Bush's tax cut draws clear line between conservatism, lideralism

By DAVID MOON, Moon Capital Management
March 4, 2001

Tuesday night, President Bush, in his own uniquely butchered syntax, continued his case for a massive, across-the-board reduction in income tax rates. The proposal is one of the most defining philosophical political events in the last 20 years. Pretty heady stuff for a Harvard MBA who, at times, struggles with his grammar. Why is this plan so significant? And how did George Bush come to present it?

The proposal is significant because it forces people to declare what they believe. After years of triangulation and governance toward the center, this tax proposal is so philosophically clear it is near impossible to take a position on it without divulging your own core economic and societal beliefs.

To support the proposal requires a legislator to actually contradict the majority of Americans, at least based on recent polls. A Gallup poll taken the day of the President's address reported that over 50 percent of those polled favored targeted tax cuts, aimed at middle-income taxpayers (whomever they are), rather than the broad tax cuts proposed by the President. Of course, some self-professed smaller-government, lower tax conservatives are waffling at the proposal, showing themselves to be more concerned with opinion polls than their supposed philosophy. The president's plan has been criticized by business, because none of the tax relief is aimed at corporations.

Self-professed liberals are forced to show their true colors, as well. In their passion to oppose anything that might be interpreted as a benefit for the rich, the opponents of the tax cut proposal will use any argument, however flawed, to help support their position. Think about this the next time you hear a congressman say, 'this tax cut jeopardizes our economic prosperity.' (George Gephart and Tom Daschle said this in the democrat response following Bush's speech.) They argue that if the government squanders the surplus, the economy will suffer and recessions will ensue. But this argument defies logic. Their underlying premise is that the government provides prosperity to the people. And if the government has less wealth to pass around, then people will be less wealthy. Of course, that argument might work if the government could create wealth. But it can't. It can protect the rights of individuals to create wealth, but governments create nothing of economic value. While uncontrolled budget deficits are not desirable, deficit spending and economic expansion are not inconsistent. Those who argue otherwise prove their true underlying philosophy - that redistribution of wealth is more important than anything else - and their willingness to use any argument to fight for their core cause.

Despite a seeming insatiable appetite for new programs and spending, our fearless leaders in Washington do not spend all of the money I send them. My personal tax payments are responsible for some percentage of the excess federal government revenue. So are yours. Our elected officials are now faced with a basic decision: shall they send the money back to those who sent it, in relative proportion to the amounts of the surplus provided by each specific taxpayer? Or is this another opportunity to arbitrarily redistribute wealth? The government cannot create wealth; only an individual can do that. Washington has more individuals' wealth than we thought they needed; let's see what they do with it.

David Moon is president of Moon Capital Management, a Knoxville-based investment management firm. This article originally appeared in the News Sentinel (Knoxville, TN).

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