OPINION:
Economist Robert J. Samuelson tells us that we are “edging toward a soak-the-rich economy,” a prospect he seems, to some extent, support.
“To be sure, the United States is under-taxed in the sense that people want more government spending than they are willing to pay for with higher taxes,” he says in a recent column in The Washington Post.
And he says these are the facts to prove it: “In 2019, federal taxes equaled 16 percent of the economy (gross domestic product), while spending was 21 percent. In cold cash, the deficit totaled nearly $1 trillion, or 5 percent of GDP.
“The argument — made by many Republicans — that the economy can’t tolerate higher taxes is overkill,” he argues.
“The truth is,” he says, “we need higher taxes as part of a political bargain to reduce and ultimately eliminate endless deficits, which pose long-term political and economic dangers. No deal is possible unless it includes a sizable contribution from new taxes.”
But the “trouble is that many Democrats view higher taxes as a vehicle to fund new social programs.”
Well, yes. Vermont Sen. Bernie Sanders, among some others, is running on an irresponsible, giveaway platform that would plunge our nation into decades, if not centuries, of endless, spiraling debt on the backs of our children and future generations of Americans.
The late free market economist Milton Friedman would have dismissed this, or any other call for higher taxes, as voodoo economics. Here’s what he said in his brilliant, widely-read book “Free To Choose.”
“By general consent, the personal income tax is sadly in need of reform. It professes to adjust the tax to “ability to pay,” to tax the rich more heavily and the poor less heavily and to allow for each individual’s special circumstances. It does no such thing,” he wrote in 1980. “Tax rates are highly graduated on paper, rising from 14 to 70 percent.
But the law is riddled with so many loopholes, so many special privileges, that the high rates are almost pure window dressing. A low flat rate — less than 20 percent — on all income above personal exemptions with no deductions except for strict occupational expenses would yield more revenue than the present unwieldy structure.
“Taxpayers would be better off — because they would be spared the costs of sheltering income from taxes; the economy would be better off — because tax considerations would play a smaller role in the allocation of resources. The only losers would be lawyers, accountants, civil servants, and legislators — who would have to turn to more productive activities than filling in tax forms, devising tax loopholes, and trying to close them,” he wrote.
And while we’re at it, Friedman wrote, the “corporate income tax, too, is highly defective. It is a hidden tax that the public pays in the prices it pays for goods and services without realizing it.”
Meantime, there is a far more effective way to end the government’s oppressive income tax burden and shrink or all but curtail its mounting budget deficits. Eliminate and or consolidate more than 100 outdated, ineffective, wasteful programs, agencies, bureaus, commissions and other bureaucracies that I exposed in my 1980 book, “Fat City — How Washington Wastes Your Taxes.”
Collectively, these bloated bureaucracies needlessly add billions of dollars to the nation’s tax burden. President Reagan was so impressed by its scandalous findings that he mentioned it to voters during his campaign and passed out copies of my book at his first cabinet meeting.
The first sentence in that book tells you everything you need to know about how to reduce the costs of the federal government, halt its mounting deficits and sharply reduce our country’s tax bill:
“Our federal government has become a bloated, extravagant, paternalistic, remote, cluttered, disorganized, inefficient, frivolous, duplicative, archaic wasteland.”
Tragically, 20 years later, the irresponsible, almost criminal spending binge is worse than ever.
• Donald Lambro is a syndicated columnist and contributor to The Washington Times.
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