Tax cuts are not government spending

Malcolm Turnbull gets this very basic issue wrong.

When a cabinet is presented with a surplus it is sorely tempted to spend it on some or all of the following: tax cuts, hand outs to politically important interest groups, infrastructure (often in marginal seats) and of course at the same time with lots of money sloshing through the doors it is very hard to persuade ministers to cut the costs in their own departments. “Why should my department have to cut back when Buggins over there is getting a few hundred million for his new project?”

His argument is for a sovereign wealth fund – the existence of a SWF could encourage government to save. Then we have this

Of course, governments can just rack up surpluses and have the money in the bank, but without a specific savings objective the arguments for ‘giving us our money back’ are pretty compelling in a political sense.

What? Like letting us keep our money out of your clutches isn’t always a compelling story?

So imagine a cabinet considering what to do with a surplus; on the table are some buckets, one of which is marked ‘unsustainable tax cuts’. Another is marked ‘infrastructure projects in marginal seats – don’t worry about a cost benefit analysis’ and third is marked ‘some more middle class welfare’. But imagine if there was another bucket marked ‘saving for the our children and grandchildren’s future’.

There is no such thing as unsustainable tax cuts, only unsustainable spending. People can save for themselves and their own children – they don’t need government for that.

Update: Malcolm Turnbull responds here.

This entry was posted in Uncategorized. Bookmark the permalink.

88 Responses to Tax cuts are not government spending

  1. brc

    Not only are tax cuts not government spending, tax deductible items are not ‘subsidies’ as some of the more unhinged environmentalists are wont to claim.

    As is typical of those in government (or wish they could be, so they could control everyone else) they tend to see the country and economy as something under the governments control, with the people allowed to do this or that – like keep their income or say what they like.

    Assuming all income belongs to the government unless otherwise is the same mistake as assuming all speech should be controlled by the government, unless otherwise allowed to be ‘free’.

    All democratic governments should be existing at the pleasure of the people, not the other way around.

  2. Infidel Tiger

    Yet I am constantly reminded that he would be a brilliant Treasurer.

    Pigs arse.

  3. Fisky

    The good news is that his recent interventions have completely ruled him out of the Liberal leadership so we won’t have to worry about Turnbullian leadership destabilisation. Sorry Lefties – you are not having your genial loser back.

  4. No, you are stuck with your “new tax for a parental leave plan no one except me thinks is essential” leader.

  5. Feral Abacus

    Turnbull is on Q&A tonight. For a great drinking game, you ought to take a shot every time they air a Twitter comment from a nitwit imploring MT to retake the Liberal leadership from that evil, ALP-stomping Mad Monk.

    God help your liver if you do.

  6. Gab

    Turnbull should just take the ALP leadership from Gillard. Then both Liberal and Labor voters would be pleased.

  7. Turnbull needs to cash in his smsf and call it a day. Government has this neat thing called a printing press it has no need for a cupboard to hoard the same stuff it prints.

  8. dover_beach

    What IT and Fisky said.

    Feral, I’m going to take up your challenge.

  9. wreckage

    And how do you stop the next government from blowing the SWF on whatever brain-fart blows through that week?

    Nope, the people keep their money and if the government wants to spend big on major projects it can make the case for taxes to pay for it.

  10. Gab

    I must say I’m very surprised, SoB. Are you not going to demand a list of financial contributors to the GLW to be made public, as you do for the IPA? Yes?

  11. And even in the other thread, I made no comment…

  12. Gab

    You have poor comprehension, Steve.

  13. eb

    Tempting dare, Feral.

    I got myself some butterscotch schnapps today.

    Cheers!

  14. Whatever, Gab. I would be more worried if it was something significant being said.

  15. johno

    The really depressing thought is that Abbott is no better than Turnbull on wanting to tax and spend.

  16. Fisky

    No, Steve, you must demand a list of GLW sponsors or risk being exposed as a Far Left partisan hack.

  17. Oh come on

    Errrr I think the balloon went up on that one some time ago, Fisky…

  18. .

    We must agitate that he not be preselected for the next Federal election. He seems like a nice guy except he wants too much of OUR money.

  19. kingsley

    This probably should be a test for everyone joining the Liberal Party or claiming to be a conservative. If you believe a tax cut = govt spending then how are you a conservative?
    Turnbull clearly doesn’t intuitively get that every dollar a Govt spends was first taken from someone.
    Yet there is a quite high number of conservative voters who think he some great intellect who’d be perfect to run the country. The best you could say is he would turn the Liberal party into Labor-lite.

