The Bush Tax Cut: Nothing More Than A Mountain Made Out Of A Molehill
By Tony DiPasquale (06/04/03)
Last Wednesday, President Bush signed a $350 billion dollar tax cut into law. Democrats naturally went into a frenzy, suggesting all sorts of negative outcomes short of the apocalypse. Could the Founding Fathers have ever imagined that we would have allowed our country to come to this?
Democrats, as anticipated, made references to the ballooning deficits that occurred following the Reagan tax cuts of the 1980's. Unfortunately, this tax cut does not even approach the size and scope of the cuts that took place during the Reagan years. Rather, a tinkering of the current code is a better description of the newly passed legislation, still its impact should be positive rather than negative.
Those who consistently oppose tax relief are quick to point to the 1980's and automatically make the correlation that it was tax cuts that created the budget shortfalls. Yet, purposely being overlooked is the increase in revenues to the treasury from $517 billion in 1980 to $909 billion in 1988. This can only mean one thing, spending was unconstrained. Sure enough, a closer look reveals that while treasury revenues were expanding at a solid clip, our representatives displayed all the fiscal responsibility of a teenager with their first credit card. The resulting effect was that federal outlays during this period exploded, increasing from $591 billion in 1980 to an unfathomable $1.06 trillion in 1988 (Office of Management and Budget). Of course, we are told that this was due to the massive arms buildup during the Cold War by Reagan, completely ignoring the fact that military spending was dwarfed by entitlement spending.
Now today, the same scenario is being set in place as our members of Congress are continuing their assault on the American peoples' pocketbook. Keeping in mind that this tax cut is spread out over a ten year period, the actual amount is only $35 billion a year, quite an anemic amount when compared to the 2004 fiscal budget of over $2.2 trillion. Yet we are still told that the government cannot afford this loss of revenue, an amount that equals just over one-percent of the budget. Could it be that our government is running so efficient that a one-percent tax cut is just not feasible? Hardly!
Aside from the fact that tax cuts typically spur economic growth, which in turn translates into increased revenues to the treasury, one would have a difficult time locating the areas in the Constitution that provide for most of Congress's spending. As Alexander Tytler once said, "A democracy…can only exist until a majority of voters discover that they can vote themselves largess out of the public treasury," a prime example as to why our Founders decided to establish a republic.
So what can we do? Well, for starters, we must insist that our representatives curb spending and return this republic to its constitutional limits. That being said, we must no longer allow Congress to control every dollar that we make. Under the present conditions, Congress has complete control over our earnings, allowing us to keep part of our checks only through their "good graces" or fear that we will revolt.
In order to end this situation we must pressure our elected officials to replace the existing system with a much less cumbersome national sales tax. Through the enactment of a consumption tax, each of us can determine how much tax we pay, and how much our representatives will have to spend.
Sure enough, some will quantify this as a regressive tax system. In order to combat this attack, staples such as food and modest clothing should be removed from taxation, thereby removing the burden on lower income earners. The current system, by contrast, only encourages the vices of greed, envy, and class warfare, an ill-fated situation for any society.
A national sales tax will have the benefit of making the tax transparent to the average taxpayer. Presently, the government can hide its immense appetite for tax revenues through withholding taxes on paychecks. Only when people are finally made aware of how much of their hard-earned money the government takes can we hope to return to a limited government as our Founding Fathers had envisioned.
Still, it is essential that we remain vigilant if a consumption tax is ever enacted. Should we instead rest on our laurels, we may wind up someday with both a consumption tax and an income tax.
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