Kipesquire inquires about the impact on national savings and is concerned that AmeriSave is not fiscally neutral. His Broken Windows Fallacy raises an important point: if the government lowers my net taxes but not does cut government purchases, there will be an increase in someone else’s net taxes either now or later.
Kip, however, makes a few gaffes in his critique. First of all, AmeriSave requires me to cut my consumption by $1000 (save the funds instead) to get the $1000 transfer payment. But Kip fails to acknowledge this important point. Kip then goes onto to endorse certain tax breaks for the well to do without applying the same standard of fiscal neutrality.
While some of his suggestions have merit, this statement shows what is really bothering Kip:
This program would only apply to the middle-class and working poor. Which means of course that the overall federal tax system will become even more progressive than it already is, “tax cuts for the wealthy” notwithstanding.
Shame on us liberals for not jumping on the Reverse Robin Hood bandwagon!