Posted by
Craig Freeborn on Tuesday, April 17, 2007 1:33:06 AM
Years ago, when I was younger than my youngest son is now, I noticed a peculiar thing around tax time. People were not only happy to get an income tax refund, but bragged about how much they got. Many actually increased their withholding so as to get a bigger refund at the end of the year! This “forced savings” came at the “cost” of the lost interest they didn’t earn by allowing the government to use their money all year.
But even worse than that, the withholding of part of their taxes every payday masked the pain of having to write a check to the U.S. Treasury for the full amount of taxes owed. It’s long been my contention that if every taxpayer in the country had to write a check for their entire tax burden every April 15, the electorate would demand immediate tax cuts, and half the Congress would receive a well deserved boot to their backsides next election!
In my lifetime, there have been three major tax cuts – during the Kennedy, Reagan, and George W. Bush administrations. Each one has stimulated the economy, reduced unemployment, and increased tax revenues. Our current economic expansion has recovered from the 9/11 attacks, and survived corporate scandals, ongoing war, Hurricane Katrina, interest rate increases, and the almost doubling of oil prices.
Fueled by the tax cuts of 2001 and 2003, our economy has created 7.5 million new jobs. Consumers are buying. The number of Freeborn Americans investing in home ownership, saving accounts, and capital markets is at an all time high. Business investment has increased for 15 straight quarters.
Yet, leading up to the recent mid-term elections, Democrats were telling us how bad these tax cuts were for the country. Some Democratic candidates even ran on a platform of increasing taxes.
But once the democrats actually took control of both houses of Congress, we haven’t heard much talk of increasing taxes. As in lock-step, even the “mid-evil media” – which vilified the Bush tax cuts almost since he took office in 2001 – has been quiet on the subject.
A new strategy seems to have emerged. Rather than encure the wrath of voters by increasing taxes, their new budget resolutions – passed by both houses – simply let the tax cuts of 2001 and 2003 expire after 2010. Of course, a lot can happen between now and then, but if the Demos are successful, this will be the biggest tax increase in history.
Using their typical double speak, they are now trying to convince us that allowing tax cuts to expire isn’t the same as raising taxes! Wrong, absolutely wrong! If the Demos have their way, the 15 million low-income Americans who have been taken off the tax rolls will again be burdened by taxes. The average American household will pay an additional $2641 in taxes each year. If you weren’t paying taxes and suddenly you are, or if your tax rate goes up how is that not a tax increase?
All this begs the question… If the tax cuts were so important to stimulate the economy, why didn’t the Republicans make them permanent when they held both houses of Congress?
For that matter, why did Bush even have to cut taxes after the Reagan tax cuts had proven so beneficial to the economy of a generation before?
Or, why did Reagan have to cut taxes after the Kennedy tax cuts had proven so beneficial to the economy of a generation before that?
The answer is that politicians will always be politicians. They may jump on the band wagon, and with great fan fair for the folks back home, vote for tax cuts. But when then microphones are off, and the cameras aren’t rolling, and the voters’ attention is diverted, they raise them again. Even after the Bush tax cuts, America’s top personal tax rate is 25% higher than when Reagan left office!
So what’s the solution?
I’ll examine some alternatives in my next piece.
But never forget what Thomas Jefferson said over two centuries ago, “The price of freedom is eternal vigilance”.
If you don’t tell your Congressman and Senators how you feel, how will they know? If you don’t tell them you’re watching how they vote, how will they know?
Before computers, I used to write multiple letters to Washington using carbon paper! Today I can write a personalized letter to both of my congressmen and my Senator in five minutes. I use e-mail, fax, telephone, and the Post Office. When was the last time you told your representatives how you feel or remind them that at least one of the folks back home has their eyes on their voting records?