Who would have guessed way back on December 16th, 1773 when the Boston Tea Party happened that it would somehow ingrain in our nation’s fabric a strong enduring belief that taxes are somehow evil and nefarious things.
Don’t get me wrong. I don’t want to pay a cent of tax. I don’t believe a single human being on this planet that has ever been born or ever will be born, WANTS to pay taxes. But as Supreme Court Justice Oliver Wendell Holmes famously stated, “taxes are the price of a civilized society”.
We seemingly have this nationwide mental block when it comes to government of wanting to go shopping but just bypass the checkout line and go right to the parking lot with our purchases, and then when forced to go back in and pay for it, complain and moan about it. As they say “don’t do the crime if you can’t do the time”.
If we want all these things as a nation that we ask of our government, then we must be willing to pay for them in full.
Traditionally as a nation we were very good at this. It was only after the Great Depression and World War II when our political class got a taste of how powerful deficit spending could be that we went off the rails. And when economist John Maynard Keynes theorized that deficit spending was okay in bad years as long as the deficits were paid off in the boom years, they all conveniently forgot about the latter and seized on the former……now no politician is afraid to be seen as going into further debt as a nation as long as they can seemingly point to some great accomplishment that arises from it or sucker the public into believing that if we cut taxes it will boost the economy so much that it will bring in more tax dollars from a larger economy down the road (just another version of the de-bunked “trickle down effect” or voodoo economics).
Here is a fun little fact….did you know the last US President who left office with LESS national debt than when they entered office was Calvin Coolidge in 1929? Every President since has left us with more debt than the previous officeholder. Below are the totals as of May 2023:
| Coolidge | Reduced debt by $5 billion |
| Hoover | Increased debt by $6 billion |
| Roosevelt | Increased debt by $236 billion |
| Truman | Increased debt by $7 billion |
| Eisenhower | Increased debt by $23 billion |
| Kennedy | Increased debt by $23 billion also |
| Johnson | Increased debt by $42 billion |
| Nixon | Increased debt by $121 billion |
| Ford | Increased debt by $224 billion |
| Carter | Increased debt by $299 billion |
| Reagan | Increased debt by $1.9 TRILLION |
| GHW Bush | Increased debt by $1.5 TRILLION |
| Clinton | Increased debt by $1.4 TRILLION |
| GW Bush | Increased debt by $5.9 TRILLION |
| Obama | Increased debt by $8.3 TRILLION |
| Trump | Increased debt by $7.3 TRILLION |
| Biden | Increased debt by $4 TRILLION |
Republican Totals—$16.7 Trillion over 50 years in office
Isn’t that stunning?? In a very bad way?? My only thought when I see such numbers is that I soooo badly want to return fiscal discipline to our great country, pay down the debt big time, and start to live within our means as a government once again and stay that way. Don’t you agree?
President Truman once famously said that he wanted a one armed economist, because economists were always telling him “on the one hand….and on the other hand…..” and I can’t blame him.
Many economists will tell you not to get hung up on the actual dollar amounts listed, that what is more important is how big that debt is in terms of a percentage of the overall economy, but as I covered in the term limits criteria, by any way you measure it, our debt is huge, and already larger than the size of our entire economy and that needs to change…..fast.
So how does this correlate to our topic of taxes? Simple. We either need to increase taxes, cut down on our spending, or some combination of the two.
Until our debt is fully under control and we have had budget surpluses paying it down for many years, if you hear a politician mention the words “tax cut”, please do us all a favor and smack ‘em upside the head (not really, but you know what I mean).
Are there problems with our tax system in this country? Absolutely. Does it need a major overhaul and get simplified, you betcha. But as with everything else, the devil is entirely in the details.
Taxes, if one takes the time to study them in depth, are actually really cool and powerful tools for everything from social engineering (ie tax unhealthy things like cigarettes, improve people’s chances for upward mobility thru education deductions, etc) to just simply paying the government’s bills.
One could make a lot of analogies to what they are like, but being a stay at home dad and thinking about how I have to pressure wash my house soon, taxes are kind of like the water coming out of the end of a pressure washer.
Ever accidentally put your hand up close to the water coming out of the end of the pressure washer nozzle? I did once by accident. Hurt like hell. Lucky I didn’t rip the flesh off my hand and it felt weird for at least a day afterward. But pointed properly at the intended item to be cleaned off, it works like magic. Taxes are the same way. They can either be formulated to do amazing things, or misused and cause problems. But taxes in and of themselves are not the boogeyman.
Being a Harry Potter fan, would you say a wand is evil? No, it is a tool. It can either be made to do good things or bad things by the holder of the wand. Same thing goes for taxes. And it can be just as harmful for politicians to say taxes need to be cut when they are working properly as it is to leave a bad tax policy in place.