  20. Driftforge

    The best you could say is he would turn the Liberal party into Labor-lite.

    Malcolm Turnbull = Mitt Romney ?

  21. I’m prepared to be charitable and say Turnbull knows tax cuts aren’t ‘govt spending’, he’s just parroting Treasury’s jargon “Tax expenditures”.

    I wonder why the Liberals don’t just come out and say they’ll cut unnecessary expenditure on political action groups. Howard did just that for some extreme green groups but then blew it on Landcare and ‘Caring for our Country’, most of which was deployed into government departments and state bodies. I guess their polling says it will lose them too many swinging votes in marginal seats.

    I can’t recall hearing any Liberal mentioning the opportunity cost of the thousands of socialist activists (including the ABC) redirected to producing real value adding products or services.

    Cleaning toilets on public transport and slashing Lantana on the coast comes to mind.

  22. Kelly of Kenmore

    Malcolm Turnbull is the only Liberal MP who has a hope of winning the next fed election for the LNP.

    Malcolm Turnbull must never be allowed to become coalition leader.

  23. .

    Yes Kelly, the only way to defeat the ALP is with socialism! The Socialist Alliance FTW!

    Idiot, troll, etc.

  24. Driftforge

    Malcolm Turnbull must never be allowed to become coalition leader.

    You may have missed a couple years there…

  25. Sleetmute

    George M is constantly going on about Howard’s unsustainable tax cuts. His latest effort in the weekend Oz is no exception:

    In three of Peter Costello’s last four budgets, fiscal policy did not lean against the boom – it folded. The way to see this is to check the change in the underlying cash balance from one year to the next. It is this figure that tells us whether the former treasurer played the contrary hand demanded of him – to take cash out of the economy when it was hot.

    .
    Two things. First, it’s all obvious in hindsight. At the time, no one knew how long the boom would continue. As Howard has said repeatedly, the idea that the government could have banked the revenue returned as tax cuts over 3-4 years s nonsense. that money would have been spent.
    Second, and more important, the budget is a poor tool for fine-tuning. any fine-tuning should be left to the RBA.

  26. Sleetmute

    PS. Get rid of Treasury. It’s a good-for-nothing institution. Finance can do the Budget and a revamped PC (given a reprieve after its recent joke report on paid parental leave) can do micro reform.

  27. Pickles

    Next thing you’ll be telling us that Governments don’t create jobs.

  28. Two things.

    Third, everything George M poses are counter factual.

    How does he know how the Howard / Costello government would act?

    How about this counter factual, Howard hands over to Costello who finally implements the cuts to spending he spent 10 years fighting Howard to implement.

    Another, Costello noted the Rudd/Swan government were obsessed with inflation when he was predicting a downturn. It is as likely as not he would’ve implemented changes to deal with those facts.

    George M gets away with peddling this BS because no one can ever prove what he says is wrong…because they are all guesses.

  29. Pickles

    Gay Marriage first issue on QANDA. Fancy that.

  30. Gab

    It’s the great moral challenge of our generation, Pickles.

    Think of the children’s children’s children.

  31. Pickles

    Now Global Warming. What’s next?

  32. Gab

    Da ebil Murdoch and da ebil mining billionaires.

  33. Pickles

    Waves of climate refugees.

  34. Skuter

    Dover, Eb,
    How are you traveling now that you’re a handful of shots in? After the climate change discussion, I nearly sprayed my TV with buckshot…Why oh why do we put ourselves throught this?

  35. Gab

    They’re waving? That’s nice of them.

  36. Sinclair Davidson

    Why do you guys watch that show?

  37. Gab

    I’m not watching it, Sinclair.

  38. Skuter

    Sinc, it’s a Canberra thing. I think I need help to be honest…

  39. Pickles

    Just wanted to be able to say that I saw part of the worst panel mouthing the worst worn out platitudes in history. And that old cocky is the worst so far.

  40. Skuter

    Eb and Dover must have run out of grog by now…and passed out. For me, I had a little vommie when someone suggested Tanya Plibersek should be PM.

  41. Feral Abacus

    For me, I had a little vommie when someone suggested Tanya Plibersek should be PM.

    At least Gillard built some overpriced school halls before becoming PM. What has Madame Smugalot achieved in five years of government?

