Wednesday, December 8, 2010

Accounting for the Tax Cut Extension Compromise

Not a long post today, just something that bugs me.

Some people are assailing the just-announced compromise on extending the Bush-era tax cuts, complaining that it will cost the government hundreds of billions of dollars.

This is sheer nonsense or, as we say, sophistry.

Keeping tax rates the same means that the government will continue to extract the same percentage of income from you and me that it has taken in the past. Thinking of that as "costing the government money" is to argue that it is the government's money to begin with.

Get it?

Taxes cost US money. Keeping taxes where they are does not "cost" anything.

Maintaining tax rates at their current levels "costs" the government the same way that steel vaults "cost" bank robbers or alarms "cost" car thieves.

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