We need to stop falling for the Republican argument that taxes need to be cut, cut, cut. I would personally love for us to get to that point one day, but not before we settle up the bar tab on the party that was the last half of the 20th century and first 23 years of this century.
It is ironic to me that Republicans seemingly look wistfully back on the 1950’s era, when one of the main drivers of that era coming into fruition was our tax policy. Graduated income taxes was a huge factor in growing the American middle class and keeping the Joneses and Smiths neck and neck with each other.
It is only when we start to “flatten” taxes (ie all pay pretty much the same rate) that you start to see separation between economic classes and haves and have nots emerging, or 99% and 1% as the current case may be.
I would argue that the American Dream of each generation doing better than the one before started to get a dark storm cloud over it when we started to monkey around with tax brackets and let the super rich pay less and less without closing all of the loopholes at the same time.
In the Fall of 2017 when the Republicans took up tax reform they started out talking about eliminating some tax brackets and just having 3 or 4 tax brackets. That’s a bad move that thankfully they didn’t take. We need to think of tax brackets as steps.
If I ask you to get from the first floor to the second floor, would you rather have to do it in 3 large giant steps or 5 or 6 smaller ones, or better yet, maybe 10 steps? What happens when you have fewer tax brackets is that the leap to the next tax bracket is so large that it actually creates a dis-incentive to increase your income. Ideally you want the tax brackets to go up gradually, kind of like an escalator and you don’t even notice you are paying a little more as your income grows.
There is admittedly a lot of seduction to the idea of everyone paying the same tax rate. We are all Americans, we believe in equality, we should all be treated equally under the law and under God, right? Could not agree more! But let’s think about this a little deeper.
Let’s say it’s 1776, you’re a simple farmer, and in your small company of Minutemen is a wealthy shop owner as well. You’re good friends, and live right down the street from each other. But your militia needs funds to buy cannons and rifles and bullets. Someone suggests you all pass the hat and each pay an equal amount.
But wait, you don’t have nearly the money that the wealthy shopkeeper does, and you don’t have a problem putting in the full amount you can spare, but why should you have to if the shopkeeper can pay a little extra so you can hold onto more of your money and he won’t even miss the extra he pays?
That’s called patriotic duty. It is the wealthy shopkeeper’s patriotic duty to pay more because he can afford to pay more, than the average citizen. That has been a fundamental principle of our country since before its founding and it is at the heart of our graduated income tax system today and needs to stay that way.
What most people today fail to realize is that they are part of the 99%, not the 1%. When politicians talk about taxes and possibly having to raise them, it isn’t really on the 99% that taxes need to be raised, but rather on the 1% first. And truth be told, it is in their interests to keep the civilized society I mentioned at the outset that Justice Holmes spoke of, so they should gladly want to pay their fair share of what they can afford.
Now, having said that, I also am a firm believer that no citizen should ever have to pay more than 50% of their income in total combined taxes (Federal, State, and Local). There’s just something fundamentally wrong with taking more than half of someone’s income, regardless of how they earned it, or how much they have.
Furthermore, we have to stop thinking of the price and the item as separate things. They are two sides of the same coin. It sounds silly to have to even say that, because we do that with everything in our day to day lives, whether we are buying clothes, food, or entertainment. But we do a major disservice to ourselves and our country when we can advocate for the governmental goods we purchase, yet then demean the tax that pays for it.
Lastly, the tax cut the Republican majority Congress passed in 2017 was projected to increase the national debt by $1.46 trillion over 10 years…..when we already had over $20 trillion with an economy the size of $18.5 trillion at the time.
Isn’t it amazing how they can tar and feather Democrats as being “tax and spend”, yet it’s okay for them to run up deficits and debt by purely cutting taxes? Their end goal is to put downward pressure on spending to bring it back into balance, coupled with the thoroughly disproven belief that by cutting taxes it will foster so much economic growth that it will come back to the government down the road and make up for it. Nope, a review of that chart above shows what happens when Republican presidents cut taxes….the deficit and debt explodes and never comes down.
The reason this is so bad is that we should be using good times like now to increase taxes to pay down the debt, so that in the off chance we have a deep recession or depression, the government will be able to go into debt and help Americans.
If we cut taxes and explode the deficit when things are going well, the government’s hands will be tied when things go bad.
FDR never could have incurred the debt of the New Deal during the Great Depression of the 1930’s if he had come into office with a large debt load already. He would have been helpless to spend money to help citizens, and unable to raise taxes during a Depression, because that would just make the situation worse.
Perry Waag 