The Working Americans’ Tax Cut Act Robs Peter to Pay Paul

If you listen to politicians in Washington, the Working Americans’ Tax Cut Act proposed by Virginia Representative Don Beyer sounds like a gift to the middle class. But by decreasing taxes for some by increasing them for others, it only robs Peter to pay Paul.

A tax decrease that is financed by a simultaneous tax hike might temporarily make a core group of voters happy, but isn’t a serious way to relieve economic pressure. Under the proposal, millions of middle-income Americans would see their federal income taxes reduced or even eliminated. Some workers below a certain threshold, roughly what is considered a “living wage,” would pay no federal income tax at all.

One of the bill’s selling points is that it’s “budget neutral,” but not for the Americans whose taxes will go up. The lost revenue from this “tax cut” is replaced with a new surtax on individuals earning over $1 million per year. Lawmakers claim this surcharge could raise around $1.5 trillion over a decade. In other words, rather than cutting taxes, the government is just shifting the burden.

But this position isn’t about “favoring the rich” over the middle class. It’s about being intellectually honest about the fact that the government, at the end of the day, can’t give you anything that it hasn’t taken from somebody else.