Is the Government’s Budget Equal to GDP?

by | Aug 8, 2016

Is the Government’s Budget Equal to GDP?

by | Aug 8, 2016

Memo to news people: tax cuts don’t have to be paid for. The money is ours; the government takes it from us by threat of force, i.e., taxation. It’s government programs that have to be paid for. Tax cuts are not government programs. So if you want to ask how government programs will be paid for if taxes are cut, fine. I will answer that the programs should be abolished.

The more you think about the notion that tax cuts must be paid for, the more ridiculous it sounds. One might say tax cuts have have to be made up for (by cutting spending), because the government would have less revenue, but not paid for. Moreover, since taxpayers pay for everything government does (sooner or later), the conventional wisdom about paying for tax cuts translates to: How should the taxpayers pay for their tax cuts? To which the only proper answer is: Huh? Say what?

From the taxpayers’ vantage, tax cuts cost nothing. We might say they cost the politicians, bureaucrats, and government contractors something–but it’s something they had no right to anyway. Securing my wallet “costs” a would-be thief my money. But who cares?

Final point: a hidden premise of this belief is that the government properly owns all wealth and income. In budget-talk when the government gives you a chance to recover or hold onto some of your money, say, via a tax deduction or credit, that is known as a “tax expenditure”; in other words, it’s just another way for government to spend (its) money. But under that way of thinking it follows that not taking the money in the first place is also a tax expenditure. What’s the difference between, on the one hand, taking money and giving some back and, on the other, not taking the full amount to begin with? Thus the whole GDP must be the government’s budget because the politicians, as they see things, “spend” all of it one way or another.
This is pretty absurd. So let’s just acknowledge that what you honestly earn is yours and that the government is a thief because taxation is theft.

About Sheldon Richman

Sheldon Richman is the executive editor of The Libertarian Institute and a contributing editor at He is the former senior editor at the Cato Institute and Institute for Humane Studies; former editor of The Freeman, published by the Foundation for Economic Education; and former vice president at the Future of Freedom Foundation. His latest books are Coming to Palestine and What Social Animals Owe to Each Other.

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