Paying taxes is a lot like getting a colonoscopy — we know it’s necessary, but we still moan and whine when the due date arrives. Moreover, just as putting off that necessary colonoscopy can lead to disaster, so too are the consequences of delayed fiscal responsibility (there are other, more graphic analogies, but I will leave these to your own creative imaginations…).
So in this spirit of our healthy national colon (yuck!), I will address a few points about taxes, jobs, entitlements and the deficit.
Will The Adults In The Room Please Stand Up?
We all know that Democrats blindly defend entitlement programs as fiercely as Republicans fight taxation. The adults in the room, however, know the only way out of our of our current fiscal disaster is a painful approach to both: increasing revenues (read: “tax increase“) and meaningful entitlement reform (read: “entitlement cuts“). The sooner we all face reality, the sooner we can get down to business.
Getting down to business, however, requires a review of a few questionable cliches:
1. “We’re already over-taxed!“
2. “Raising taxes kills jobs!“
3. “Tax cuts reduce the deficit!“
4. “Those Republicans want to kill your Medicare!“
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“We’re Already Over-Taxed!“
Despite the outcry from fiscal conservatives that we are terribly “overtaxed”, current personal income tax levels are actually at near record lows in our modern history (just a cursory review of the top marginal income tax rates since 1960 startles most readers). While one might make a compelling argument that our current tax revenues are poorly utilized by the government or that our federal government should be smaller and more efficient, a prima facie argument that today’s current tax rates are oppressive — rates that are near historic lows — is at least suspect.
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“Raising Taxes Kills Jobs!“
While renowned economists, Fed Chairmen and career politicians continue to debate this theoretical question, perhaps the rest of us can at least look to recent data to make a common sense evaluation (perhaps as good as any approach…).
While Clinton raised taxes, 22.7 million jobs were created — a record number (Source: Bureau of Labor Statistics) . Interestingly, at the same time a budget surplus was achieved.
Bush then lowered taxes and job growth was stagnant – only 1.1 million jobs created in eight years. At the same time, massive deficits were created.
While I would not dare argue a cause and effect construct between tax increases and job growth, the fact remains: record job growth has been achieved in an economic environment of tax increases. Not just job growth, record job growth.
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“Tax Cuts Reduce the Deficit!“
As always, there is no free lunch. We all love paying less in taxes, but we must also live with its long-term effects. Despite Republican rhetoric to the contrary, the Bush tax cuts led to a dramatic increase in our budget deficit. Estimates of how much the Bush tax cuts cost the Treasury in foregone revenue from 2001 to 2010 range from 1.0 trillion to 2.1 trillion (Source: Tax Foundation).
Moreover, extending the Bush tax cuts for the wealthy for an additional 10 years will further increase the deficit by $680 Billion (Source: CBO). Here, the long-term effects of tax cuts are clear — all 680 billion of them. Numbers are numbers.
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“Those Republicans Want to Kill Your Medicare!“
Democrats want you to know that they are the last safeguard between you and your entitlement programs. They just don’t want you to know that those same entitlement programs are not only bankrupting your country, but that these programs are soon insolvent and wont actually exist (Medicare will be insolvent in just 10 years (Source: CBO, March 2011)). Instead of actually proposing a solution to the problem, Dems are only playing politics with it, for it’s a slam dunk winner for election purposes — even 70% of the fiscally conservative Tea Party members are unwilling to cut Medicare (Source: McClatchy-Marist poll, April, 2011).
While the Republican plan to replace the soon-to-be insolvent Medicare may be wholly insufficient, at least the Republicans have brought an option to the table. If the Dems want to act like grown-ups, they had better do the same.
So where do we stand?
So maybe we are not terribly overtaxed. And perhaps raising taxes might not kill jobs. And perhaps tax cuts would only further increase the deficit. And maybe, just maybe, today’s entitlement programs are simply not sustainable.
So we’re back where we started. Will the adults in the room finally stand up?
Not likely.
In the meantime, you might want to schedule your colonoscopy.
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the politically challenged 