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Health & Fitness

The Misunderstood Radical Right: Taxes

3rd in the Series on The Misunderstood Radical Right. A Conservative viewpoint on Federal taxes.

The Misunderstood Radical Right:  Taxes -- by Cindy Peak

When I first introduced this series, a commenter said:  “Looking forward to hearing the "Radical Right's" view on taxes. I believe that there are essential services, i.e., education, streets maintenance, etc. that benefit all of us and must be supported by an adequate tax base.”  Glad you asked!

History

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Let’s start with a little background.  The Revenue Act of 1861 was the first time a tax was imposed upon income in the United States of America.  Prior to that, taxes were gathered on imports/exports, excise taxes, and through the issuance of Treasury Bills. (http://www.policyalmanac.org/economic/archive/tax_history.shtml)

That Act was repealed about 10 years later, but was soon replaced with a flat rate Federal income tax in 1894.  This tax was ruled to be unconstitutional because it did not apportion the tax according to the population of each state.  Undaunted, in 1913 Congress passed the 16th Amendment.  Later that year, “Congress passed a new income tax law with rates beginning at 1 percent and rising to 7 percent for taxpayers with income in excess of $500,000.” (http://www.policyalmanac.org/economic/archive/tax_history.shtml)

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After the Great Depression, more changes occurred to the tax laws.  “[T]he Smoot-Hawley tariff of 1930 raised import prices… President Hoover raised taxes in 1932… FDR raised taxes sharply in 1937 in an attempt to balance the budget… Late in 1945 under President Truman’s leadership, Congress cut marginal tax rates and… the economy soared toward full-employment.”  (http://blog.heritage.org/2010/10/20/hoover-fdr-and-clinton-tax-increases-a-brief-historical-lesson/).

Role of the Federal Government

So what exactly is the Federal Government supposed to do?  To get the definitive answer, one must look at the US Constitution.  From Article I, Section 8 of the Constitution, we find the following:

“The Congress shall have Power To lay and collect Taxes, Duties, Imposts and Excises, to pay the Debts and provide for the common Defence and general Welfare of the United States; but all Duties, Imposts and Excises shall be uniform throughout the United States.”   You can continue to read the rest at:  (http://www.archives.gov/exhibits/charters/constitution_transcript.html); it goes on to innumerate a total of 18 powers of the government.  They are summarized below: 

  • To tax, borrow money, coin money, deal with counterfeiting
  • To regulate commerce with other nations and among states and the Indians
  • To establish uniform laws regarding immigration and bankruptcy
  • To establish courts
  • To deal with patent rights (in order to promote science and technology)
  • To provide for an army and navy, manage same, declare war
  • To  provide for a post office and post roads
  • To  establish a seat of Government
  • To make law

 

What is “Essential”?

So given these few powers, what is essential for the Federal Government to do?  There is no provision for the Federal Government to provide charity, healthcare, income to the poor, support to farmers, housing for the poor, telecommunications for the poor, insurance for citizens or non-citizens, disaster relief, or energy management.  Given that, we could eliminate a number of cabinet positions and the associated departments, including:   Secretary of Agriculture, Secretary of Education, Secretary of Energy, Secretary of Health & Human Services, Secretary of Homeland Security, Secretary of Housing & Urban Development, Secretary of Labor, and Secretary of Veterans Affairs.

Not that any of the above are not worthy endeavors, it is that they are not appropriate for the Federal Government to be doing them.  The point here isn’t to abolish these; rather it is that the Federal Government is too big.  It is so because it has taken over responsibilities that do not belong to it and it mismanages the ones that do belong to it.  The fault lies with both major parties.

The departments that remain – Treasury, Defense, State, Justice, Transportation, Interior, and Commerce -- can be shrunk down too.  Once you get down to the essentials, the Federal Government shrinks, its responsibilities shrink, and the amount of money it takes to operate it shrinks.  Even Congressional staff budgets should be cut.  There has been a “39 percent increase in the past four years [data from 2010] in the number of staffers earning at least $163,358 [per year]... There are approximately 10,000 House staffers [does not include Senate], including district office workers, according to the chief administrative officer.”   (http://www.cato.org/blog/number-congressional-staff-real-problem). 

