Politics & Policy

Rhetoric Rides Again

Political and liberal-media talking points are obscuring economic realities.

Let’s face it, politics is largely the art of deception, and political rhetoric is largely the art of misstating issues. A classic example is the current debate over whether to give money to the unemployed by extending the duration of unemployment benefits, or instead to give “tax cuts to the rich.”

First of all, nobody’s taxes — neither on the rich nor on the poor — are going to be cut in this lame-duck session of Congress. The only real question is if our current tax rates will go up in January, whether for everybody or nobody or somewhere in between.

The most we can hope for is that tax rates will not go up. So the next time you hear politicians or media talking heads say “tax cuts for the rich,” that will tell you whether they are serious about facts or just addicted to talking points.

Not only are the so-called “tax cuts” not really tax cuts, most of the people called “rich” are not really rich. Rich means having a lot of wealth. But income taxes don’t touch wealth. No wonder some billionaires are saying it’s okay to raise income taxes. They would still be billionaires if taxes took 100 percent of their current income.

What those who argue against “tax cuts for the rich” are really promoting is raising the tax rates on families making $250,000 a year and up. A husband and wife making $125,000 a year each are not rich. If they have a kid going to one of the many colleges charging $30,000 a year (in after-tax money) for tuition alone, they are not likely to feel anywhere close to being rich.

Many people earning an annual income of $125,000 a year do so only after years of earning a lot less, before eventually working their way up to that level. For politicians to step in at that point and confiscate what those people have invested years of working to achieve is a little much.

It also takes a lot of brass to talk about taxing “millionaires and billionaires” when most of the people whose taxes the liberals want to raise are neither. Why is so much deception necessary, if your case is strong?

Small-business owners usually reach their peak earnings many years after starting their business: They often operated with very low income, or even at a loss, when they first began.

Having politicians step in with an extra tax at that point, when later incomes compensate for earlier sacrifices, is sheer brass — especially when real millionaires and billionaires have their wealth safely stowed in tax shelters.

Another fashionable political and media deception is making a parallel between giving money to the unemployed versus giving money to “the rich.”

When you refrain from raising workers’ taxes, you are not “giving” them anything. Even if you were actually cutting their tax rates — which is out of the question today — you would still not be “giving” them anything, but only allowing them to keep more of what they have earned.

Is the government doing any of us a big favor by not taking even more of what we have worked for? Is it not an insult to our intelligence to say that the government is “giving” us something by not taxing it away?

With unemployment compensation, however, you are in fact giving someone something. “Extending unemployment benefits” always sounds good politically — especially if you do not ask the basic question: “For how long should they be extended?” A year? Two years? No limit?

Studies have shown what common sense should have told us without studies: The longer the unemployment benefits are available, the longer people stay unemployed.

If I were fired tomorrow, should I be able to live off the government until I find another job that is exactly the same, making the same or higher pay? What if I am offered another job that uses some of the same skills but doesn’t pay quite as much? Should I be allowed to keep on living off the government?

With the government making it more expensive for employers to hire workers, and at the same time subsidizing unemployed workers longer and longer, we will have as much unemployment as we are willing to pay for, for as long as we are willing to pay for it.

— Thomas Sowell is a senior fellow at the Hoover Institution. © 2010 Creators Syndicate, Inc.

Thomas SowellThomas Sowell is an American economist, social theorist, political philosopher, and author, whose books include Basic Economics. He is currently senior fellow at the Hoover Institution, Stanford University.

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