Wednesday, February 23, 2011

Taxes and Spending

Many libertarians in the Republican Party have argued that income taxes in particular are unconstitutional. I do not share this belief. Given the 16th amendment to the Constitution, income taxes are constitutional. It would be irresponsible of me, due to the present fiscal situation in our country, to advocate for lower taxes right now. I believe we should keep the tax level the same, and not repeal the Bush tax cuts.
Earlier I made reference to our fiscal situation; I believe that we cannot talk about taxes without talking about government spending. The government for the last 8 years has been increasing spending and lowering taxes. This has driven the nation into large budget deficits. Furthermore, the Government in the last two years has spent over two trillion dollars, which is an unprecedented amount in American history. President Bush spent 1.05 trillion dollars with the $350 billion stimulus package and the $700 billion in bank bailouts. President Obama has continued this policy with the $750 billion stimulus package and the $450 billion Ominous bill to keep the Government running until the beginning of the next fiscal year. All these expenditures from both Presidents on both sides of the isle have brought us to spending 2.25 trillion dollars since the recession began (not including the Health Care bill and other non-economic pieces of legislation). The Bank bailout will be paid back with interest which lowers the extremity of the situation but does not eliminate it. However, we still have 1.55 trillion to pay down from the recession which has given us a debt of $10 trillion to pay down. We must pay down or off the debt and lower government spending before we lower taxes and only then should we take such an action.
The argument that I presented above is a deviation from the normal Republican argument in lower taxes and lower government spending. As Republican’s we had control of Congress and the Presidency for 6 years, at which point we lost Congress in the last two years of the Bush Administration. It is fair to say that even though we fulfilled the promise of lower taxes through the Bush tax cuts, which are still benefiting our economy today, we failed to lower government spending.
 Now, keeping taxes the same does mean not letting the Bush tax cuts expire. The consensus among economist is that the government should not increase taxes in the middle or while we are ending a recession. An increase in taxes would lower the amount of money Americans have to spend, bringing us back into at least an economic slowdown if not another recession. The Bush tax cuts enacted in 2001 created 7 years of uninterrupted economic growth, it has kept the money in the hands of people who create jobs lowering the number of layoffs that companies have had to make during this crisis and recession. If allowed to expire it would make it harder for our struggling economy to get out of the recession because people would have less to spend and employers might decide not to hire because the higher taxes would make it less affordable.
Many say that Republican’s argue for lower taxes in order to benefit the wealthy and Corporations. But both those groups deal with tax hikes much better than do small business and the American family. The lower tax rate that the Bush tax cut gave the country benefited the American family in many ways among them but keeping people employed and allowing small business to flourish and compete with big business for 7 straight years. The continuance of this policy is what makes sense right now. I applaud President Obama for not repealing the Bush tax cuts and thus giving credit where credits due!


JP Oddo said...

Interesting argument. Can't say that I agree with your assessment of the 16th Amendment making direct taxation possible. The original intent of the constitution called for indirect taxation. Many violations of the constitution have come and gone (prohibition). Some have stayed long beyond their usefulness like the government extracting the taxes before you get home - directly from your pay. That was instituted to fund the World War effort in 1941 and was intended to be temporary. Now we have gotten conditioned to these illegalities.
For more on repealing the 16th Amendment see:
Joe Oddo

Bridgewater College Republicans said...

Right but what was the intent of the Amendment itself? I agree that the tax itself is not a good idea, but that is a separate issue from whether or not it is constitutional. Further, what would you consider indirect taxation? (I'm just wondering to ponder it a bit)