Tuesday, September 22, 2009

How do politicians in DC "Cut taxes"

Every president for the past 20 years have professed to cut taxes, both individual and corporate. While corporate taxation is relatively straightforward, the way in which individual taxes are cut involves a slight of hand in a lot of instances. The Federal government can promote these things called "mandates", basically standards or laws that state and local governments must enforce or comply with. These mandates are often social or commercial programs that involve the actual spending of money. What the federal government does is push the cost down to the states, thus lowering the federal government expenditures, thus giving them the ability to "cut taxes". For example, to implement and comply with No Child Left Behind, states had to spend significant money. This is state money, thus requiring the states to either cut other programs or raise state taxes. So, the federal government gets to have its cake and eat it too. Not only do they get to tout the fact that they started a great program, but they also get to tout that they did not raise, and possibly did lower, taxes. In the meantime, states are left with the bill.

think about this when you read the healthcare bill and how it will be funded.

No comments:

Post a Comment