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Wed., Feb. 23, 2011

Don’t blame tax cuts

On Feb. 13, Gary Crooks again blamed the current federal deficit on Bush’s “tax cuts.” From 1950 through 2009, taxes averaged 16.7 percent of Gross Domestic Product. Before Bush’s tax policies were implemented the numbers were 15 percent of GDP in 2004 and 14.9 percent in 2005. With Bush’s reduced rates, federal tax collections grew to 17.9 percent in 2007 and 2008. Since 17.9 is bigger than 15.0, most people would see that as an increase, not a cut. “Bush’s tax cuts” resulted in tax collection rates significantly higher than the average for the last 60 years.

Tax rates affect the way people spend and invest their money. This is well known and responsible for a few thousand pages of convoluted tax code. When tax rates are high people don’t invest the way they would under lower rates. When tax rates are lowered, people are more willing to invest, create jobs and grow the economy, which results in more government revenue. Many economists recognize tax collections would be even higher with lower rates than we currently have.

Low tax rates are not responsible for the federal deficit. Blame high spending that has averaged 18.6 percent of GDP over the last 60 years.

David Wordinger

Medical Lake

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