Should Politicians Know What They Are Talking About?

Recently a state governor announced a tax-cut plan proposed for their state. The plan is to be a 10% cut on earned income spread over three years, and will be an across the board cut; that is, the 10% reduction will apply to all income levels equally. This last qualifier “equally” is very important because using that term conveys an underlying American sense of fairness and, well, equal treatment. Politicians use such terms quite often since people usually like to hear things that sound so American-centric. As is true in most dealings with politicians the public tends to believe rather than think.

But in this case there is surely no way that the governor could be misleading the public, right? After all, 10% for everyone is 10% for everyone. And if you are satisfied with that then yes it must be fair.

If however, I posited the following alternative tell me if it doesn’t sound fair also. The state will give back an equal amount of money to every tax payer. Everyone gets the exact same amount of money from the state’s current income tax revenues. It is equal certainly. But it is not the same as the proposal. Can both be fair? I know perhaps you think that giving everyone the same amount isn’t fair since some may not have even paid that much. So let’s modify the plan slightly, in case this beneficent largess makes you uncomfortable, suppose we only allowed tax payers to get back up to the amount that they paid and then the rest of the tax payers got an equal share of the remaining funds. By having removed the offending over-generous gift to those who can’t afford to pay more in taxes, do we not create a fair proposal?

Now maybe you reject the equal quantity of money approach and not being the kind of equal they you consider equal. Alright, I can appreciate that. I don’t necessarily agree that your rejecting it represents any valid basis for it being unequal. You would have to explain why it is unfair and unequal. I regret to say that you would have to explain the basis of your position, because just telling me what your opinion is does not actually in any intelligent or meaningful sense explain it. But let us suppose you have an argument to place the ‘across the board’ approach at a higher equal condition than the ‘equal amount’ approach.

Then let’s try a third approach on providing an equal tax cut. Let’s reduce the tax-rate structure so that the tax revenue stream is reduced by 10% over three years. The adjustment would be to raise the level of income where the tax-rates change by an equal amount so that 10% less tax revenues result. This treats everyone equally and fairly, so why not this approach? What makes the governors approach the better equal approach?

Now this is a reason that these approaches are not equally equal, or equally fair, or consistent with American’s values on equality. Do you know which approach is the best ‘equal and fair’ way to implement the tax cut? I will give you a hint. The better approach, in fact the best approach can be derived from an understanding of the progressive tax system. You would have to understand the progressive tax system. For example, the governor proposing the tax-cut referred to the inequality of the progressive tax methodology that is applied today. Unfortunately the governor seems to have demonstrated a less than competent understanding or accurate knowledge about what a progressive tax methodology is. This is understandable since their background is in the law and politics.

If you can’t figure out why ‘raising the tax structure levels’ is the best ‘equal’ way to cut taxes then I would suggest you seek someone who can explain the progressive tax rate method correctly. Perhaps you could refer them to the governor so they could explain it to the governor also.