Curiously, the reaction of the largest group affected by the proposal hasn’t been sought namely, those footing the bill. Well, if the taxpayer’s point of view hasn’t been aired yet, by golly, it will be now.
Under the Clinton administration, Americans paid federal government taxes like never before. According to the Commerce Department, in the first quarter of 1998, federal taxes peaked at 21.7% of gross domestic product (GDP). By comparison, the World War II high, when the nation was fighting wars in two hemispheres, was only 19.9%. The post-war average has been 18.5%.
Thus, because of the strong U. S. economy, federal government revenues have gushed in, surging well above projections. With markets beginning to falter now, though, Bush’s tax reduction may offer the economy a lifeline. Even Federal Reserve Chairman Alan Greenspan, an ardent deficit hawk, recommended tax cuts as a means of staving off recession.
If ever there was a time to lower taxes, brother, this is it. But given that the government’s eyes tend to be larger than its wallet, perhaps it’s not surprising how difficult reducing the tax burden is even though Washington is currently awash in cash.
Senate Democratic leader Tom Daschle summed up the anti-tax cut mindset: “The tax cut must be affordable and responsible. It can’t use up money we need for education, prescription drugs and other necessities.” I guess it depends on what your definition of government “necessities” is. You can bet, though, that Daschle’s is a lot more generous than yours or mine.
But there’s a more important reason for cutting government’s take of our family income. Taxes aren’t just a financial matter: they’re a moral issue, too. People’s earnings are their own property, just like their home. Each tax dollar deducted from someone’s hard-earned pay is taken under the threat of force if done privately, it would be considered armed robbery. At a minimum, this should give us pause about taking one dime more than necessary.
Moreover, the federal income tax is a particularly odious tax. It’s confiscatory the top federal income tax rate is nearly 40% of marginal income. (Remember that when the federal income tax was first enacted in 1913, opponents feared it might someday balloon to 1% of a person’s income. What alarmists our ancestors were!)
When combined with Medicare and Social Security taxes, state and local taxes, and other government fees and taxes, some face an effective marginal tax rate of well over 50%. This means they spend more time working for the government than for themselves, making them virtual tax slaves.
Federal income withholding also has a cunning, insidious effect: You don’t miss what you don’t have. Most working people pay enough federal taxes each year to purchase a new car only they’re buying the car for someone they’ll never meet. Then, there’s the stiff penalties more than a few delinquent taxpayers have found themselves facing many long years in the slammer just for trying to protect their private property from the grubby fingers of the IRS.
Besides, Bush’s tax plan wouldn’t exactly throw federal government agencies to the wolves. His budget for next year is expected to be a monstrous $1.9 trillion, even after taking the proposed tax cuts into consideration.
Further, over the next 10 years, Washington is expected to rake in $5.6 trillion more than it spends. After subtracting $2.5 trillion earmarked for Social Security, $3.1 trillion is left for other purposes. Bush’s proposal would take half of this government plunder, roughly $1.6 trillion, and return it to its rightful owners the productive individuals who paid it in the first place.
For an overtaxed populace like ours, every decrease in taxes represents an increase in liberty. The less the state takes, the more we’ve got to spend on our families, homes, businesses, or whatever we choose. Each tax reduction works like a crowbar prying a massive, crushing block off the taxpayer’s chest and revitalizing the gasping patient with a breath of freedom’s fresh air.
The President’s tax reduction plan would put $1,600 of cold, hard cash each year into the average family’s pockets. More importantly, though, it would be a small but well-deserved victory for our nation’s most overburdened yet least represented special interest group the good, old American taxpayer.