Latest Posts





Tax cuts are not ‘giveaways’, they are ‘take-less-aways’

I’m pretty sure that, at some point, you will have heard tax cuts for individuals or businesses, such as those contained in the Tax Cuts and Jobs Act passed in December 2017, as ‘giveaways’ or ‘handouts’ to ‘the rich’ or corporations. As California’s Rep. Barbara Lee put it last week,

“President Trump pushed through a tax scam that gave unprecedented handouts to billionaires and corporations”

To see what nonsense this is, think about what happens when taxes are cut. In 2017, a business, for example, would earn $100 million in revenues. In this simplified example, it would then would pay $38.9 million of that in tax. In 2018, the same business would earn $100 million in revenues. Thanks to the tax cut, it would now pay $25.7 million of that in tax.

Where is the handout? The giveaway? The government hasn’t handed or given this business a cent. Instead it has taken less of the businesses money from it. A tax cut isn’t a ‘giveaway’, it is a ‘take-less-away’.

Who does the income you earn belong to? 

This is not mere semantics. The idea that tax cuts are giveaways rests on the notion that all the income we earn belongs to the government in the first instance, and that government then decides how much of that income it will let each of us have. This is a rotten, collectivist idea.

There are real handouts to corporations

This isn’t to say that corporations don’t sometimes get ‘handouts’ or ‘giveaways’ from government.

In December 2008, President Bush approved a bailout plan and gave General Motors and Chrysler $13.4 billion in financing from TARP (Troubled Assets Relief Program) funds, as well as $4 billion to be “withdrawn later”. This literally was a handout to a corporation. It was government handing money over to it, money it had first taken from consumers. These same consumers had been so reluctant to hand over their money to GM willingly that the company’s sales had slumped by 45% in the previous 12 months. So, government took their money and gave it to GM on their behalf.

Tax cuts are not handouts. Handouts are handouts. If you oppose corporate handouts, make sure you’re opposing the right thing.

John Phelan is an economist at the Center of the American Experiment. 




Upcoming Events

  • Morning in Minnesota Breakfast Series Featuring Isaac Orr

    Location: The Oaks at Eagle Creek 1000 26th Ave NE Willmar, MN 56201

    Please join Center of the American Experiment on Tuesday, August 27th at The Oaks at Eagle Creek for breakfast with Center policy fellow and energy expert, Isaac Orr. Following his discussion of his new report, Doubling Down on Failure: How a 50 Percent by 2030 Renewable Energy Standard Would Cost Minnesota $80.2 Billion, Isaac will be joined by Rep. Tim Miller, Rep. Dave Baker, and Sen. Andrew Lang for a conversation about renewable energy standards in Minnesota. Tuesday, August 27, 2019 The Oaks at Eagle Creek 1000 26th Ave NE, Willmar, MN 56201 7:30 AM Breakfast & Check-In 8:00 AM Presentation…

  • Fall Briefing Featuring Kimberley Strassel

    Location: Ordway Center for the Performing Arts 345 Washington Street, St. Paul, MN 55102

    Purchase Tickets Here

    Register Now