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As I See It

Stronger economy best way to gain tax revenue

I’m trying to be a little more restrained at bashing my friends at the other end of the ideological spectrum these days, but the liberals’ resurgent obsession with raising tax rates has called me back onto the playing field.

The vast majority of liberals are always ready to take another slice of our incomes. You can almost see them salivating at the chance, can’t you? The very idea of people controlling their own money when the government could put it to better use for the so-called greater good is anathema to their mantra.

Additionally, liberals need people to be dependent on government and allowing folks to keep their own money reeks of self-sufficiency and that would never do.

Clamoring away

With most of the country, particularly our part of the country, still reeling from the destruction of Katrina and Rita, liberals are steady on the job. Without even waiting for the enormity of the damage, both in human lives and property, to be assessed, the tax-and-spend crowd has beens clamoring for higher taxes.

Theoretically, conservatives want smaller government and liberals want it big — and growing. Of course, that rule doesn’t apply to the current administration. The Bushies preach smaller government, but they’ve actually grown it at an alarming rate.

So much for starving the beast.

Of all the lessons learned from the recent hurricanes, one of the most important has been the unmasking of the federal government’s inability to perform in a time of crisis.

Apparently nobody can manipulate the giant bureaucracy to respond quickly when the need is great and time is of the essence. The military is a shining exception to this rule and these men and women deserve our gratitude.

FEMA’s reputation was less than stellar when it was a stand-alone agency. It collapsed under it’s own bureaucratic weight and inept political appointees when the time for fast action was needed.

More, bigger federal government is one thing we don’t need. A higher tax rate is another thing we don’t need. Rather than raise taxes we should disband the Department of Homeland Security since it is only adept at harassing law-abiding citizens in airport shakedowns and a total failure at even preventing 12-year-old Mexicans from crossing the border every day.

Making a little sense of it

Let’s look at the economics of taxation. We, the citizens, exchange a percentage of our wealth in the form of taxes to the various governments to provide us services. Raising the tax rates increases the government’s share and reduces our take-home pay and adversely impacts the economy. Government gets fatter and fatter and has no incentive to spend wisely since it is getting more tax dollars for doing the same thing. Bureaucracy blooms like the cherry trees in spring.

Alternatively, leaving the tax rates alone and increasing the tax revenue from growing the thing that is being taxed doesn’t impact the economy or our take-home pay. The tax rates stay the same but government revenue grows.

Now, the government has incentive to do things to improve the economic landscape so that it can have more dollars to dole out. Thus, by keeping the tax rates low government participates in the results of its economic decisions.

Get it? Better economy, more tax dollars. Hey, this is starting to make sense.

The liberals are known to favor a tax-and-spend philosophy. Unfortunately, the Bush administration has launched itself down the slippery slope to a philosophy of spend-and-borrow — and that option is far worse than the liberal position. What really needs to happen is a spend-and-cut approach.

If we’re going to spend hundreds of billions of dollars on hurricane recovery efforts, then we should cut hundreds of billions of dollars from some other government program. It’s really pretty simple.

Take your pick

Where would government cut spending? Most anywhere and everywhere is a good starting place. I think that most people would agree that there are hundreds of cow plants in the federal budget and the money for disaster relief can be found in canceling, or at least delaying, some of the pork until we get back on our feet.

Taxation is a drag on the economy and entrepreneurship. Government spending is synthetic and temporary, at best. Government employees provide a service to the taxpayers but they don’t make the economic pie any larger. Lasting economic improvement only comes from the private sector. Let’s keep government on a short tax leash before the beast gets too big to handle.

Thought for the Moment

Education is the best provision for old age. — Aristotle (384 – 322 B.C.E.)

Joe D. Jones, CPA (retired), is publisher of the Mississippi Business Journal. Contact him at cpajones@msbusiness.com.


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