Tax Cuts Are Not a Cost

Tax cuts are often described by politicians as a “cost” to the government.  That is an Orwellian lie for two reasons.  First, tax receipts are revenue, not cost.  As any householder knows, revenue is income and cost is spending.  Government spending is a cost.  Now, if government revenues are less, then the government can (a) reduce spending or (b) borrow money to cover current spending (which will incur further costs in the form of interest on the borrowed money).

The second reason has deeper implications.  To describe a tax cut as a cost to the government is to assume that all money belongs to the government. Therefore, from the government’s perspective, tax cuts are money begrudgingly spent by the government.  This is a bizarre twisting of logic.  All monetary wealth in the US is due to the productive efforts of its citizens, tallied annually as the Gross Domestic Product.  In other words, all the wealth in the US belongs to its people because that is who created it.  From the point of view of the people who create this wealth, the taxes paid to support the government are a cost of production. As citizens we pay a percentage of the money we create to support the government, which is tasked with our collective defense and maintenance of the infrastructure that we all use.

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