harding, who was in office for more than two and a half years, died leaving Calvin Coolidge to become president. Coolidge was more of a hawk about government spending and taxation. He believed that government spending beyond the confines of the Constitution was immoral. He also believed citizens had less liberty when they were forced to give more of their earning to the government. As a result, during his six years as president, the federal budget had been cut nearly in half and there was a surplus in revenues every year, which he used to pay down the deficit. This was the last time that any administration in the United States had ever been intensely focused on reducing the public debt.
As previously mentioned, there have been many books and publications written on this historical impact of cutting taxes. In addition, data from government sources and studies also empirically support these claims. Authors include such renowned economists and historians as Milton Freidman, Thomas Sowell, James Grant, Walter Williams, and Burton Folsom Jr. Thus, the information is indeed readily available to those who wish to actually learn the facts.
It is widely known that most in the mainstream media are essentially one-sided where issues of the economy are discussed. It is also known that Hollywood, the media, and academia have consistently held the narrative that people in the top income brackets should be forced to pay “their fair share” of the tax burden in the United States.
While it is known that the top 50% of wage earners pay the entirety of all income taxes, the wealthiest of that top half are already responsible for even the majority of that percentage. But, history also has shown that increasing taxes on top income earners usually results in them finding ways to avoid paying them.
In an interview Thomas Sowell pointed out that when the taxes are raised on the wealthy they shift their investments to tax exempt endeavors.
This was particularly true toward the end of the 1970s. The upper class, who were avoiding the higher taxes of the day, stopped investing in job creation and sought other forms of investments that were taxed at lower rates. In essence, the “rich did indeed get richer”, while less job creation ensured that the “poor got poorer”. Ironically these are statements used by the left to explain what happens in “trickle-down” economics.
In contrast, the Ronald Reagan administration was able to get tax-cuts across the board passed in congress and it saw not only the wealthy become more wealthy, but upward mobility was unleashed and more people moved up from the lower to middle class and middle to upper class in terms of income than in the previous decade.
As previously mentioned, this necessarily equated to more people paying taxes overall, thus increasing the revenues to the IRS.
So why is this information ignored?
The truth is that there is a narrative being lead by two types of people—the elites and the believers.
While much of the rhetoric against tax-cuts involves the “rich paying their fair share”, elites themselves are a wealthy class of people. Ironically, some of them have gained their wealth in capitalism, but seek to destroy the free market. They see themselves as the only people on the face of the planet who know how to make the world run correctly.
They honestly believe that they know what is best for the “masses” and stop at nothing to advance their ideas and control over everyone’s lives at the peril of liberty freedom. Often, through back-room deals and so forth, they pay little in taxes but maintain the narrative of forcing the wealthy to pay their fair share. It is a false narrative to be sure, but with enough people supporting their ideas, the fallacy is not only unseen, but taken at face value.
The followers are also an ironic group of people. They are often part of academia, Hollywood, mainstream media, and of course, those who receive government benefits and subsidies. The reason for the irony is that many of them are college-educated and should therefore be capable of critical thinking and using the scientific method to review empirical evidence. Yet, many seem to lack this as the information is readily available, but not ever sought by this group of people.
If appears that these followers, as many in the lower class, react solely on the basis of emotion and discard all notions of reality. It is likely that Chris Wallace’s assessment of the information that he presented, though completely arbitrary, was also based on surface observations and emotion. Most of the people who watched his broadcast likely believed the numbers, but those who know the truth likely see him as an idiot lemming, following the left over the cliff.
Wallace’s claim that tax cuts are responsible for higher debt is literally the same as saying a business went broke because it offered a discount that doubled its sales. The truth is the business went broke for not managing costs and this is what the so-called educated reporter misses by accepting the going narrative.
But Chris Wallace is not alone on his ideas of what tax cuts do for the economy—which is nothing. In fact this news anchor has really just echoed the same misinformed nonsense of more radical leftists. For example, a woman by the name of Hanna Brooks Olsen wrote a piece in Everyday Feminism that essentially gripes about people giving advice to people in poverty when they themselves have never been in the same financial position.
While the piece is worthy of an entire article itself, one paragraph outlines just how misinformed recent generations are.
She writes, “In the US, we have become so accepting of the fact that poverty is not a symptom of a grossly unequal economy, or the result of numerous systemic failures, or the product of years of trickle-down economics, but instead, that the only thing standing between a poor person and the life of their dreams is their own decisions, their own choices, and their own failures."
In keeping with the leftist ideology, the term "trickle-down economics" seeks to assert that businesses and wealthy people are inherenlty evil and do aboslutely nothing to spur economic growth. The term was first coined during the Great Depression wherby it was suggested that government intervention was the only way to spur economic growth. Unfortunately, in spite of its great failure, the interventionist New Deal program of that time has been misrepresented as a saving force during this period. Additionally, the lie has been perpetuated for so long that the likes of Hanna Brooks Olsen and Chris Wallace believe every word of it and have no intent to research the readily available data.