The following Bloomberg Businessweek exchange between television host Charlie Rose and retiring UNC president/U.S. Debt Commission co-chairman Erskine Bowles reveals a lot about Bowles? take on taxes:
What about the Bush tax cuts? If you give more tax cuts, you lose revenue. First of all, I don’t think people like you and me need a tax cut, Charlie. We’ve said, let’s broaden the base, simplify the code, bring down rates, and cut the deficit. There are $1.1 trillion worth of tax expenditures, what I call spending, in the tax code that basically benefit people like us. What we’re saying is, let’s eliminate them. Charitable deductions, mortgage-interest deductions, deductions for state and local taxes. And if we eliminate them, let me tell you what we can do on income-tax rates. We can [bring them down] to 8 percent, 14 percent, and 23 percent. And we can take the corporate rate down to 26 percent.
Note the basic premise: It?s the government?s money. Government officials magnanimously agree to sacrifice some of that money to selected taxpayers in order to further a government goal. Bowles seems to think government has been too magnanimous.
Of course, there is another way to view the situation. Government takes resources away from their rightful owners through taxes. To the extent that this is necessary to fund basic core functions of government, it?s warranted. To the extent this is done to ?spread the wealth? or accomplish some other big-government goal, the process is flawed.
The government does not sacrifice when it makes due with less money because of lower marginal tax rates. Instead it reduces the burden on those who actually do sacrifice in order to allow government to operate.
