August 23, 2011
Tax Hikes Won't Work
By Jim Babka

Quote of the Day: "Would you be willing to give up your favorite federal program if it meant never having to pay the income tax again?" - Harry Browne

You are probably aware that the Debt Deal created a committee of 6 Representatives and 6 Senators that would create an agreement intended to reduce yearly budget deficits. The plan they hatch will be subject to an up-and-down vote in both the House and the Senate, with no amendments.

Also, this "American Politburo" has the power to include tax hikes in their plan.

Calling this committee the "American Politburo" is strong language. It might even seem shocking to you. I explain why this is the ACCURATE label over at the Downsize DC Foundation website.

We will probably say more about this Politburo in the weeks to come.

To start, we urge you to tell your Representative and Senators to OPPOSE any plan that includes tax hikes.

You may borrow from or copy this letter...

The Debt Deal created a 12-person "American Politburo" to hatch a long-term deficit plan. I disagree with its creation.

But my concern right now is that raising taxes are "on the table."

I insist that you tell the Politburo members to take tax hikes OFF the table...

 * Congress has a history of spending ALL it can tax, PLUS more that it can borrow. There is zero reason to trust that tax increases will lower the debt by so much as a dime - In fact, if there was no other reason to oppose tax increases as a solution to the federal debt problem, this would be sufficient!
 * Higher taxes rob the private economy of capital investment, which hurts economic growth and, ironically, leads to LOWER tax revenues over time
 * Obamacare, Dodd-Frank, Sarbanes-Oxley, and other regulations are hobbling economic growth, and higher taxes will exacerbate our economic woes

Moreover, the evidence shows tax hikes don't work:

* CATO's Michael Tanner notes that "Britain, Greece, Portugal, and Spain have all included major tax hikes as part of their austerity packages. The result across the board has been anemic economic growth and scant progress toward debt reduction."
* Harvard economists Alberto Alesina and Silvia Ardagna studied 100 debt-reduction efforts throughout the world from 1970 to 2007. They discovered that combining spending cuts and revenue REDUCTIONS was more likely to result in debt reduction than clustering spending cuts with revenue increases.

The deficit problem can NOT be solved by raising taxes. It can be solved ONLY if you...

* Slash spending, drastically -- that means you must put Defense and Homeland Security "ON the table"
* Develop transitions and opt-out programs to make Social Security and Medicare less costly
* Deregulate the economy and simplify the tax code to make it easier for businesses to start and expand
* And CUT tax rates so that more businesses will be inclined to stay in America or to come here

Economic freedom, with a simple and equitable tax structure, would ATTRACT savings and investment. If this is combined with the downsizing of the federal government, we can quickly get rid of our record deficits.

I hope you won't let your ideology blind you to the evidence I've presented here.


You may send your letter using's Educate the Powerful System.

Do your friends, family, and associates know that the Debt Deal is likely to include a tax increase? Might they disapprove? If so, please share this message with them, with a PERSONAL request from you to JOIN YOU in sending a message. provides this service thanks the support of lots of subscribers who are also monthly pledgers, who give anywhere from $1 per month to $250 per month. Please join their ranks and help spread this service to others.

Jim Babka
President, Inc.

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