NEWS BLOG (WSAU) “Walker tax cut favors those who pay the most”. That’s the Milwaukee Journal Sentinel headline after analyzing the tax-cutting part of the Governor’s budget proposal. http://tinyurl.com/aeb77oz

Of course it does.

If that’s the standard, taxes can never be cut.

Let’s use a simple example and include some basic math. Joe-Conservative-Taxcutter proposes an across-the-board one-percent income tax cut. If you’re wealthy and your income tax bill was $10,000, you’ll save $100. If you are a lower-income worker and your taxes were only $1,000, you’ll save $10.

Jim-Tax-And-Spend screams, “not fair!” The rich taxpayer gets $90 more than the poor taxpayer. He sends out a news release: “90-percent of my opponent’s tax goes to the rich.” And that’s true.

The facts are that high-income taxpayers put so much more into the pot that any across-the-board tax cut gives them much, much more in actual dollars. In the same example, if we give the lower taxpayer a percentage cut that’s four times as large, the high income taxpayer still gets 60-percent of the cash benefit. So the charge of “the tax cut favors the rich” could still be made.

Under this kind of thinking, any tax decrease is unacceptable because it favors the rich.

It’s the same kind of thinking we’re seeing with the sequester – that spending can never be cut, not even a little, without catastrophic results.

Beware of the template where taxes and spending can only go in one direction.

Chris Conley
2.27.13