McCain's Killer Question

Frank Turek

10/15/2008 12:01:00 AM - Frank Turek

If the economy is truly the issue that will decide this election, John McCain only needs to ask one rhetorical question to the American people during Wednesday night’s debate:  Are you currently working for, or have you ever worked for, a poor person? 

The implication is so obvious but, in today’s liberal-dominated media, a conservative’s first duty is to state the obvious. Jobs are produced by people with money who are trying to make more money.  This is why those engaging in class warfare by “sticking it” to the rich are ultimately “sticking it” to themselves.    Ask them, “Would you rather ‘stick it to the rich’ or have a job?”

The same is true for “sticking it” to corporations.  In the first debate, McCain said that corporate taxes in Ireland are about 11 percent, but he didn’t drive the point home that higher corporate taxes here (about 35%) drive jobs overseas.  Every dollar in tax savings is a dollar of profit to a company.  Why would any corporation stay in America if it can increase its profits dramatically by paying lower taxes overseas?   Any corporation would be unfair to itself and its shareholders if it didn’t pick up and leave. 

Everyone knows that if you want less of something, tax it more (everyone but Obama apparently).  Higher personal and corporate taxes will result in fewer jobs here and less wealth for everyone—you, your employer, and your government. 

How so the government? Not only do higher tax rates destroy jobs, they usually bring in less revenue to the government. That’s because higher tax rates reduce economic growth and send jobs and investments overseas.  So while the government may get 39% instead of 35% on marginal income, a slower economy means that the amount of taxable income is lower resulting in less total revenue to the government: 39% of $100 is less than 35% of $120.

While the mainstream media maligns the “Bush tax cuts,” those cuts were a win for everyone and the country.  In the first three years the of the rate cuts (2003-2006), economic growth rates more than doubled and helped create five million new jobs.  Moreover, tax revenues as a percent of GDP rose above the historical average.  Deficits grew because of increased spending, not decreased revenue.

As documented here, the win-win benefits of tax rate cuts have held true over the past fifty-plus years.  Since 1952, the highest marginal income tax rate has dropped from 92 percent to 35 percent, and tax revenues have grown in inflation-adjusted terms while remaining constant as a per­cent of GDP.   So it would be a blow to everyone if Obama let those tax rate cuts expire as he has promised to do (McCain wants to make them permanent).

What about the rich “not paying their fair share” (whatever that means)?  The truth is the top 1% of taxpayers in the U.S. pay 39% of all federal income taxes (that’s two percentage points higher than when President Bush took office).  The top 25% of taxpayers pay 86% of all income taxes.  And the top 50% of all taxpayers pay 97% of all income taxes.   If anything, the rich are paying far more than one should expect!  And the fact that about 40% of taxpayers pay nothing means Obama’s promised tax cut for the “middle class” is mostly welfare which would be a poor stimulator of the economy. 

We are told that Obama is the great unifier.  But you can’t unify a country by political class-warfare rhetoric that continually divides people by their income. Nor can you encourage economic growth by punishing those who create it.  There is only one way to alleviate economic hardship.  It is not by creating more government, but by creating more wealth.  And the way that you create more wealth is by getting the government out of the way of the wealth creators—hard-working Americans and their businesses.    

Leadership built on class warfare and socialist policies will not create a more prosperous future. Everywhere socialism has been tried it has failed. It has failed in countries such as the Soviet Union and Cuba, and it has failed in services such as health care.  (Rich Brits and Canadians come here for their health care; Gee, I wonder why?  Go to stand in line at the government-run Department of Motor Vehicles to find out.) 

Moreover, class warfare ignites the wrong kind of passion in the electorate– envy and revenge.  That’s wasted energy and only produces dependence on government rather than on the true engines of economic growth--opportunity, individual responsibility and hard work.   After all, the government can’t give you anything unless it takes it from another citizen first.  That’s not a good recipe for growth or unity.

I will say that Obama is right about one thing.  He is right when he derides the term “trickle-down” to describe the effect of tax cuts.  But he is right for the wrong reason. “Trickle-down” is not wrong; it’s just too weak to describe what actually happens.  What actually happens in the lives of most Americans is more like “Income-down” or “Job-down.”  The economy is fueled by job creation from the top (the rich); it doesn’t bubble up from the bottom.  That’s why Senator McCain needs to remind everyone of that fact by asking the question:  Are you currently working for, or have you ever worked for, a poor person?