As an example, Rand Paul, the Senator from Kentucky was in the news recently for returning $600,000 to the Treasury from his office’s operating budget; this amount was said to be over 20% of his operating budget.  Last year, he returned $500,000.  (http://dailycaller.com/2013/02/21/rand-paul-returns-surplus-operating-budget/).  While Senator Paul should be applauded for this effort, let’s also stop and do the math:  that means his annual operating budget is on the order of $2,500,000 to $3,000,000 (I base my spread on the notion that if they said it was over 20%, that it wasn’t over 25% or they would have used that number).  And he’s only one of 100 senators and 425 congressmen.  If they each got that budget, that’s $1,312,500,000 - $1,575,000,000.  I’d be willing to wager there could be some cost-cutting measures employed here to help the cause of reducing our debt.  If each of them just trimmed their budgets
like Senator Paul, that’s a savings of $315 million per year.  Imagine if every office in the United States government decided to be frugal, what could be saved!     

How do the essential things get done if we do away with these bureaucracies?  Someone should do these things, even perhaps some government!  But the Right believes that things not delegated to the Federal Government are either the peoples’ to do or the States’.  The Right believes that the closer the power that is given is to the people, the more control the people will have over it and the more efficiently it can be done.  Oh and guess what?  The Constitution even agrees  with us! 

Want to see?  It’s in the 10th Amendment!  And it says:  “The powers not delegated to the United States by the Constitution, nor prohibited by it to the States, are reserved to the States respectively, or to the people.” 
(http://www.archives.gov/exhibits/charters/bill_of_rights_transcript.html)  Each State can decide how best to provide for its citizens within its charter.  Taxes
can be levied at the State level, where the people paying the taxes can have
more control over how much tax they are willing to pay and how many of these
services they actually want to pay for.  Because each state’s representatives actually live in the communities they represent, they are more inclined to listen to the people, instead of special interest groups.  They have to face their constituents in the grocery stores and have a harder time of hiding from “We the People” than do those folks who go off to Washington and are rarely seen again.  There is more accountability to the people within the states, and even more at the local government levels.  The people can choose with their vote in how they get accomplished or choose with their feet to go to a state whose policies they prefer.  It is ultimate power for the people.  

Taxes

Today’s (2013) rates are graduated according to the amount of taxable income from 10% at the lowest bracket to 39.6% at the highest tax bracket.  (http://www.forbes.com/sites/kellyphillipserb/2013/01/15/irs-announces-2013-tax-rates-standard-deduction-amounts-and-more/)  “Top earners are the target for new tax increases, but the federal income tax system is already highly progressive. The top 10 percent of income earners paid 71 percent of all federal income taxes in 2009 though they earned 43 percent of all income. The bottom 50 percent paid 2 percent of income taxes but earned 13 percent of total income. About half of tax filers paid no federal income tax at all.” 
http://www.heritage.org/federalbudget/top10-percent-income-earners

Ideally no one should pay taxes!  But if we have to pay, the Right believes that everyone should be a part of it, because we all need to be responsible.  Should everyone pay the same?  Yes and no.  If we are paying based upon income, everyone could pay the same percentage, but not the same amount.

Let’s look at an example:  if everyone paid 10%, the person making $10,000 a year would pay $1,000.  The person making $100,000 a year would pay $10,000.  The person making $1,000,000 a year would pay $100,000.   Each would pay the same percentage, but each would pay a different amount according to their annual earnings.  Each would be impacted the same 10%.  Does the poorer person pay less?  Yes.  Do the rich pay more?  Yes.  Does it “hurt” the poorer person more?  Every financial impact hurts the poorer person more.  But people don’t complain that poorer people shouldn’t pay sales tax and only the rich should pay that, do they?  So why should they also not pay
for the national services they receive in like proportion?

Don’t like that scheme?  How about a tax on goods instead of income?  That way you could choose how much in taxes you are willing to pay based upon how much you buy.  In this scheme, even people working illegally would be paying taxes; today they are required to do so, but to get them to pay you have to catch them.  With a tax on goods, they would pay each time they made a purchase.  In addition, those people who are living off the earnings of their ancestors, never having working a day in their life, could also share in the tax burden in accordance with their lavish spending! 

