In Tamny’s March 3rd piece in Real Clear Markets, he takes issue with Hudson Institute fellow Jeffrey Anderson and his belief in middle class tax relief as the source of better economic times.
Key Tamny points,
- all government spending is debt. Governments can only spend to the extent that they extract resources from the real economy first
- debt amounts to an accounting abstraction. A focus on debt misses the real barrier to economic growth, which is government spending itself.
- Government spending is the true tax signaling resource consumption by politicians lacking market discipline.
- The unseen…that is never pursued by market-driven entrepreneurs (cancer cures, transportation innovations, technology advances that would render the internet dated) thanks to government existing as a size consumer of always limited resources.
- economy-boosting advances…spring from abundant failure.
- Anderson’s “Main Street Tax Plan” focused “on the well-being of typical Americans” would do very little to boost the economic chances of same…simply because the typical American doesn’t have much money to lose.
- the simple truth is that job-creating innovation springs from more dynamic investing that by virtue of being dynamic is highly risky. This is where the rich come in.
- The rich, for being rich, have money to lose… because the rich are flush with funds, they can take risks on the dynamic companies of tomorrow that are tautologically necessary for the prosperity that Anderson would like.
- Since the rich have money to lose, they alone can pursue the intrepid investments that make the typical American much better off.
- Success in the U.S. of the wealthy variety shouldn’t bring with it a tax penalty; rather it should gift the ambitious with a tax reward.
- intrepid investment is the path to the kind of prosperity that we all want, and that will lift all boats.
Tamny’s point has consistently been, lower the tax rates for all. But if you are going to lower the tax rates only selectively, do it for the rich! These are the individuals whose money is the surplus capital which when invested drives innovation and growth, resulting in an improved standard of living for all of us.