  42. Skuter

    Feral,
    Let’s not forget Gillard’s crowning achievement – the Fair Work Act. As for Tanya, well, she’s got the vibe, man. I suppose the question is, if we must have an ALP PM, do you want one with a definite idea of where he/she wants to take us or one who is thicker than two planks and therefore little more than a puppet for others who have a definite idea where they want to take us?

  43. Alex Pundit

    Sinclair, isn’t it a matter of time before they invite you on?

  44. ar

    ” I had a little vommie when someone suggested Tanya Plibersek should be PM”

    You make it sound cute…

  45. On your Marx

    If you advocate cutting income tax and thereby reducing a potential surplus you are simply increasing or creating a structural deficit in the budget.

    This is what Peter Costello did.

    We now are seeing the result of this following the GFC.

    If you wish to advocate income tax cuts then government spending should be cut at the same time with little effect on the budget bottom line otherwise you are being fiscally irresponsible.

  46. Sinclair Davidson

    Sinclair, isn’t it a matter of time before they invite you on?

    The ABC likes tame conservatives.

  47. brc

    We now are seeing the result of this following the GFC.

    No, what you’re seeing the result of is reckless borrowing and spending for no purpose than political vanity.

    A responsible treasurer and PM would have ridden through the GFC with a mild deficit and kept the tax cuts. There would have been no need to go around hunting profitable industries to super-tax to death, all in the name of class warfar and politics of envy.

    In case you didn’t notice, the budget cannot be balanced even when the Terms of Trade are at record highs and unemployment remains low.

    This is definitively a spending problem, not an earning problem. To suggest that somehow Costello is responsible for the current debt is taking such liberties with the truth polite people should be blushing.

  48. ar

    tame conservatives

    Hmm, Judith is a regular…

  49. On your Marx

    Really.

    We are getting spending down to levels below the average of the last Government yet the tax we are getting is much less then previous years.

    Have a look at MYEFO.

    Martin Parkinson’s speech was all about why tax revenue would be less in forthcoming years.

    There is more detailed information about this in Budget Paper No.1 Statement 5. It is named Revenue!

    To put it another way if Swan had Costello’s revenue then the budget would be in the black now.
    On the other hand if Costello had Swan’s revenue he would have had mostly deficits in the last commodity boom.

    If a treasurer tried to ride through the GFC without any stimulus we would have had a recession and quite a quarters of negative growth.

    Debt would be little different to now except we wouldn’t looking at getting back into the black.

    I do agree some people should be blushing about what the truth is.

  50. JamesK

    I posted this on the OT but it is relevant here.

    An Indian finance professor opines:

    “The crisis faced by the West is primarily because it has forgotten a six-letter word called ‘saving’ which, again, is the result of forgetting another six letter word called “family”. The West has nationalised families over the last 60 years. Old age, ill health, single motherhood – everything is the responsibility of the state.

    When family is a “burden” and children an “encumbrance,” society goes for a toss. Household savings have been negative in the US for long. The total debt to GDP ratio is as high as 400 percent in many countries, including UK. Not only that, the West is facing a severe demographic crisis. The population of Europe during the First World War was nearly 25 percent and today it is around 11 percent and expected to become 3 percent in another 20 years. Europe will disappear from the world map unless migrants from Africa and Asia take it over.

    The demographic crisis impacts the West in other ways. Social security goes for a toss since people are living longer and not many from below contribute to their pensions through taxes. So the nationalisation of families becomes a burden on the state.

    European work culture has become worse with even our own Tata complaining about the work ethic of British managers. In France and Italy, the weekend starts on Friday morning itself. The population has become lazy and state-dependent.

    In the UK, the situation is worse with drunkenness becoming a common problem. Parents do not have control over children and the Chief Rabbi of the United Hebrew Congregation in London said: “There are all signs of arteriosclerosis of a culture and a civilisation grown old. Me has taken precedence over We and pleasure today over viability tomorrow.” (The Times: 8 September ).

    Married couples make up less than half (45 percent) of all households in the US, say recent data from the Census Bureau. Also there is a huge growth in unmarried couples and single parent families (mostly poor, black women). Society has become dysfunctional or disorganised in the West. The government is trying to be organised.

    In India, society is organised and government disorganised. Because of disorganised society in the West the state has to take care of families. The market crash is essentially due to the adoption of a model where there is consumption with borrowings and no savings. How long will Asian savings be able to sustain the western spending binge?

    According to a recent report in The Wall Street Journal (10 October 2011), nearly half of US households receive government benefits like food stamps, subsidised housing, cash welfare or Medicare or Medicaid (the federal-state health care programmes for the poor) or social security.”

