Monday, July 21, 1997

Week of 07/21/1997

Tax Confusion 101
Why The Democrats Win In The Tax Cut Argument
- by David Matthews 2

Here’s a no-brainer for you: If I offered you a choice between $500 cash in hand or $500 on an IOU, which one would you take? The cash, right? Why? Well, you’d say, because the cash would be THERE. You could see it, put it in your pocket, and do what you like with it. You couldn’t do that with an IOU.

But what if I told you I would give you $500 right here and now, and instead of cash, I give you that $500 IOU? You’d think I was nuts, right? You’d want to know what happened to the money.

Well can somebody tell me how the politicians in Washington are able to get away with confusing TAX CREDITS with TAX CUTS and not be pummeled by 1040 forms, sharp pencils, calculators, and every accountant in the New York City Yellow Pages?

The two terms are not interchangeable. TAX CUTS are just that, a cut in your taxes. A tax cut means not having that much taken out of your paycheck in taxes. That means more money coming home every payday. Money in your hands to buy groceries, to pay bills, to spend on your family or yourself.

TAX CREDITS, on the other hand, are nothing more than an IOU. It’s the government telling you "I owe you X amount." It won’t pay up on that IOU until it’s time to do your taxes; when that money is then deducted from the amount of taxes you are expected to have paid. There is no change in the way you’re taxed. The same amount of money will go out of your paycheck to the government.

So why are we bringing it up? Well it all started when the Republicans promised the American people a TAX CUT. What they put in the bill, though, was something called an "earned income credit" for families. Essentially a TAX CREDIT. They ballyhooed it as something that the American family desperately needs. Problem being, folks like Newt Gingrich were still calling it a TAX CUT.

You with me so far? OK. Here’s where it gets confusing.

So now the Democrats and President Clinton look at this "earned income credit" that the GOP is calling a TAX CUT and are saying "Well if you’re giving tax credits to the middle class, why not give some to the working poor? After all, they’re paying taxes too." Never mind the fact that the GOP was talking about INCOME taxes and not money taken out for FICA. The Democrats have seen thought this illusion, even if the real people out there in the real world haven’t yet.

So now the Democrats have thoroughly confused everybody by turning one white lie into a whole mess of lies! And it looks like the Republicans may actually have to cave in.. AGAIN!

Look folks, this whole mess wouldn’t have started if the Republicans in Congress didn’t lie about giving people a tax cut when they’re poised to give people a tax IOU. And a relatively cheap one at that! $500 per child, per family may seem like a lot of money to us real folks, but when you boil it all down, it’s less than $10 per child a week. TEN DOLLARS! And remember, it’s not even money your hand, but money that would only exist ON PAPAER!

Let’s be brutally honest here, the Republicans in Congress are trying to pull another smoke-and-mirrors trick on the American people, and the Democrats have aggravated the situation even worse going back to their old class-warfare language. If the GOP was really serious about helping out the American families, they should stop playing with a failed socialistic tax code and instead bring the flat tax debate back into the forefront. They know the Democrats hate a flat tax, but right now they aren’t in a position to argue, right? After all, this IS still a GOP-controlled House and Senate, right?

That’s assuming, of course, that the Republicans are genuinely concerned about the American people, instead of pretending to do so like the Democrats.

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