“Taxation destroys American livelihood by taking away disposable income that would be spent by consumers on goods and services. The net effect is an increase in the unemployment rolls and universal misery!” 

That quote came from my decades old spiral notebook which I happened upon while de-cluttering my house.  Every time I look at that statement I am blown away by the import of it.

Let me deconstruct the import of that statement by reconstructing what I recall of the lecture.   The only Macro term one needs to know to understand this concept is the “multiplier” effect.  This simple scenario explains how a reduction in sales, state, and federal tax rates results in greater revenue in the sales, state, and federal coffers.  The remarks in {brackets} are mine to facilitate the dear reader’s understanding.

“Mr. and Mrs. Joe Sixpack are in the market for a washing machine. 

The Sixpacks go to the store and purchase a washing machine.  This sends a message to the washing machine manufacturer to produce one more washing machine. 

The Sixpacks are feeling so good about their purchase they invite their neighbors, Mr. and Mrs. Chowhound, over to see all of the modern conveniences of the new washer. 

The Chowhounds are so impressed that they decide to purchase a new washing machine.  This sends a message to the washing machine manufacturer to produce one more washing machine. 

{See where this is going…}

The Sixpacks, the Chowhounds, and tens of thousands of other consumers are participating in the free market economy.  Thousands of families going to the store to purchase washing machines cause the manufacturer to hire more employees to build more washing machines and consequently dryers.   

With their new found income the new employees go and purchase a myriad of goods and services.  The additional expenditure on goods and services cause other manufacturers to hire new personnel.  Department stores hire new personnel to sell the goods and services.  These new employees, benefiting from the reduction in tax rates, go and purchase goods and services. 

Thus lower taxes and the multiplier effect trickles through the economy…More employees translates to an increase in state, federal, and sales tax revenue.

{An observation confirmed by no less than President John F. Kennedy.}

This is all well and good until Democrats introduce the newest tax, purported to ‘level the playing field for all our citizens.’  For the sake of discussion let us call the new tax, ‘The Patriot Tax.’

{I infused this Bidenism to accommodate the discussion}

The Patriot Tax (TPT) becomes law and all persons holding a job must pay the tax.  Oh, by the way, the TPT has an increased sales tax component, therefore the unemployed and the underemployed are compelled to pay higher taxes.  In effect, the TPT is a regressive tax, therefore the burden is borne by those who can least afford it – the disadvantaged.

The disposable income of the Sixpacks and the Chowhounds is diminished by several percentage points.  With a larger tax burden (less disposable income) the Sixpacks and the Chowhounds defer spending the remaining disposable income on a new dryer. 

The manufacturer of washers and dryers experiences decreased demand for his product and lays off employees.  Unemployment roles increase, families cannot meet their obligations, and general misery ensues.  To deflect the bad press, the Democrats and liberals

{and their willing accomplices in main stream media (a term not coined in 1977)}

blame the manufacturers, i.e. the rich.  Class warfare arises and more legislation is passed to level the playing field.” 

Any of this sound familiar?  Full employment reduces the need for billions of dollars in transfer payments in the form of welfare.  A reduced tax burden results in greater disposable income that when it is spent, sends a signal to produce more, and because of greater demands on production leads to hiring more workers, which provides new employees more disposable income, which is spent on more goods and services.  Hence the multiplier effect. Viola!

Why this is such a difficult concept for Americans to grasp defies explanation?  How democrats and liberals have been able to carry this off for 40, no almost 70 years is SICK. Please pass this along to Obama-Biden voters. Maybe my recitation of that lesson learned so long ago will be like an atom in a cyclotron and destroy the underpinnings of the Obama-Biden pogrom for “Change.”