Friday, April 15, 2005

 

Mark Alexander On Income Redistribution Day 2005

Mark Alexander makes several good points regading our tax system and spending. Currently both are bloated from speciatly group add-ons. Pork barrel spending continues to grow out of control and we can no longer blame just the Democrats, the Republicans are as guilty as the rest. The tax code has so many loopholes and special tax breaks for so many special interest groups and demographic groups that it is simple un-understandable for many Americans. For the last year our economy has thretened to get out from under the Clinton recession. However, as the deficit grows due to uncontrolled spending, the economy is having a hard time getting out from under the shadow of $7.8 trillion. As conservatives, we need to support smaller governmnent, lower taxes, and less spending. The first two can't happen without the last part.

From Alexander's article:

In fact, the cost of spending and regulation now exceeds $24,000 per person per year. The total combined public and intergovernmental (so-called "trust-fund") debt is approaching $7.8 trillion. Not content to rest on their laurels, the FY 2006 House and Senate budgets will rack up an additional $365 billion in debt.

On top of the current '05 budget's bloated social and discretionary spending, there were more than 14,000 clear examples of unrestrained spending (AKA "pork-barrel") projects appropriated at a cost of about $27.3 billion. Case in point: Consider the $80 billion Emergency Supplemental Appropriations Act for Defense, the Global War on Terror, and Tsunami Relief (H.R. 1268). It includes $103 million for the Emergency Watershed Protection Program; $55 million for wastewater treatment in Desoto County, Mississippi; $25 million for the Fort Peck Fish Hatchery in Montana; and, well, you get the picture.

All that changed in 1913, however, when the central government started taxing income. At that time, federal taxes were equal to 3% of GDP and the entire tax code was two pages. Now taxes are in excess of 20% of GDP and the tax code is more than 46,000 pages (including 481 separate tax forms). Additionally, taxpayers will spend a cumulative 6.5 billion hours complying with that code, and due to its complexity, more than half of taxpayers will rely on "professional preparation," costing them more than $200 billion.

Former Federal Reserve Board Chairman Paul Volcker warned recently that, once again, America is “skating on thin ice” because of federal budget deficits (read: unrestrained federal spending) -- and we are headed for another an inflationary cycle similar to that of the 1970s.

As for tax rates, we are reminded of these supply-sider words from a former president who crusaded for tax reduction: "Lower rates of taxation will stimulate economic activity and so raise the levels of personal and corporate income as to yield within a few years an increased -- not a reduced -- flow of revenues to the federal government. ... The present tax codes ... inhibit the mobility and formation of capital, add complexities and inequities which undermine the morale of the taxpayer, and make tax avoidance rather than market factors a prime consideration in too many economic decisions."

Ronald Reagan? Nope. Try John F. Kennedy.

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