Why Taxes Don't Matter Much Anymore (Jeff Tucker)

Jeff Tucker explains that the strange disconnect between tax policy and spending policy is only made possible by the counterfeiting of the Federal Reserve:

Barack Obama's tax advisers recently posted a piece in the Wall Street Journal about their candidate's tax plans. Their article was designed to triangulate, painting their candidate as a tax cutter and the Republican opposition as a secret tax raiser. It was well written and well argued — not that you can really trust anything you read about what candidates will or will not do once in office.

In any case, I was discussing the piece with a person whose politics are certainly left of center. She said to me something along the following lines:

I'm really not sure I understand all this tax talk. The government taxes us to get money to do what it wants to do. But it seems like what they do — whether going to war or funding new projects — is never discussed in terms of money they have or don't have. I mean, Bush cut taxes, right? And the reduced revenue should have restrained him. But he spends on whatever he wants. The tax cuts didn't seem to reduce his power at all. Why is this?

It's a good question. Why is it that talk of tax policy doesn't seem to have a relationship to policy generally?

Read the rest