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Opening Arguments

Pocket change

Here, from an editorial in the Bloomington Herald-Times, is the essence of the liberal argument against the just-passed 5 percent cut in the Indiana income tax. I've heard and read variations of it from all over the state:

For those who like averages, the "average" Hoosier would realize $114 in annual tax savings, or $2.19 a week.

It's a symbolic gesture, meant to show the governor and lawmakers are on Hoosiers' side by throwing them a few bucks that could have totaled something of significance if channeled to programs designed to improve education, help senior citizens or shore up the safety net for people living in poverty.

That's the argument generally used against any tax cut -- it will be so small it won't make a difference with individuals, so much better to "invest" the money where it will do the most good -- and it's the flip side of the coin for the argument used for tax increases: So little will be taken from you that you'll hardly notice, but when we add it all together we can do so much good with it. The embedded assumption, of course, is that government knows better than we do how to spend our money on what we need.

The truth is, despite pundits' use of words like "whopping" and "record setting," that almost all tax changes -- hikes as well as cuts -- are incremental. The hikes are incremental because people wouldn't stand for dramatic new chunks of money being taken from them. The cuts are incremental because we've gotten used to government services and would feel shocked if great numbers of them were suddenly disappeared or downsized. Liberals like incremental hikes because they know we'll stand form them and eventually the total will be huge. Well, I'll take incremental cuts for the same reason. Five percent here, 6 percent there, and soon we'll be talking about real money.

As for the  economy, an argument can be made that there will be a stimulative effect, if only a modest one. There are tax reductions besides the income ones in the new two-year budget -- inheritance taxes, financial institutions taxes, corporate taxes. All will reduce the cost of doing business, and it would violate the laws of economics for us not to get something more of what costs less.

But, hell, we don't even have to go there. The cuts overall amount to about $1.1 billion. That's $1.1 billion of our money that we get to keep in our pockets and the government doesn't get to confiscate.