Trickle down happens with more things than I care to admit, but here at the BCD, it is the trickle down cost of money that concerns us. High tax rates carry a trickle down effect. This effect could be prominently seen with the passing of the luxury tax (repealed three years after it took effect in 1990). The upper class was suddenly faced with a tax on their toys, and in the face of that, refused to buy them. The people who made the toys suffered a far greater loss than those who refused to buy what they made. The loss of business at the middle class level was incredible. Remember, irony is best when you do not have to point it out.

When the tobacco companies are hit with outstanding fines for their participation in the killing of their customers, it is the customers themselves who will pay for the fine in the increased cost of cigarettes. And should the increase in taxes negatively effect those that provide goods and services and pay taxes in the upper bracket, it is those that use the goods and services that pay for the increase. We are the ones who, literally write their IRS payment.

The trickle down effect has even entered in the question of inheritance tax. The richest folks are the ones who pay this tax. The top 2%, but judging from what I have read, both in the media and from e-mail sent to me, you folks think that doing away with this tax is a good idea. Cutting taxes is a good thing. But if you look at the irony of this tax cut, this 2% adds $100 million or more to the budget surplus every ten years, and over $500 million if you extend their contributions to the common good over the next ten after that. That is a ton of cash that can go for improvements in the social programs that would do the most good.

There is no doubt that we, the middle and lower class, pay taxes. Our bills to federal, local, state, Social Security, and Medicare, can add up to almost 50% of our income, which makes everything we want to purchase cost twice as much because we have to earn twice as much before taxes.

But there is a responsibility to these tax cuts that is not being taken seriously. We are currently in the midst of the greatest economy in American history. There are surpluses, that have been miscalculated to be so much that tax cuts as a form of refund are being considered by Congress. They are looking at this surplus (estimated at $2.2 trillion, but realistically calculated to around $770 million by the Center for Budget and Policy Priorities) as if they had hit the lottery. This money could be used for such needed items as health insurance, better public schools, or even poverty. But start taking away from the realistic number, and you start eating into the very things that would be good for the nation. One candidate has suggested a $1.3 trillion tax cut that isn't really there. This solution, should please many but I guarantee, it will become a future problem.

Remember that the best irony doesn't need to be pointed out. Higher taxes are not good. Tax cuts are worse. They create atmosphere of uneven opportunity. There are still Americans who work their butts off and are not being paid an honest buck for the job, probably have no health insurance, and are unable to avail themselves of a good education.

It is my job to point this out. And right now, the thought of these mindless tax cuts is like washing your car before the migration.

Debt
Is there such a thing as good debt? What do you suppose bad debt is? And what kind do you have?

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