Bush’s Tax Cut Plan is Both Moral and Practical

By Edwin A. Locke

Even before Bush’s new tax cut plan was announced, it had become a source of confusion and conflict. The anticipated plan was attacked by some as immoral, because it would give the rich too many benefits and by others as impractical because it would increase the budget deficit. Still others viewed it as a perplexing conflict between the moral and the practical, claiming that tax cuts would immorally benefit the rich but also stimulate the economy.

In fact, those parts of Bush’s plan that will cut taxes on dividends and reduce tax rates on income are both moral and practical. Removing the personal dividend tax will encourage more companies to offer and/or enlarge stockholder dividends and will thereby allow many stockholders to have a more predictable and dependable sources of income than what is provided by capital gains. The stock market woes of the last three years have driven many investors from the market. The chance to gain non-taxable dividend income will bring many of them back. It will also directly benefit ten million senior citizens who receive dividend income.

Bush’ plan is also practical, because it will take money away from unproductive government uses such as paying the salaries of bureaucrats who spend much of their time in useless and/or anti-capitalist activities. Instead, it will give the money to those who will use it productively–such as by investing in businesses. The budget deficit is a concern, but the tax cuts will stimulate the economy and thus bring in revenue to the government and cuts in spending can and should be made in the next federal budget.

Bush’s plan is moral because it is just. With respect to dividends, they are taxed twice, once at the corporate income tax level and again at the personal level–an obvious injustice. As to income taxes, although most taxpayers will benefit from Bush’s plan, the most wealthy will benefit the most–and they should. Due to progressive taxation, the more one earns the greater one’s tax bill as a percent of income. The top 1% of taxpayers pay 37% of all federal income taxes but earn only 21% of all income. The top 50% of taxpayers pay 96% of all income taxes but earn only 50% of all income. This exploitative policy, which soaks the middle class well as the rich, is based on the “Robin Hood” principle. Today, however, this symbol does not mean taking money back from looting rulers and returning it to its rightful owners but rather means taking money by force from people who earned it and giving it to people who did not earn it

The moral principle used to justify forced income redistribution is altruism. Altruism does not mean generosity or benevolent concern for the less fortunate. Altruism means: other-ism. It is the doctrine that it is your moral duty to live for others and to sacrifice your life, property and well being for theirs. It is the code of self-sacrifice. Under altruism the productive are the ones who must give and the non-productive are those who receive. The inability or unwillingness of the non-productive to create wealth gives them a moral claim upon those who do. This is not morality but immorality. The well-to-do should not have fewer but the same rights as the less well-to-do. Bush’s plan is a start in the direction of greater justice by giving the wealthiest 50% the largest tax reduction

Altruism is the opposite of Americanism. Americanism means you have the inalienable right “to life, liberty and the pursuit of happiness,” which includes property rights. It means that your life and property belong to you, not to the state or to society. It means that the government’s proper job is to protect, not to violate, rights. Acting in one’s own self-interest (while respecting the rights of others) is fully moral—it is the fundamental requirement of a successful and happy life. It means that you are not an object of sacrifice but a sovereign being. It means that every individual, whether rich or poor, has the same rights. Self-reliance, not self-sacrifice, is the American ideal.

The doctrine of altruism induces (and is meant to induce) guilt. It makes the successful feel that they have no right to their achievements. The goal of altruism is to morally disarm the producers of wealth so that they will not defend their right to their lives and property. It time that we replaced guilt with the desire for justice.

About Edwin A. Locke

Edwin A. Locke, a Professor Emeritus of management at the University of Maryland at College Park, is a senior writer for the Ayn Rand Institute (www.aynrand.org) in Irvine, Calif.