No, Paul. You Can’t Give What Isn’t Yours

August 23rd, 2010

Keith Hennessey breaks down a favorite rhetorical trick used by welfare state supporters:

In this view of the world, revenues belong to the government and are allocated by policymakers as gifts to those who need or deserve them.  When you hear that “we cannot afford to cut taxes” and “we should not give tax cuts to ______,” you are hearing this philosophy.

Money doesn’t just magically appear in the government coffers. A private citizen or firm earns income and the government takes a portion of that income. The money initially belongs to he or she who earned it. Using “we” to refer to the government suggests the funds being spent by the government belong to the government. This matters because if the money belongs to the government, then elected officials should apply their moral principles to figure out who needs or deserves it most. If the money belongs first to he or she who earned it, then elected officials should apply their moral principles to figure out whether they should take it from the earner and spend it on something else or give it to someone else. Those are fundamentally different decisions.

In this case, Keith is responding to Paul Krugman’s use of this convenient lie, but it’s widespread. When welfare state supporters discuss reducing taxes, they refer to it as “giving” money to some group. Krugman et al love using it, because it makes tax cuts sound like a plot to make the wealthy wealthier. In reality, of course, this is absolutely false—a tax cut merely reduces how much the government forcibly takes from someone.