Either of these approaches would be fairer than today’s system where almost half of the people – rich and poor -- get a free ride on the other half’s back.  The Right does not think it is our fair share to pay for people to have cell phones.  A
cell phone is a luxury, not something you are entitled to have.  Being poor is not shameful, it is inconvenient and a wonderful motivator for success.  But if the Federal government gives food and housing and phones and education and more to people who do not work, where is the incentive to work?   It robs the poor of self-esteem and success, and therefore happiness.  Likewise, it is not our duty to pay the unemployment for months end.  Nor is it good for them; being out of work for so long makes them unemployable because their skills are out of date.  Neither should the wealthy get by with paying nothing if they are so wealthy they don’t have to work.

The Right doesn’t think it is our fair share to contribute to people when they could be responsible for themselves and better themselves, but choose not to in favor of living off of the largess of “We the People.”  A study was done recently that looked into what a single mother of 2, ages 1 and 4, actually would “make.”  The study showed that “the single mom is better off earning gross income of $29,000 with $57,327 in net income and benefits [due to government subsidies] than to earn gross income of $69,000 with net income & benefits of $57,045.”   (http://www.aei-ideas.org/2012/07/julias-mother-why-a-single-mom-is-better-off-on-welfare-than-taking-a-69000-a-year-job/).   As the researcher concluded, “The U.S. welfare system sure creates some crazy disincentives to working your way up the ladder.”  Yet this social system amounts to 62% of the Federal Budget in 2012.  (http://www.heritage.org/research/reports/2012/10/federal-spending-by-the-numbers-2012). And that shouldn’t be the case. 

Does that mean that the Right thinks all entitlement spending is bad?  No. 
But it is out of control and it should be investigated and reined in.  Some of it more rightly belongs to the states to address where it could be better managed and more efficiently operated; and the jobs to manage those programs would be distributed among the states instead of around the Washington Beltway.  Some spending could be eliminated altogether because of fraud and waste.  Rules for who is eligible to receive these entitlements need to be reconsidered.  For instance, illegal aliens should not benefit from entitlements.  They are already thumbing their noses at our laws by being here illegally; should we allow them to take from our coffers as further insult (which hinders citizens from getting the help they need and over burdens our taxpayers and institutions)?

Just as government handouts disincentivize the poor from getting out of their
poverty, the huge tax burden on those who are successful -- 39.6% Federal taxes, plus another 10+% of state taxes in some states, plus property taxes, communication taxes, gas taxes, city taxes, sales taxes, and more --  are disincentivizing the rich from growing the economy!  If you have a company, why hire more people to manage, when doing so only costs you more money than you can make?

It is not that the Right has a “total opposition to increasing taxes when current
taxes are not sufficient to support community needs” as the commenter went on
to say.  It is that the Right believes the Federal Government has the money for the nation’s needs they are required to address, but it is acting like an irresponsible college kid with his parents’ credit card:  spending money on
parties, buying things that aren’t needed, giving the card number for strangers
(and even enemies) to use, and neglecting the things that should be done while
running up the balance beyond what the parents can pay.  Which one of you would increase this college kid’s limit before you had a sit-down with him and put him on a budget?  The Right would like to see a responsible, smaller government instead of the ever-growing, out-of-control-spending one we have now.

There are ways to address this and still manage to help those most in need.  But to be a thriving nation, we cannot be bankrupt.  We must eliminate the burden
of debt we find ourselves under (and our children for generations) and balance
the budget – and not with tricks of “baselining” to redefine what the budget is.  We need serious adults to come to the table and work.  We don’t need crisis-creating, name-calling, political-posturing, lying partisan hacks.  We need representatives who love this country more than they love their power and position, who have intelligence not talking points, and who understand words like these: 

“Another not unimportant consideration is, that the powers of the general government will be, and indeed must be, principally employed upon external objects, such as war, peace, negotiations with foreign powers, and foreign commerce…  The powers of the states, on the other hand, extend to all objects,
which, in the ordinary course of affairs, concern the lives, and liberties, and
property of the people, and the internal order, improvement, and prosperity of
the state.”  --  Joseph Story, Commentaries on the Constitution, 1833

“A rigid economy of the public contributions and absolute interdiction of all useless expenses will go far towards keeping the government honest and unoppressive.”  --  Thomas Jefferson, letter to Lafayette, 1823

“A just security to property is not afforded by that government, under which unequal taxes oppress one species of property and reward another species: where arbitrary taxes invade the domestic sanctuaries of the rich, and excessive taxes grind the faces of the poor; where the keenness and competitions of want are deemed an insufficient spur to labor, and taxes are again applied, by an unfeeling policy, as another spur.”   --  James Madison, Essay on Property, March 29, 1792

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