NY Times Op-Ed Writer's Muddled Logic: Money Not Paid in Taxes a Gift from Government

It’s a really skewed view of the relationship between citizens and the government – that anything you earn and get to keep by not paying to the government in the form of taxes is a show of benevolence from the government.

But that’s apparently the view of Richard H. Thaler, professor at the University of Chicago. In the Sept. 26 New York Times, Thaler, declares that tax cuts are a gift in his op-ed “What the Rich Don’t Need.”

“WANT to give affluent households a present worth $700 billion over the next decade?” Thaler wrote. “In a period of high unemployment and fiscal austerity, this idea may seem laughable. Amazingly, though, it is getting traction in Washington. I am referring, of course, to the current debate about whether to extend all, or just some, of the tax cuts of President George W. Bush – cuts that are due to expire at year-end. They’re expiring because the only way they could be enacted initially was by pretending that they were temporary.”

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This caught the eye of CNBC’s Joe Kernen, the co-host of “Squawk Box.” On the Sept. 27 broadcast of his show, Kernen pointed out the flaw in that logic.

“Over the weekend, I was reading in The New York Times – it was one of their professors that writes. I forget the guy’s name. I always disagree with him,” Kernen said. “[H]e talks about it as a $700-billion gift to the rich. And I just have a problem when they look at – OK, so they're using the Clinton tax levels as the standard of where we are. And anything diverges from that is a gift, even though it's money you earned. It’s a gift back to you.”

Kernen questioned why the talking point used by tax cut opponents is always based on what tax levels were during the Clinton presidency and why it is a view that a certain percentage of what taxpayers keep is gift to the them.

“Let's go back to pre-, before Reagan began was around, when it was 70 percent. Anything less than 70 percent, is it a gift to the taxpayer?” he continued. “[D]oes it start at ‘you pay 100 percent to us and anything we let you keep after that is a gift’ or does it start at ‘0 percent and anything you charge me prove that you need to spend that.’ Why don't you do it that way? Prove that you need anything above zero percent. Show me you’re not going to waste it and then prove you can do it.”

Fill-in co-host Michelle Caruso-Cabrera, author of the forthcoming book “You Know I'm Right: More Prosperity, Less Government” summed it up succinctly by explaining what the intended relationship of government and the citizens is.

“They work for us,” Caruso-Cabrera said. “We don't work for them.”