Vail Daily letter: Dependent nation
Vail, CO, Colorado
There is a presidential commission inquiring into the causes of our national economic distress, and what to do about it. Their report is not going to be released until after the elections, but rumor has it that they are going to suggest a VAT — in addition to, not as a substitute for, the income tax.
VAT means value added tax. It’s a kind of sales tax applied to every level of production and distribution. It’s popular with politicians because it’s less visible to the people than an income tax. But I might be receptive anyhow, if it were to be substituted for the income tax, because it taxes consumption, not enterprise and innovation.
I believe in a flat income tax rate. No exemptions, no deductions. No special deals for oil depletion or other favored activities. Everyone pays something, so if they hear about a spending program, they know they are going to help pay for it. Steve Forbes has some good ideas on this subject.
I also believe that the Laffer Curve is a valid demonstration of how tax rates of any kind produce revenue. If you are not familiar with this illustration, I can provide it.
The basic problem is that there is too much demanded of government. The ultimate culprits are those Americans who demand this from the politicians as the price for their vote. Social Security and Medicare are good examples. Entitlements are 60 percent of the federal budget. Many seniors have assumed the position that they are owed these programs, without regard for what they paid in, or what will have to be paid by others to maintain what the seniors want.
The Social Security Administration announced that there would be no cost of living increase in benefits this year. Because there wasn’t enough inflation to justify it. It was disappointing when a lot of seniors registered their protest anyhow, saying that they depend on that increase, and to hell with this inflation nonsense. This is to be expected when you make people too dependent on government for their livelihood.
We can’t afford all the programs people are demanding and politicians are enacting. At the present time, it’s being carried with accounting gimmicks, over-optimistic projections and borrowed money. This can’t last.
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