Tuesday, February 15, 2011

Taxes and logic

About 10 days ago, House Majority Leader Eric Cantor was the featured speaker here at William & Mary's Charter Day ceremony. The text of his speech can be found here. One usually expects a visiting politician to stick to his standard talking points, and Cantor largely did so. Still, I found him oddly rude to his audience.

First, he did not address his remarks at students at all, except in the sense that one can assume they are friends of William & Mary, opening as follows: "President Reveley, the Board of Visitors, faculty, administration, alumni, friends of William & Mary, thank you."

Second, and more substantively, the core argument of his speech was that high tax rates in this country — especially high tax rates on top earners — are inhibiting the U.S. from maintaining its traditional leadership position in innovation and entrepreneurship. As most people know, Cantor included, tax rates on top earners used to be much higher during much of the post-World War II period, when the United States built its reputation for innovation and entrepreneurship. For example, the top marginal rate did not fall below 70% until 1981. Yet there was a lot of innovation and entrepreneurship in the U.S. before that time. Apple Computer, one of his examples, was founded in 1976.

Logically, then, Cantor was telling William & Mary students that they are either intellectually weaker than their parents, or extremely mercenary in their behavior, since he feels that they will not innovate or become entrepreneurs unless taxes are lowered still further (the top marginal rate is now 35%), even though their parents clearly had no trouble producing innovation and entrepreneurship for less extreme financial rewards. It may just be me, but I found that fairly insulting.

Cantor also seemed to suggest, in his speech, that taxes were independent of government spending. So he complained about both taxes and "runaway debt" (a result, in part, of reducing taxes without cutting spending), as though they were unrelated. And he implied he was offended by the notion that raising taxes might help us deal with the current economic crisis. Well, it is not raising taxes that might help — it is what we do with the resulting revenue. Again, this is basic logic, but Cantor apparently believed that William & Mary students cannot make the connection.

Cantor is obviously a smart guy; having spent several years at William & Mary's law school he should know that our undergraduates are smart too. It would have been nice if his speech had not both assumed and implied otherwise.


  1. You are too kind. There was much more in his speech that was offensive, not the least of which was his exasperated tone and overly dramatic delivery. One won't have the true pleasure of experiencing it from just reading the transcript. I expected him to tone down the politics and focus more on his relationship with William and Mary and how the school prepared him for his career. Instead, we got an illogical stump speech. Who knew that no innovation would be coming out of the UK in the next 50 years? Or that the reason entrepreneurs are hesitating to start businesses is because of the tax burden? I had mistakenly thought it was because they couldn't get loans from the very green banks that the government bailed out. If I had known in advance what I would be subjected to, I wouldn't have taken part in the ceremony.

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