Tax us now or tax us later
What do the words toll, tribute, tallage, gabel, impost, duty, custom, excise, subsidy, aid, or supply have in common? They are all ways of referring to tax, a hot topic this election season. Wikipedia says tax is: “a financial charge or other levy imposed on an individual … to support the government.”
Yes, taxes move wealth from us to the government in exchange for all the things that government provides. Governments raise taxes to achieve things directly and reduce taxes to stimulate us to achieve things for ourselves, and society as a whole. Using that logic Republicans like to label Democrats as ‘tax and spend’ liberals. That is a good political slogan that easily persuades people that taxation takes our money away and tax cuts give it back; i.e. tax cut = good and tax rise = bad. Unfortunately it is not as simple as that, as we have learnt these past 8 years. We have on the surface seen substantial tax cuts, and yet those tax cuts were an illusion. The truth is that the tax burden we face has grown massively under the Bush Administration; let me explain:
Tax is not just the amount the government takes from us now. To that we must add all the government spending that occurs now but for which the day of reckoning is delayed by merely adding the bill to the national debt. Under Bush 43, government spending has gone through the roof. According to ‘whitehouse.gov’, the national debt is now over $9.6 trillion, some 70% of GDP, and growing rapidly (see the graph above from zFacts.com).
So what that means is that, even though our tax rates are low, our tax burden is spiraling out of control. In simple terms the situation the government finds itself in is akin to the homeowner who spends massively on home improvements and a new car, using borrowed money through a home equity loan, and then suddenly realizes that he has a massive debt that needs to be paid back. Life goes overnight from happy spendthrift days to hardship, belt tightening and foreclosure.
What I am saying is that taxation is of itself not a bad thing, as long as it fulfils a purpose and is spent wisely and judiciously. The problem comes when our money is frittered away on wasteful projects, or is spent without enough care to avoid cost over-runs, embezzlement or other losses. These past 8 years we have seen numerous examples of poor government practices and lax controls that have led to massive losses for us, the taxpayers.
In the Presidential election and also in local elections we should be looking at the candidates not only in terms of pledges to reduce, or not increase, taxation but also we should be looking at how likely they are to spend our money wisely and change government to reduce irresponsible spending practices.
Locally we have a lot of discussion about who has or has not taken a tax pledge, and whether TABOR is to be kept on or not. To me such pledges and, yes, TABOR are diversions from the real issue which is the election of officials who will make sound spending decisions, root out corrupt or inefficient practices, and who will set the County, State, and Country on a sound economic footing going forward.
I hope the young voters turn out in force this fall, for it is their tax burden that our current leaders are racking up! Whoever is elected in November has a tremendous challenge with the economy. Let us make it someone who understands the nature of the problem, is up to the task, will bring about real change and, oh yes, also realizes that government spending is yet another way of saying TAX.
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