Why The Left Fears Tax Cuts
Trump is proposing to cut taxes by $10.5 trillion dollars over the next decade. The left is, of course, blowing a gasket about deficits.
In a recent article, Bloomberg panicked about the "massive expense" of Trump's tax cuts, noting they would exceed many government agency budgets.
Bloomberg was particularly upset that Trump doesn't plan to cut social security and medicare, since they’d love him to face-plant.
Tax Cuts: A Return of Stolen Goods
Thing is, tax cuts aren’t a cost at all. In fact they’re a return of stolen goods to the people. Who will no doubt spend it better than the corrupt degenerates in Washington.
They’ll spend part on groceries or making their lives better than government ever could. The rest they’ll invest to grow the economy — which, incidentally, reduces inflation.
The logic here is that when a mugger sleeps in, we don't call his foregone crimes a cost. When he retires, we don’t call his lost “earnings” a cost to society.
Meanwhile, complaining that a tax cut costs more than many government departments — as Bloomberg does — is like complaining that maxxing out your 401k costs more than many hookers in Vegas.
One is a savings, one is a cost.
The Left’s Tax Cut Shell-game
So why does the left pretend tax cuts are a cost? Beyond cynical gaslighting, because they're looking from the perspective of the government. Tax cuts are a cost to the government, specifically because they’re a gain to the people.
This is important in deficit debates, where left-wing media will try to paint tax cuts as fiscally irresponsible. After all, they do increase the deficit. But the important part is how much real resources are being wasted by the government.
To illustrate, if federal spending shrank to ten thousand dollars -- Congress meets once every 2 years to name post offices -- yet taxes go to literally zero, the deficit soars to 100%.
Zero dollars in, 10 grand out. 100% deficit.
But of course that takes us from squandering 6 trillion on wars, recessions, cronies and welfare to squandering 10 grand naming post offices.
In light of this, my modest proposal is rephrase “tax cut” to “income hike.” As in, not Trump’s $10.5 trillion tax hike, his $10.5 trillion income hike.
Trump’s $10.5 Trillion Income Hike
With that, how does Trump plan to hike Americans' income by $10.5 trillion?
About half of it is extending his 2017 tax cuts, which doubled the amount of tax-free income -- the standard deduction -- and lowered individual tax rates across the board. While reducing the corporate rate from one of the least competitive in the world to something reasonable.
Another $3 trillion comes from boosting the child tax credit to $5,000 -- tax credit meaning if you owe $5,000 in taxes you pay nothing.
Note that's per child, so if you've been fruitful your 5 kids cancel 25 grand in taxes.
The remaining $3 trillion come from ending taxes on tips, ending taxes on social security payments -- many Americans don't realize these are taxed since, after all, you already paid. And reducing the corporate rate further to 15%. Which would make it low enough to actually lure European or even Chinese companies to relocate to the US.
What’s Next
For far we've only talked tax cuts. Then comes the fun part: spending cuts. The part that panics Bloomberg.
$10.5 trillion over a decade comes to a trillion per year in spending cuts. If you're looking to cut a fast trillion, some options include:
cutting welfare to illegals -- $450 billion per year.
cutting welfare for Ukraine -- $200 billion and counting.
cutting welfare for corporations -- like the $1.2 trillion Build Better Act, with many more hidden in day-to-day regulatory hustles
cutting foreign aid, where we hand out $100 billion a year for everything from paying LGBT activists in Pakistan -- not a joke -- to military advisors who die so lobbyists can sucker America into every conflict in the world.
And if Elon really does advise a Trump administration, sink and all, we can only imagine how many trillions could be cut from our parasitic administrative state. If that happens, it’ll be 4 years of popcorn.
Every week I write an article on the top stories in economics with regular deep dives into history like the Fall of Rome, the Weimar hyperinflation, or FDR’s Great Depression.
I also make daily videos on economics and freedom, posted on X/Twitter, Youtube, and Rumble.
And a weekly podcast with interviews of key figures in liberty and a roundup of all the week’s videos.
It would work nice if Trump actually does those spending cuts, but that's not what he did when he had the chance. I hope he actually learned the lesson...
I ran for my local town council and won. We have a residential tax exemption. We have the option, as a town council, to change that tax exemption. When I got into my seat I found out since 2006, the town council had never increased it! And when I asked why, they said well we want to have the ability to increase it in case of a debt override where we may have to tax our residents more. My response was so you have been holding the residents' money hostage for year upon year? Seriously, hostage! Why not give the money to people to live now, for groceries, gas, rent, heck a vacation. People are hurting and need the money now. This is how government thinks. And being en entrepreneur, it makes no sense.