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“Tax and spend liberals!” “Borrow and spend Republicans!” “Cut taxes to grow the economy!” “The liberals want to raise your taxes!” “The rich should pay their fair share of taxes!” “Taxes are too high!” Taxes are almost a whipping boy for all the ills of our society. If only there were no taxes we would have heaven on earth! Hey, let’s go to heaven! What would it be like? You’re ready to go to work, go out to the garage to get your car, drive onto the street, and get stuck in a really big pothole! You call a towing company to get you out. Because these services are in such high demand, you have to pay $300, in cash! You finally get on your way and get stuck in another pothole. Before you can even dial your cell phone, a guy sticks a gun in the window and demands all of your money. OK, you have a conceal-and-carry permit, have been to fast-draw school, and get the bad guy right between the eyes. One of his friends sees you kill the first guy and blasts your car and you to smithereens with a rocket launcher. Can’t happen? Think Lebanon, Iraq, and Afghanistan. So you’re out $300 and maybe your life to save less than $300 on the city portion of your real estate taxes. Some bargain, some heaven! When the city budget is balanced, in my lifetime I hope, your city taxes would have paid for well-maintained streets and an adequate police force to limit such opportunistic crimes. You don’t like taxes but you want a strong military? Without taxes, our soldiers would be going out with single-shot rifles, no helmets, and only the food they could steal from the enemy peasants. However, today a strong military means high-powered automatic weapons, night-vision goggles, meals ready to eat, body armor, and, and, … They are to be supported by million-dollar helicopters which in turn are supported by multi-million-dollar fighter jets which in turn are based on a carrier whose price would boggle your mind. And we have told Democrat and Republican presidents we want low taxes and a strong military. So, some of them borrow huge amounts of money from all over the world. If you think this is OK, read Paul Kennedy’s The Rise and Fall of the Great Powers. Many are the great powers that have fallen by great overreach. The question should not be whether taxes are too high or too low. The question should be: are the taxes appropriate for what we expect from government? If we want a strong military we should be levying more national taxes to pay for a military that is appropriate to the defense of our country. Britain first levied an income tax in 1799 to fight the Napoleonic wars. It was ten percent on all income. See “A Tax to Beat Napoleon” on the HM Revenue & Customs site. The U.S. Congress has budgeted over $600 billion for the Iraq war for the 2008 fiscal year. This is out of revenue of over $2,500 billion, including Social Security taxes. The cost of the Iraq war is about four times the annual deficit of over $150 billion. So, if we are 300 million people and paid $500 each more in federal taxes, we would balance the budget. Isn’t that a small price to pay for our freedom? Instead, we got a rebate that was supposed to stimulate the economy. As it turned out, three-quarters of the rebates were saved. If you consider the cost of the Iraq war an investment in our future, then consider other investments the Federal Government has made or could make. One of the greatest recent investments was the G. I. Bill of Rights that helped many veterans get through college. This provided thousands of engineers, scientists, teachers, and doctors that we might never have had. Their higher incomes also added much to the investment pool to help businesses grow. An investment not made was in research on alternative energy. We’ve lost 28 years since Ronald Reagan took Jimmy Carter’s solar panels off the White House. What might not have happened if our politicians had heeded the “warning” shot of the oil embargo? A miniscule portion of Reagan’s tax cuts could have funded many little alternative energy projects within the Federal Government. These would have least provided a small market and a big example. When we consider appropriate taxes, we should also consider the appropriateness of the level raising the revenue for various projects. Other than the obvious cases of the wrong level funding projects, like “The Bridge to Nowhere”, bicycle paths, and local bridges, consider the State of Minnesota has “reduced” our property taxes by “aids and credits” to local governments. But this means that our state taxes are raised by the same amount! Actually our state taxes are raised even more; there is the cost of administration of these “aids and credits”. So the next time a candidate promises to cut taxes, ask what government services are going to be cut. And the next time a candidate promises to support a war or to support whatever, ask what taxes are needed to pay for them. ©2008 Melvyn D. Magree |