Axes not Taxes

February 23, 2012 12:02

Let’s tell them to stop the political posturing on taxes, and focus on real fiscal responsibility, i.e., the hard task of significantly reducing the number and size of federal departments. Substantial success will require a second American Revolution, a bloodless revolution.


By Robert C. Wilson


On May 3, 2011 I posted an article “Let’s Talk Taxes” in which I tried to make it clear that at current and projected federal spending levels, no tax federal income policy can by itself prevent a fiscal train wreck. Since then the related political rhetoric on this issue from both parties has changed little. The real issue was, and remains to be, that the federal government is too big, too expensive and too overreaching.

Few would argue that our federal tax regulations are not in need of reform. I use the term “reform” in a very narrow sense, since much of what is called reform in Washington is better termed “change” and frequently not improvement.

Conservatives say, with good statistical evidence, that increasing taxes inhibits economic growth.

Liberals say that rich people are not paying their fair share of taxes – that all Americans need to be “patriotic, tighten their belts and pay more taxes” as a remedy for deficits.

A repeat of relevant statistics shows that:

  • Income taxes account for only about one third of federal revenues. Increases from any income bracket will not eliminate the deficit.
  • 47 percent of Americans pay NO income tax. Isn’t there a “fair share” for a group this large?
  • The bottom 50 percent of U.S. taxpayers pay about 3% of total taxes.
  • The top 25 percent pay 85 percent of FIT.
  • The top 1 percent pay 40 percent of FIT.
  • Confiscating 100 percent of all taxable income from taxpayers earning $250,000 or more per year would furnish only 24 percent of the White House $4 trillion budget.

Unless one ignores these facts, it is clear that:

  • The solution to our fiscal crisis is not in revising the current income tax code.
  • If someone is not paying a fair share of FIT, it is not the folks earning over $250, 000.
  • Closing all of the “loopholes” will not cure the deficit. We still have a growing mountain of complex tax code and the salaries of 91,082 full time IRS employees to pay. Arthur B. Laffer, chairman of Laffer Associates and the co-author of Return to Prosperity, said in a recent article, “In a study published last week by the Laffer Center, my colleagues Wayne Winegarden, John Childs and I estimate that these costs (IRS costs) alone are a staggering $431 billion annually. This is a cost markup of 30 cents on every dollar paid in taxes.

Putting all of this together, the question remains, how can we put our fiscal house in order, i.e. getting the budget balanced and reducing the national debt?

It is clear that revising the income tax code will not suffice. But it is still a fact that the system is broken and badly needs repair. I believe if we keep an income tax and it is fair, it should be a flat tax, with a floor income level – few deductions and no “loopholes.” An added benefit would be elimination of the exorbitantly expensive IRS empire.

More important, we need to reduce the size of government. The website lists all agencies and departments attached to the federal government. The list includes all states and protectorates. With these removed from the list it still totals more that 400. Certainly all of these agencies can be more efficient, but many are just empires built by bureaucrats and furnish little or no meaningful service to the American people. And many came into existence by legislative action in direct conflict with the constitutionally enumerated powers of the federal government.

According to an article in the Washington Times, February 2, 2010 by Stephen Dinan, The Obama Administration projected the number of federal employees will grow to 2,150,000. The IRS 2009 Data Book indicates the number of IRS employees was 93,337 of which 91,082 were full time.

Over 50 years ago, while an undergraduate student at Washington University, I enrolled in a course in public speaking. As a requirement of the course I had to take part in a debate on federal aid to education. I argued against federal aid as it would eventually morph from “aid” to “control.” I was justifiably criticized for being too rigid in my assertions. But, look where we are today. What benefit do we receive from the throttle-hold Washington has on local education authority, and how much are we paying for it?

It will go hard for many special interest groups that have become fiscally dependent on Washington politicians, but the real path to fiscal sanity includes dismantling many federal departments and agencies, some of whose existence and functions are actually unconstitutional, which contribute mostly to increasing national debt and incremental erosion of constitutional liberties and principles.

In my May 3, 2011 posting I asked if there are enough elected officials with sufficient principle and courage to see it through. I suggested that readers ask them. Nothing will bring about real change and improvement like persistent grass roots political involvement in the way we vote and forcefully communicate with our elected officials. Let’s tell them to stop the political posturing on taxes, and focus on real fiscal responsibility, i.e., the hard task of significantly reducing the number and size of federal departments.

Substantial success will require a second American Revolution, a bloodless revolution. Our commitment needs the firmness of the final sentence of the Declaration of Independence, “…with a firm reliance on the protection of Divine Providence, we mutually pledge to each other our Lives, our Fortunes, and our sacred Honor.”


Robert Wilson’s bio

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