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Of Myths, Opinions, Taxes, and Guacamole

Posted By J.D. Foster, Ph.D. On April 5, 2010 @ 10:19 am In Economics | Comments Disabled

Roberton Williams and Rosanne Altshuler’s Five Myths About Your Taxes [1] in the Washington Post on Sunday was such a useful piece one hesitates to criticize, but one confusion is so unfortunate that a correction is necessary.

In all, the authors got about 3 and a half right out of five, which at the start of baseball season is really pretty good. They were right when pointing out that most people (75 percent by their estimates) pay some federal tax, even the many of the poor and virtually all the rich. They were also right when dispelling the myths that most people’s taxes are way too complicated, and that a victory over the IRS is getting a big refund. That’s three.

The authors were half right when they said that tax hikes can’t close the budget deficit. Taxes would have to rise to crushing levels to do that. Where the authors fell short is they failed to mention this means massive spending cuts are inevitable. And not just any spending cuts. Just as you can’t close the deficit with tax hikes, you can’t make a dent in the necessary spending cuts through discretionary spending. It’s got to be the entitlements – Social Security, Medicare, and Medicaid. It’s not enough to say what won’t close the deficit when you know perfectly well what will.

The one the authors really got wrong is when they argued it’s a myth that we’re overtaxed. Unlike the other “myths” they cite and address with factual evidence, this so-called myth is entirely a matter of personal opinion. The co-authors believe we should be taxed more heavily. That’s a perfectly fair opinion, though one with which I and apparently most Americans are in strong disagreement. But it is an opinion, not a fact or a myth. Compounding the confusion is the evidence the authors present.

The authors correctly point out that most developed countries have much higher total taxes than we do. This neither proves nor even implies we are not overtaxed. It only affirms that these other countries have chosen more government and less economic growth, jobs, and income. After all, if more tax is bad for the economy, less tax would be better. There’s nothing sacred or correct about the current level of taxation. To suggest that heavier foreign tax loads evidences that we’re not overtaxed is like the guy at the bar slurring to the bartender that he hasn’t had too much to drink by pointing to his buddy nearby who’s now passed out with his face in the guacamole dip.


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URL to article: http://blog.heritage.org/2010/04/05/of-myths-opinions-taxes-and-guacamole/

URLs in this post:

[1] Five Myths About Your Taxes: http://www.washingtonpost.com/wp-dyn/content/article/2010/04/01/AR2010040102287_pf.html

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