The President’s Misleading Tax Math

by Amanda Griffin-Johnson As the debate over whether or not to extend the Bush tax cuts continues, Veronique de Rugy of the Mercatus Center adds some much needed perspective by comparing the size of the tax cuts to the amount of spending over the next decade. In The American, the journal of the American Enterprise Institute, Dr. de...

by Amanda Griffin-Johnson

As the debate over whether or not to extend the Bush tax cuts continues, Veronique de Rugy of the Mercatus Center adds some much needed perspective by comparing the size of the tax cuts to the amount of spending over the next decade. In The American, the journal of the American Enterprise Institute, Dr. de Rugy writes:

Here is President Obama, talking on September 29 in Richmond, Virginia:

“Now, I’m not a math teacher. But I know a little bit about math. They’re proposing about $4 trillion worth of tax cuts. About $700 billion of those tax cuts are for people who typically are millionaires and billionaires, and on average would get $100,000 in tax relief—$700 billion that we don’t have, we’d have to borrow in order to provide these tax cuts. And 98 percent of Americans wouldn’t see any benefit from it. And keep in mind that because we don’t have it, it would actually end up costing more than $700 billion, because we’d end up having—since we’re borrowing it, we’d have to pay interest on it. . . So when you add it all up, essentially their proposal would drastically expand the deficit instead of shrinking it.”

This is very misleading. Very likely for effect, the president is using aggregate numbers to talk about the tax cuts rather than annual numbers…

Now compare the size of the tax cuts to the total amount of spending and you will see where the problem lies. Compare $700 billion—the tax cut the president said “would drastically expand the deficit”—to $41.9 trillion ($41,911 billion).

If Washington is serious about reducing the debt level it could easily extend the tax cuts—it’s spending that must be cut.

Out-of-control government spending is increasingly becoming a problem at the federal and state level, and spending cuts are on the minds of citizens across the nation. In Illinois, a recent poll of likely voters found:

• Over 60% of Illinois voters say the state government is spending too much money.
• A majority of voters would choose a candidate that will cut spending.
• Over 50% of voters across party lines favor amending the Illinois state constitution to place a limit on state spending growth.

Would you prefer the government to raise your taxes or cut spending to address the deficit? Comment below with your thoughts. You can read the full article from Veronique de Rugy here.