    Well said that man.

    And the ‘socially progressive , economically rational’ twits always aren’t that economically rational in the end.

  51. Sleetmute

    If a treasurer tried to ride through the GFC without any stimulus we would have had a recession and quite a quarters of negative growth.

    The Coalition supported the initial $10bn cash splash. They opposed the BER stimulus spending, which only commenced in Q2 2009 (and really got going in late 2009 and 2010), too late to be responsible for saving Australia from technical recession. All the BER spending did was to drive up interest rates in late 2009 and 2010, while racking up debt. We would be a lot better off now debt-wise without the BER and our current transfer payments would be lower if Workchoices had been retained.

  52. JamesK

    The Coalition supported the initial $10bn cash splash

    They did and any oppositrion dared not speak its name such was the climate.

    It would have been as electorally suicidal because of the MSM media spin back then as climate change scepticism or AGW scepticism as it was back then.

    Both cost insane amounts of progressives spending other peoples money.

  53. Mother Hubbard's Dog

    The issue of Commonwealth revenue is quite an interesting one. It is true that tax receipts and total revenue are both at the lowest percentage of GDP they have been for some time. The main reason has nothing to do with Costello’s personal income tax cuts. It is due to a huge slump in capital gains tax and company tax receipts as a consequence of the GFC (and the consequent slump in the share market and property market).

    Interestingly, though, despite the revenue being so low as a proportion of GDP, it is still higher than was forecast in the last Costello budget. Quite a bit higher, in fact. This suggests that at least some of the government’s present fiscal problem is due to laxity on the spending side.

  54. duncan

    So,

    great big pile of cash that needs to be invested… someone’s got to run it.

    Who’ll be in govmint, and who’ll have the banking background to do it?

    Why … Malcolm Turnbull of course.

    ps: KOK, keep the dream alive! Abbott is unelectable (or a zombie overlord according to Carr)

  55. These future generations sound like they will be doing pretty well for themselves:

    Invoking future generations is the last refuge of the bad economist. As Robert Carling and Stephen Kirchner suggest in their new research paper on sovereign wealth funds, those children will grow into adults who would feel embarrassed by the folly of their forebears’ socking away their hard-earned incomes. If the economy keeps growing broadly as it has, average Australian incomes in 100 years will be about $470,000 a year in today’s dollars, compared with about $60,000 today. In any case, Australia’s so-called “finite resources” are practically infinite; even at current extraction rates, they would last centuries. A shared, if misguided, sense of fiscal rectitude will probably save the Future Fund from dismantlement, but it would be better off wound down. Some wise heads reckon it should go towards infrastructure. Indeed, Australia needs to ensure its workers are skilled and industrial capacity are able to respond quickly to the next boom while we enjoy the proceeds of this one. But Australia’s economy is stretched to capacity.

    Can anyone seriously imagine poor farmers at the beginning of the last century ferreting away vast sums in order to underscore our current standard of living? Can anyone imagine a Labor government not raiding that fund and hosing it up against a wall at the earliest opportunity?

  56. JC

    Can anyone seriously imagine poor farmers at the beginning of the last century ferreting away vast sums in order to underscore our current standard of living? Can anyone imagine a Labor government not raiding that fund and hosing it up against a wall at the earliest opportunity?

    Good points.

  57. Sinclair, glad you picked up a small point – the use of the word “spend” – perhaps in the sentence you highlight at the outset of your blog I should have used a more neutral verb such as “deploy” or “use.”

    However there is more to this than terminological precision. You contend that there is no such thing as unsustainable tax cuts. That is quite wrong. If a Government cuts taxes in such a manner that its revenue is reduced to a level where it cannot meet the expenses of government the tax cut is not sustainable. The Bush#2 tax cuts are often cited as a good example of such an unsustainable tax cut especially as they coincided with entering into two wars.

    The point of my blog, which you ignored, is that if you use cyclical (ie short term) gains in revenue to pay for on-going or structural increases in spending or on-going or structural reductions in tax then you will very likely create a structural deficit such that when the cycle turns the budget will be in serious deficit.

    There is a solution of course which is to hand out cyclical revenue gains in temporary handouts, bonuses, one off tax cuts as a company would do; but as I noted in the blog this does not fit comfortably with the political culture and a one-off bonus payment or tax break always creates expectations that it should be recurrent.

    There are always questions of degree and timing, what is cyclical and what is not and those are the issues we should be discussing.

