Tax cuts for whom?

Few sayings receive more airtime from politicians than the accusation of "tax cuts for the rich." With election time looming, those vying for office will likely up the ante with this type of propaganda speech. While most politicians turn this into a partisan battle, what really troubles me is the philosophy behind this accusation. The mantra "tax cuts for the rich" (with its negative connotation) is based on an incredibly crude assumption: rich people don't do good things with their money.\nMany would argue that rich people indeed do good things with their money, but other people need the money more, so it's important to "redistribute" that money. This statement, while sounding noble, is overly simplistic and very misguided.\nMany people fail to realize the extent to which taxation plays a role in the lives of "rich" people. For example, in 2001, the Joint Committee on Taxation (www.house.gov) reported that those earning more than $200,000 account for 32.4 percent of the Federal Tax Liability. In other words, these folks are responsible for 32.4 percent of the revenue generated by income, payroll and liability taxes. \nWhat's more, those who make more than $50,000 comprise a whopping 84.2 percent of that same federal revenue. Translation: our nation's top income earners pay the majority of the federal taxes. Of course, the more you look at this debate, another question arises: what exactly is "rich"? \nSome might say if you're making six figures, you're pretty rich. But let's think about a mother with a $125,000 salary, three kids in college, one in high school, a mortgage payment, a car payment and various other expenses. To put this into perspective, my estimated cost of attendance at IU is $27,392. Surely, this woman has a very good salary, but, with her list of expenses, I'd hardly call her rich. \nThat brings us to the real heart of the "tax cuts for the rich" issue: if rich people pay most of the taxes, why is it so horrible that they get some of their money back? As I mentioned earlier, politicians believe that they can do better things with the money of the rich than the rich can do on their own. \nIn reality, the efficiency of the government to administer help to those in need has been an abomination. Michael Tanner of the Cato Institute estimates that about 70 cents of every charitable dollar from the U.S. government gets lost in the bureaucratic shuffle (http://www.cwru.edu). Not only do the poor benefit more from private charities (per dollar), but could anyone with a reasonable mind actually donate money to government welfare over their favorite private charity? I highly doubt it.\nThe fact of the matter is, when people have more of their own money, they give more of it away -- and they give heartily. The Social Welfare Research Institute at Boston College showed that the largest portion of philanthropic contributions comes from the wealthiest Americans (www.pbs.org). Those families worth more than $1 million comprise 46 percent of the total contributions to charity, and those worth $200,000 to $1 million comprise 25 percent. \nIf we know that the government does a bad job in using funds to help those in need and we know that rich people do good things with their money, why is it such a bad thing to empower rich people to give more by keeping their money? I would rather have money funneled into private charities than getting lost in IRS paperwork.\nThe big tax cuts of the 1980s brought about a tremendous increase in charity giving. The relationship is clear: when people have more money, they'll likely do good things with it. I believe that Americans are good people; it's a shame that more politicians don't agree with me.