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<font face="Verdana" size="2"><font color="#002864"><strong><font size="5">Is the Tax Cut for Real?</font></strong></font>
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<font size="4">By James Ostrowski</font>
<st1:date Year="2003" Day="26" Month="5">
<span class="492275912-29052003">[</span>May 29, 2003<span class="492275912-29052003">]</span></st1:date>
Jeffrey
Tucker and Lew
Rockwell have noted, it's awful. The Bush administration inherited a
federal budget of $1.86 trillion, and now proposes to spend $2.3 trillion in
2004, for a whopping 23.6 percent increase in federal spending in this short
period. The Bush presidency has far outspent Clinton's in every category. As
Cato's Chris Edwards
says,"ased on his first three budgets, President Bush is the biggest
spending president in decades." To close the gap between spending
and revenue, said a
report commissioned by the US Treasury, would require an"immediate
and permanent 66 percent across-the-board income tax increase."
Also, despite talk of deflation, your dollar has lost about four percent of
its value under Bush. That means, for example, that if you had $50,000 in the
bank when he was elected, the feds managed to burn $2,000 of it. Cancel that
vacation. Just keep working like a jackass, the fate of those who allow their
freedom to slip away without a peep of protest.
In addition to spending, we must analyze regulations to determine the trend
under the Bush Administration. A regulation is essentially a tax on
nonmonetary wealth such as time, liberty, energy, and property. Bush's
regulatory record is mixed, but new regulatory initiatives have occurred on
Bush's watch. Examples include an extremely burdensome scheme for regulating
medical records, new banking regulations which destroy financial privacy, and
new federal controls over local public schools.
There is yet another type of tax that must be considered—blowback. Yes,
9/11 was a kind of tax on the American people, the destruction of our lives
and wealth by those who are unhappy with the federal government's numerous and
obnoxious interventions into lands far, far away.
Then there is the risk of future blowback, a real economic cost and thus a
form of taxation by blowback. We Americans now wear a target on our backs.
Strange men at airports use that as an excuse to feel our private parts. Other
strange men from strange lands would like to kill us to send a message to our
federal Leviathan.
These terrorists apparently think the feds care about our lives or that we
have some influence over the federal government. If they only knew. Years ago,
I happened to be in D.C. and decided to drop in impromptu on my Senator, Al
D'Amato, to discuss one of his awful votes. The lazy young staffers in the
palatial suite thought it was the oddest thing. The look on their faces in
reaction to my breaking up their little office party was like, should we call
for a psychiatrist, or security or what?
Also, a few years ago, I attempted to contact the Senate Judiciary
Committee to speak against the appointment of a political hack nominated to be
the U.S. Attorney in Buffalo. Despite of my best efforts, I was completely
ignored. At least in a Stalinist country, I would have gotten a response.
As for the"caring" part, Americans were murdered on 9/11 because
of the feds' insane foreign policy. Rather than change that foreign policy,
the feds have intensified and reinforced the same errors that led to 9/11.
Without using street language, how do you describe those who make a good
living by fervently clinging to failed ideas that have killed thousands of
people?
There are (bad) arguments for cutting taxes without cutting spending.
First, they argue that creating huge deficits is the only way to rein in
spending. We heard this Machiavellian strategy under Reagan in the Eighties. I
guess it didn't work because the federal government has been growing steadily
ever since. No major program or department, even the utterly useless,
thoroughly corrupt, patently unconstitutional and extremely destructive
Department of Housing and Urban Development (a.k.a., Dept. of Neighborhood
Destruction and Political Corruption), has been eliminated.
The reality is that spending creates constituencies which exert a powerful
force for raising taxes rather than cutting spending. That is why, according
to Bruce R. Bartlett,
"there have been 15 major tax bills since 1980. Of these, 11 were tax
increases. Ronald Reagan, the arch tax cutter, signed into law 6 of them,
including the Tax Equity and Fiscal Responsibility Act of 1982, one of the
largest tax increases in history."[b] Nice try, but the
only way to cut spending is to cut spending.
<p align="center">[img]" alt="[image]" style="margin: 5px 0px 5px 0px" />
The other argument we can quickly dismiss. By cutting taxes, we can make
the saps work harder and raise even more money for the welfare/warfare state.
No thanks! If cutting the tax rate a few percent will increase the
private sector's incentive to increase productivity, won't a 100 percent
salary cut create a powerful incentive for the political class to get real
jobs and do real work?
Even on the specifics, this tax cut is
not what it is advertised to be. It addresses capital gains but not
capital losses. The child tax credit is subject to strict income limitations
on both the upside and downside. It doesn't change the dangerous Alternative
Minimum Tax, which will devour the middle class, given time. Many breaks
in stealth taxes like the personal-exemption phaseout and the limitations on
itemization aren't scheduled to take effect for several years. We won't know
until later how many tax increases are snuck into the bill.
This much is clear from the total picture: this tax package is not
about smaller government. It is about changing the way ever-bigger government
is to be funded. It has already given rise to speculation that it is only
the first of many steps toward a national consumption tax. And the terrible
problem of the payroll tax, which now accounts for 37.8 percent of all federal
receipts, isn't addressed at all, though it would be a good time to do so.
So, the evidence is in and a verdict can be delivered. Like every other
Republican president since and including <st1:City>
<st1:place>
Hoover</st1:place>
</st1:City>
, George Bush has failed to reduce the size, scope of power of the federal
government. On the contrary, he has increased all three, making the federal
government a much bigger nuisance than it was even under the administration of
President Clinton.
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James Ostrowski practices law in Buffalo, N.Y. See his Mises.org <font color="#000080">Articles
Archive</font> and send him <font color="#000080">MAIL</font>.
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