    But your central proposition that no tax cut can be unsustainable is just windy rhetoric.

  58. .

    Excellent points, NGD.

    Are you going to scuttle Malcolm’s candidacy or not?

  59. Malcolm’s ego compromises him as a leader and a politician. Even if he does have any core beliefs he would readily sacrifice them in a heartbeat in order to be adored for a moment by the left-leaning press.

    He’s only weighing in on the sovereign wealth fund debate because it’s topical.

    The contributions by our political class on this issue have been disturbingly low quality.

  60. On your Marx

    in Costello’s last budget tax as a % of GDP was 24.2% of GDP .It is at present 20% of GDP.

    Spending was 23.1% of GDP and it is expected it will be 23.6% of GDP next financial year. (In Costello’s last budget we had capacity constraints whereas we still have an output gap now)

    I repeat if Swan had the revenues of Costello he would have a surplus.

    Can I suggest people read the MYEFO before embarrassing themselves further.

    brc is the only person suggesting the income tax cuts are the reason for low tax revenue now.

  61. JC

    in Costello’s last budget tax as a % of GDP was 24.2% of GDP .It is at present 20% of GDP.

    Spending was 23.1% of GDP and it is expected it will be 23.6% of GDP next financial year. (In Costello’s last budget we had capacity constraints whereas we still have an output gap now)

    Link please Homer.

  62. JC

    And one other thing dickhead. We also need to see the analysis normalized.

    In other words expenditure moved into out years and off balance sheet spending also has to be brought back in, such as the NBN.

    You need to show evidence that the carbonic tax and the mining taxes are in there covering up spending.

    And you need to do this while stacking aisle 6 with paper towels.

    Go!

  63. John Mc

    Malcolm’s ego compromises him as a leader and a politician. Even if he does have any core beliefs he would readily sacrifice them in a heartbeat in order to be adored for a moment by the left-leaning press.

    Accurate concise summary.

  64. .

    Yes Homer, we have never had it better before!

    Negative productivity growth, falling participation rates, rising unemployment, net job losses, increasing rents…

  65. On your Marx

    look up the MYEFO lazy bones.

    If expenditure is moved in to out years it would appear there. Think before you write

    Expenditure was actually moved into this financial year not into future years.

    If people had actually read Martin Parkinson’s paper instead of Judith Sloan mysterious interpretation there would be far less errors made here.

  66. Sinclair Davidson

    If a Government cuts taxes in such a manner that its revenue is reduced to a level where it cannot meet the expenses of government the tax cut is not sustainable.

    That simply begs the question as to the expenses of government. While we can agree that number isn’t zero – after all we’re not anarchists – it will be a lot less than the 350-odd billion government currently spends.

  67. Simon

    Poor investments yield poor results, the Labor govt invested in beautifying schools and cementing job conditions to a boomtime level. They are paying for these sagely gambles now by raising taxes and pawning industry growth.
    By the way a SWF could be used to pay for maternity/paternity leave at actual salary rates thus allowing people to have more children and continue spending on services and products, if there’s any industry left at the end of this corrupt regime.

  68. JC

    If expenditure is moved in to out years it would appear there. Think before you write

    Expenditure was actually moved into this financial year not into future years.

    If people had actually read Martin Parkinson’s paper instead of Judith Sloan mysterious interpretation there would be far less errors made here.

    I did look at MYEFO, dickhead. Hence my questions and your need to provide better evidence than that.

  69. On your Marx

    If you looked at MYEFO then you do not understand it.

    That is understandable. Few people here do.

    That is why the nonsense of having a deficit in a commodity boom is enunciated despite Treasury having given reasons why this would be the case in the budget last May!

    As yet no-one here has provided any evidence the labour market has changed at all since the Fair work act. the Unemployment statistics suggest nothing has changed.

    If people were sensible here they would be arguing that income tax cuts should be automatically accompanied by expenditure cuts.

    That would mean lower taxes and smaller Government.

  70. Skuter

    If expenditure is moved in to out years it would appear there. Think before you write

    Expenditure was actually moved into this financial year not into future years.

    That’s right, expenditure was packed into 2011-12 so the 2012-13 target could be met, this is mpart of the reason why the 2011-12 budget deteriorated so badly. There was also some expenditure put off into 2013-14 and beyond.

    the Unemployment statistics suggest nothing has changed.

