Spending Cuts Vs. Tax Hikes

Member Group : Jerry Shenk

Do you remember the old saying about paying your taxes with a smile? Neither
do I. The folks at the IRS don’t accept smiles. They want our money. If
we’re not careful, they’ll get more of it.

The Washington debate over "revenue enhancement" (tax increases) versus
spending cuts has resumed. Historically, politicians in both parties have
been poor stewards of our tax money, but today only one party contains a
modest element that advocates tax moderation and genuine spending cuts as
the only responsible route to fiscal sanity.

Voters will settle the argument. When voters allow tax increases, we
sanction mismanagement. We relinquish our cash, our choices and our autonomy
to a largely unsupervised political class that generally spoils whatever it
touches. Given the state of the American economy and the massive national
debt, it’s alarming that there’s a debate at all. America. Must. Curb.
Spending.

Washington needs systemic change, not more tax collectors for the welfare
state. Washington politicians have forgotten that the money they’re spending
is our money; the debt they are amassing is our debt; and the burden created
by their financial irresponsibility is ours and future generations’ to bear.

Taxation is the best example of government’s power to coerce. There is
nothing voluntary about paying taxes in America. High taxes discourage
taxpayer compliance and increase government coercion.

Too many politicians consider our earnings the government’s money, and
anything left after Uncle Sam picks our pockets as a "gift" from government.
Liberals think it’s greedy to want to keep our own money, but it’s "justice"
to demand someone else’s at the muzzle of an IRS gun.

This election year, national Democrats have settled on a class-warfare
theme, betting that they can avoid a tax backlash by focusing on tax hikes
for the "rich." They think middle-class Americans will accept higher taxes
that only affect others. Apparently believing it will make tax hikes more
palatable, Democrats say that no individual making less than $200,000 "will
pay a penny more."

Democrats used the same empty rhetoric in 1993 before they raised everyone’s
taxes, including taxes on seniors’ Social Security benefits. If the
government confiscated all the combined assets – everything – of the 5
percent of Americans who already pay about 60 percent of all federal taxes,
it couldn’t even close one annual Obama budget deficit, much less retire the
national debt – and there would be nothing left to collect from this group
the next year. So, if they wish to continue spending – and they do –
Democrats must raise taxes on everyone.

Your circumstances will determine how a general tax increase would affect
you.

If the 2001 tax rate reductions on income were allowed to expire, for
example, the 1992 tax brackets would be restored. The bottom 10 percent tax
bracket would become 15 percent, a 50 percent increase, and more than 5
million low-income families and individuals who fell off the tax rolls would
again become subject to taxation. The top bracket would increase by about 11
percent. Marriage penalty relief would be eliminated. The Child Tax Credit
would be cut in half.

The tax bill for a family of four earning $60,000 would rise about 60
percent, or more than $150 per month. Taxes for an elderly couple earning
$40,000 a year would increase from under $600 to nearly $1,500 – more than
$70 per month.

Nearly 50 million working married couples would pay an average of $2,900
more, and about 27 million small-business owners would receive job-killing
tax bills averaging nearly $4,000.

Some politicians also propose to raise the 15 percent tax rate on
investment, saying that only the wealthy would be affected. Not true.
Politicians who would increase tax rates on capital gains are either
ignorant of or indifferent to the fact that about 20 percent of the
taxpayers who file capital gains annually have incomes below $50,000. Also,
many employers have created employee 401(k) plans to replace pensions.
Millions of regular folks with IRAs and 401(k)s would be hurt by this tax
hike, not by immediately paying the taxes but by the market setbacks that
will result.

Facing a rate increase, individuals, corporations and institutions will sell
off assets to lock in market gains at the lower rate, depressing markets
along with the retirement investments of millions of Americans. By raising
investment tax rates, the same politicians that have no plan to save Social
Security would also damage the alternative retirement investments of
Americans at all income levels.

Removing capital from markets through taxation kills economic growth,
innovation and jobs.

Tax rate reductions didn’t cause deficits and debt. Overspending did.
America needs frugality – and private-sector growth to increase revenues –
not more job-killing taxes.

At the current tax rates on income, American taxpayers are living on money
liberal Democrats didn’t want us to have and don’t want us to keep. If we
want lower taxes and spending, we must elect candidates who will support
both. Taxpayers would benefit if much of the current Congress received
pensions rather than salaries.

Voters will settle Washington’s debate. If Americans elect/re-elect
spenders, they’ll get what they deserve – and no one will like the
inevitable result.