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Jewish World Review Feb. 9, 2001 /15 Shevat, 5761

Tony Snow

Tony Snow
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The squawkers

http://www.jewishworldreview.com -- PRESIDENT BUSH has unveiled his promised across-the-board tax cut, and opponents already are squawking about "fairness." The critics rely on a popular but nonsensical argument that the rich should shoulder a disproportionate burden of our taxes, and therefore receive a relatively smaller share of tax relief. The truth is, the rich carry most of our economic weight already, and any attempts to redistribute income from wealthy to poor threaten to stall the economic engine that has brought increasing prosperity to all.

Consider a simple example: Today, more than 50 percent of all households own personal computers; even larger portions own goods that once only plutocrats possessed -- televisions, washing machines, portable phones, automobiles, air conditioning, VCRs and so on.

We're all familiar with the process. Most of us have said of some fancy new device or fad: "I don't want to buy one now. I'll wait until the prices come down." In so saying, we have expressed a hidden axiom of economic progress, which is that the rich shoulder the development costs of most new products and technologies.

Upper classes always have pulled societies forward economically -- and their conspicuous prosperity always has aroused the jealousies of lower classes. The envious set out to strip the rich of their lucre, believing mistakenly that by redistributing income they could make everybody affluent.

Yet, the British demonstrated after World War II that income-redistribution schemes sap entrepreneurial classes of their strength and transform vibrant economies into backward ones. When a government becomes truly successful in moving income from rich to poor, it doesn't reduce inequality -- it just transfers wealth to people with political connections.

A handful of honorables on Capitol Hill are tinkering with the idea, floated during Al Gore's presidential bid, that it is possible and desirable to "target" tax relief to the "right people." This assumes politicians know which of the 280 million Americans is capable of doing the most good for society. But lawmakers know only whom they know -- and when it comes time to dole out tax goodies, they demonstrate an amazing capacity to reward people who have been good to them. Bill Clinton handed out pardons to people who gave him a few sticks of fancy furniture: Is it stretching credulity to predict that "targeted" benefits will flow to those who deliver the goods for politicians, as opposed to those who deliver the goods for society as a whole?

The concept of class warfare assumes that all wealth is old wealth, all poverty is old poverty and that all classes are locked in place, with little movement up or down. That's flat wrong: More than 90 percent of those in the lowest fifth of today's income bracket will move to higher brackets, many to the top bracket: Yesterday's college kid is tomorrow's newest billionaire. So when class-warfare Democrats rage against the rich, they're taking aim at the goose that laid the golden egg -- and trying to wipe out all remaining golden eggs in the bargain.

Now comes George W. Bush, who wants to cut tax rates for everyone, including those whose federal income-tax rates reached nearly 50 percent under Bill Clinton. It is one of the peculiarities of our tax law that the majority of the so-called "rich" aren't tycoons at all; they're small businesses that our revenue code defines as "individuals." These outfits face tax rates twice as high as those paid by Microsoft or General Motors. The president proposes to close that gap by half.

Overall, Bush wants to trim tax obligations over the next decade by 1.2 percent -- modest compared to the 2 percent cuts under Kennedy and the 3.3 percent Reagan reductions, and downright cheap compared to tax reforms recently enacted by our international competitors. Germany slashed its tax burdens last year by 17.2 percent; the Japanese trimmed their demands on workers by 6.0 percent; the Brits even cut back by 5.2 percent. If they remain more aggressive in this regard, global investors eventually will prefer them to us, setting off a chain reaction that could affect everything from consumer prices to the national debt.

Finally: Class warriors have abandoned any pretense that the tax code ought to reflect the obligations of citizenship, with everybody shouldering part of the load. Today, nearly 50 percent of the American public pays no net taxes to the government, leaving the other half to carry all the weight of a government machine that continues to grow larger and clunkier.

If anything, then, the Bush plan cuts too little. It would give a little nudge to the economy -- but more importantly, it could begin to reshape our culture, so that optimism and ambition, not envy and bitterness, become our dominant political values.


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© 2001, Creators Syndicate