I agree that it must be a combination of spending cuts and tax increases. I know that there will always be a philosophical battle between the two extremes, but the world is not black and white and neither should our choices be.
I’m wondering, in general, if the tax cut side could provide some numbers on tax cuts actually working. Because from where I sit, the result of various tax policies of the last 16 years look like this:
1992-2000: taxes raised, budget surplus, increased employment, wages up, positive stock market, relative success across all income levels.
2000-2008: taxes lowered, deficit doubled, negative employment, wages down, negative stock market, success of the few at the expense of the many.
Granted, this is a simplification and taxes aren’t the only variable in the equation here, but how does the tax cut crowd reconcile this discrepancy? They believe that tax cuts are the answer, yet they have 16 years of evidence to the contrary looking them straight in the eye.
I suppose that on the microeconomic level it is true that because of taxes, it may be cheaper to run your business in Texas than in California. But what about on the macro level? Is it better to save a little bit of money by moving your business to Texas where the market may not be as large or supplies are harder to come by, or is it worth it to pay the extra taxes in California for the benefits that it might bring (larger market, supply lines, etc). Lets take it to the extreme to illustrate my point: I could move my business to Antarctica in order to pay no taxes, but what good will that do me? That would be a ridiculous business decision, but hey, I’d save a ton on taxes! There has to be a happy medium out there where the positives and negatives of taxes balance each other out. That is all any pragmatist is really looking for here.
Again, I am no economist, and I am here to learn. I am open to arguments on how and why tax cuts are better for society as a whole, and I can understand the philosophical argument against taxes, but based on the last 16 years, I’m not seeing any evidence supporting their position.