    The unemployment rate suggests that little has changed – it is a misleading aggregate ratio, but if you look at employment growth and the participation rate, the labour market is very different now to what it was few years back…

  71. Simon

    Technically a governement should have very few expenses, they can do without just about everything and just borrow products and services in exchange for future tax relief or enhanced pay offs. Why borrow the cash when you can just do credit like most small businesses? Why put yourself at the mercy of mercantile financiers when you can run on ad hoc basis with current revenues? I understand when it comes to foreign countries this might not work so well but for all things domestic all it does is cave in to unionists and the like who hold you to ransom on bigg projects.

  72. Mother Hubbard's Dog

    Interesting point, Simon. Anyone who has ever contracted to supply anything to the Commonwealth government would know that in general it is the most tardy payer around.

  73. TerjeP

    Malcolm Turnbull is right in his comment above up to a point. However given that we have a structural situation where per capita government spending (in real inflation adjusted terms) and per capita government revenue (in real inflation adjusted terms) is almost guaranteed to rise year on year, any notion that a tax cut might be the meaningful source of a structural problem sort of misses the forest for the trees. We ought to be discussing remedies to this structural problem of ratcheting up in government using something like the TABOR system from Colorado or the constraints on revenue growth that our state governments place on local governments. A truly liberal government (in the classical sense) ought to be bold in offering tax cuts.

    p.s. It is worth noting that if real per capita federal government spending was held constant for just one decade, and normal GDP growth continued as usual, then personal income tax could be almost entirely eliminated from the tax mix and the budget still balanced.

  74. Gab

    Just wondering – what is current public spending as a percentage of GDP and how much has it increased since December 2007?

  75. wreckage

    But your central proposition that no tax cut can be unsustainable is just windy rhetoric.

    Not what he was saying. The assertion is that spending, even necessary spending, may be rendered unsustainable in the event that tax cuts leave the government with less money than expected, however it is the spending in this case that is unsustainable.

  76. JC

    The Bush#2 tax cuts are often cited as a good example of such an unsustainable tax cut especially as they coincided with entering into two wars.

    It’s often cited, Malcolm but it also incorrect. The Bush Tax cuts were quite affordable. What was unsustainable was the spending.

  77. John Mc

    The assertion is that spending, even necessary spending, may be rendered unsustainable in the event that tax cuts leave the government

    We are so far, far, far beyond ‘necessary spending’ that your position is irrelevant.

  78. wreckage

    John Mc, keep reading to the end of my sentence.

  79. John Mc

    Yes my apologies. I’m confused.

  80. Gowest

    My memory must be failing – I am sure MT said there should be tax cuts when the GFC hit (instead of a mega cash splash).
    Anyway all you have to do is read MT code as no handouts for non tax paying organisations and said tax free organisations (one of the fastest growing areas of the economy) be subject to gst and fbt taxes at full rates.
    That is the quickest way to build your wealth fund MT!!

  81. On your Marx

    Gab,

    Try looking here.

    Both the Bush tax cuts and the Reagan tax cuts were never financed and led to deficits.

    Bush decided to spend money (post 2001) on ‘security’ measures and then of course the Iraq war.

  82. .

    Homer,

    Stop lying.

    Like JC said:

    “It’s often cited, Malcolm but it also incorrect. The Bush Tax cuts were quite affordable. What was unsustainable was the spending.”

    Stop prattling on about the MYEFO when you’re semi bloody literate.

  83. Pingback: Dumb slogans vs rational debate on sovereign wealth funds – or the peculiar case of Terry McCrann | Malcolm Turnbull MP

  84. WP

    You deliberately misinterpret what Turnbull had to say here in order to make an attack on the man.

    Its clear he is metaphorically speaking, eg, if you have a short term surplus do you
    1 save the money
    2 Spend in on a re occurring expense that you will not be able to sustain into the future should other tax revenue return to normal levels, or even temporally drop..
    3 Reduce taxes, and hope no unforeseen events force you to raise the again, or if other revenue sources return to normal levels, be forced to cut services or raise taxes.
    4 Save the surplus for another day when we may have a recession, and revenue is down, so we can get through that period without borrowing.

    And yes tax cuts can be unattainable. If revenue drops below the cost of necessary government services, then they cannot be sustained, that’s clear. For those who say tax cuts are not unsustainable, why not reduce tax to zero, and see how long you can sustain that.

  85. wreckage

    For those who say tax cuts are not unsustainable, why not reduce tax to zero, and see how long you can sustain that.

    Indefinitely. But then any spending at all would be unsustainable.

Comments are closed.