News that the House of Representatives has passed its version of a substantial tax cut is welcome. Federal tax cuts almost always are followed by more money going into the economy, and thus into the pockets of citizens who were giving it to the government instead.
Under Presidents Reagan and Kennedy taxes were cut, and economic growth followed both reductions.
Many in Congress, and the Senate don’t like tax cuts because these elected officials believe they have been chosen by the voters to spend money — our money — and tax cuts interrupt the flow, albeit temporarily, of what can be spent.
But these spenders needn’t be too worried. Tax cuts almost always result in a flow of new revenue because of economic expansion, and in some savings.
Economic expansion means more jobs, thus more wages and more taxes collected on those wages. It also generally means more federal excise taxes due to more things being manufactured and sold.
Excise taxes are paid when purchases are made for a specific good, such as gasoline, according to the IRS. Excise taxes are often included in the price of certain products. There are also excise taxes on activities, such as on wagering or on highway usage by trucks.
The Senate is working on a version of the tax cut bill, and will have to restrain itself to keep from turning the legislation into a tax increase.
Let’s hope the tax cut will be seen as a gladsome event by those who count most — ordinary people who work for a living.
Members of the House and Senate, although claiming to be “of the people” actually are merely looking out for themselves to the extent they know that it is much easier for elected officials to spend money than it is to save it.