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Happy Tax Day!

Well, perhaps "Happy" is the wrong word...

It’s April 15th, and like every year, we’ll be seeing news stories tonight of cars lined up at the post office carrying happy taxpayers who are dutifully submitting their last-minute returns.

Happy? Well, maybe some. At least those who don’t OWE anything.

Rep. Mike Pence took to the House floor today to speak about Tax Day 2010.

Pence’s money quotes:

This Congress has voted and this President has signed into law $670 billion in tax increases in the last year and a half. $670 billion! And this list includes 14 tax hikes signed into law totalling $316 billion on middle class families, in direct violation of the pledge President Obama made not to raise taxes on individuals that made less than $200,000 per year or families filing jointly that make < $250,000 per year.

It is truly astonishing to think, that arriving on the scene during the worst economy in 25 years that the response of this administration and this Congress has been to take what in my judgement was excessive spending under GOP control and put it on steroids and pay for it with hundreds of billions of dollars in new taxes, and of course enacting more government.

Hmmm.  Doesn’t sound like Rep. Pence is too happy about April 15th, and I doubt that he thinks you are either.  What he (and we) are really angry about is that President Obama and the Democrats are clearly lying through their teeth about cutting taxes and spending.  (And if you need further documentation on this, check out this handy reference provided by the GOP House Ways and Means staff)

But are we really upset about our taxes?

CBS News would like us to think that most of us are happy about our taxes.  Yesterday, on the eve of Tax Day 2010, they published the results of a survey stating that “Most Tea Party Supporters Say Their Taxes Are Fair”.  Why, they have graphs and everything!

Yet while some say the Tea Party stands for “Taxed Enough Already,” most Tea Party supporters – 52 percent – say their taxes are fair, the poll shows. Just under one in five Americans say they support the Tea Party movement.

However, those most active in the Tea Party are less satisfied with the amount of income taxes they will pay. Fifty-five percent of Tea Party activists – those who have attended a rally or donated money – (about 4 percent of Americans overall) say their income taxes are unfair.

Americans overall are more likely than Tea Partiers to describe the income taxes they’ll pay this year as fair – 62 percent do, according to the poll, conducted April 5 – 12.

Call me a skeptic.  Why?  Because CBS’s article conveniently ignores a key fact: in 2009, about 47% of Americans paid no Federal income tax. Regarding the current tax structure, the AP (surprisingly) points out::

The result is a tax system that exempts almost half the country from paying for programs that benefit everyone, including national defense, public safety, infrastructure and education. It is a system in which the top 10 percent of earners — households making an average of $366,400 in 2006 — paid about 73 percent of the income taxes collected by the federal government.

The bottom 40 percent, on average, make a profit from the federal income tax, meaning they get more money in tax credits than they would otherwise owe in taxes. For those people, the government sends them a payment.

“We have 50 percent of people who are getting something for nothing,” said Curtis Dubay, senior tax policy analyst at the Heritage Foundation.

CBS quotes a survey stating that about 62% of Americans think they’re taxed fairly, yet about 47% of Americans pay no taxes.  I’m guessing that approximately 15% of Americans probably pay very low taxes (62-47).   Based upon this, CBS’s survey is, to put it kindly, garbage.  After all, wouldn’t YOU find that zero or almost zero taxes would be “fair”?  I know I would.

But let’s talk about “fair,” shall we?  The AP quote alludes to this but doesn’t come out and say it: is a tax system where nearly half of the citizens do not pay taxes really “fair?” Most all of us benefit one way or another from the results of governmental spending.  Yet only half of us are paying for it.  The Democrats figured out long ago that vote buying works, and they’ve done it quite effectively with the “progressive” tax system: governmental giveaways and no taxes.  You gotta love it…if you’re one of those taking the free ride.

About a year ago, Ari Fleischer, GWB’s former press secretary, penned a fascinating essay for the Wall Street Journal, making the case that “Everyone Should Pay Income Taxes.”  It is well worth reading the entire thing, as Fleischer makes many of the same points as the AP.  But he comes to a conclusion with which I somehow doubt the AP would agree:

I favor the abolition of all Social Security, Medicare and estate taxes. In their place, we should create a simple income tax system that has no deductions or credits at all. The result would be a progressive, multitiered income tax in which everyone pays. The bottom 50% won’t be excused from paying the cost of government and top earners will no longer have the loopholes they’re used to. The middle-class, whose wages have stagnated, will benefit from economic growth. Social Security and Medicare will be funded from income taxes, ending the myth that these programs are supported through government trust funds and payroll taxes. The tax base will broaden dramatically, allowing rates to fall and helping to foster what’s most important — economic growth.

I’d also create a mechanism so tax rates go up or down for everyone — no more dividing the country by lowering taxes for some or raising them only for others. A revenue system whose purpose is to pay the government’s bills should apply fairly to one and all. If Congress wants to raise or cut taxes, it should do so for everyone.

Another benefit is that such a system will create an environment in which spending programs receive the scrutiny they deserve. It’s funny what happens when everyone pays the bills; Americans may want less spending so they can pay fewer bills.

Interestingly, last year even CBS came to the conclusion that the tax system is broken.  Declan McCullagh wrote:

The perils of today’s situation should be obvious. The United States is close to a tipping point – where most people can skip the post office run on April 15 to mail a check because they’re expecting one from the government instead.

“It is somewhat odd that you have a decreasing number of folks paying into the federal income tax system, a decreasing number of folks who have a stake in what the government pays for,” says Matt Moon of the non-partisan Tax Foundation in Washington, D.C.

It then becomes tempting to vote for politicians promising more and more handouts, paid for by money forcibly extracted from an ever-shrinking number of their neighbors. In addition to being immoral, it’s poor public policy: people who pay no taxes but nevertheless get benefits are less likely to be careful overseers of their elected representatives.

“At some point people become less and less invested in making sure their government is accountable and frugal,” says Peter Sepp, vice president for policy and communications at the National Taxpayers Union, a lower-tax advocacy group. “If you pay very little for getting all kinds of government benefits, you might view those programs as a bargain, even though they may waste tens of billions of dollars a year.”

Former British Prime Minister Margaret Thatcher is getting a lot of air play these days – not because of the forthcoming UK elections, but because of her now-famous quote:

The problem with socialism is that eventually you run out of other people’s money.

And that, in a nutshell, is the problem we are faced with in our government today.  The tax system is broken.  The Obama Wealth Redistribution Plan is well under way.  Nearly half of Americans receive governmental benefits but do not pay.  Tea Party protesters are rightfully angry at the Democrat majority’s flagrant disregard for the will of the people.  Something has to give.

I don’t know if Ari Fleischer’s specific suggestion is the answer.  But I do believe there are two items to address:

  1. Reduce taxes and spread the burden to all taxpayers – if all Americans share the burden, perhaps there will be more attention paid to the need for fiscal restraint
  2. Return the United States to a representative government that is responsive to its citizens and no longer sees it as its responsibility to “spread the wealth around”

Enjoy your trip to the post office tonight, and remember to raise a toast to the fairness of our tax system…if you can afford it after you write your check.

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