“I think we have more machinery of government than is necessary, too many parasites living on the labor of the industrious”. Thomas Jefferson, 3rd US President, in a letter to William Ludlow, September 6, 1824
As a final footnote to my previous discussions on income taxes, I want to address the idea that some have proposed regarding raising taxes on the wealthy in order to cover the federal debt and deficit. According to some, anyone or any business that makes more than $250,000 a year deserves to be taxed at a greater rate than the rest of us. While I agree that when you are greatly blessed, it is only right to be generous with others, I am not sure allowing the government to do it on your behalf is a financially sound idea.
First of all, our government is not very good handling the money they already have. If they were, they would be able to make, maintain, and live within a budget, and not continue to rack up debt. Currently, we are $14.3 trillion in debt, and have not had a formal budget passed in almost 2 years. How responsible is that? I believe that if the US government were an ordinary taxpayer, they would be in credit counseling by now. No one should send them any more taxes until they proved themselves to be good financial stewards with what they already have. Unfortunately, the taxpayer is not in a position to withhold their money until the government has learned to live within its means. The IRS makes sure that we remain captives to their incompetence.
Second of all, the government is not very good at math. The US government is set to spend about $3.7 trillion dollars this year. Based on IRS statistics, about 2% of income earners earn $250,000 or more a year. If Congress imposed a 100% income tax on all income made over that amount, it would yield only about $1.4 trillion. Ok, so what about all those “greedy” corporations to cover the difference? According to the Fortune 500, the top 400 corporations take in about $400 billion in total profits. Congress could always confiscate all of this, but that would still not be enough to cover our bills. So, how about taking the assets of those super rich? According to Forbes 400, America has 400 billionaires with an approximate net worth of $1.3 trillion. Congress could force them to sell their businesses, mansions, yachts, airplanes and jewelry and send all of the proceeds to the IRS. Unfortunately, even if they did do all of the above, we would still come up short of the amount needed ($3.1 vs. $3.7 trillion). Plus, what would our government do the following year, when there is no more wealth left to confiscate? The fact is, there are just not enough rich people or corporations out there to satisfy the current Congressional appetite for more spending. They either would have to eventually go after the non-rich (i.e. the rest of us) or continue to run up the debt.
The idea of taxing the rich at a higher rate might score political points, however in realty it is both mathematically unsound and economically disastrous (not to mention quite tyrannical). Raising taxes on a few will not solve our problem. In fact, it is not even enough to kick the can down the road anymore, as our spending is so out of control that we are being told that the only way to survive is to go further into debt. My friends, we do not have a taxing problem. We have a spending problem. Our federal government has grown so big, gone so far outside its constitutional boundaries, that no amount of money we take from the rich could ever support it. We need to curb our spending NOW or there will be a day of reckoning for us and our children in the near future.
Living within your means is hard when you have never done it before. Will this take intestinal fortitude and sacrifice? Yes. Will it require some of our representatives to get a spine? Absolutely. But it is high time that we have less Democrat representatives, less Republican representatives, and more U.S. representatives.
“The question is: What can we, as citizens, do to reform our tax system? As you know, under our three-branch system of government, the tax laws are created by: Satan. But he works through the Congress, so that’s where we must focus our efforts”. Dave Barry (b.1947), American author and humorist