Back in the day, some Boston patriots dumped tea into the harbor for a good reason: taxation without representation.
Now we have representation without taxation.
Paying federal income taxes, it seems, has become a dying art.
Friday is Tax Day, yet about 47 percent of Americans will pay no federal income taxes at all for 2009, according to new projections. In 2007, about 38 percent of households paid no federal income tax. Either their incomes were too low, or they qualified for enough of the new credits, deductions and exemptions to eliminate their liability, according to The Tax Policy Center, a Washington research organization.
So, as some have pointed out, we have a system where only half the country will foot the bill for programs that benefit everyone, including national defense, highways and education.
Hate to be the bearer of bad news, but the good times of low taxes can’t last forever. There are 12.8 trillion reasons why.
The nation’s annual deficit is now $1.5 trillion and the national debt is $12.8 trillion. That’s $41,000 for every man, woman and child in this country. When you factor in our country’s future obligation for Medicare, Social Security benefits and other commitments, the total liability and unfunded future obligation is more than $56 trillion.
Yet actual federal taxes paid by Americans, as a percentage of adjusted gross incomes, dropped from 15.3 percent in 2000 to 12.7 percent in 2007, according to CBS.
This all makes about as much as sense as Butler playing in the NCAA title game.
The Tea Party rallies in Colorado and across the country have focused on excessive federal government spending. And as Sarah Palin would say, bless their hearts, because they’re absolutely right.
Spending is out of control. But spending cuts alone — even if Congress and the president could muster up the will to do it — won’t erase the nation’s debt.
But what politician is going to talk about tax hikes?
The last guy who said he would raise your taxes was beat like a drum in 1984 by Ronald Reagan, who, incidentally, raised your taxes. Ever since, it’s been taboo.
Former Federal Reserve Chairman Paul Volcker acknowledged last week that we might need higher taxes to control the deficit and suggested a value-added tax, which is basically a national sales tax. Yet the Obama administration backed away from Volcker faster than you can say, “Read my lips, no new taxes,” and instead trumpeted its middle-class tax cuts.
The administration says the economy is still too weak to handle new taxes and spending cuts that would come with a deficit-reduction plan. Current Federal Reserve Chairman Ben Bernanke agreed, but also said that merely articulating a plan for reducing the deficit would help the economy now. Yet, there’s no plan.
“To avoid . . . ultimately unsustainable budget deficits, the nation will ultimately have to choose among higher taxes, modifications to entitlement programs such as Social Security and Medicare, less spending on everything else from education to defense, or some combination of the above,” he said.
Actually, we already have unsustainable budget deficits and we’ll need all three of the hard-to-swallow prescriptions mentioned above to cure our ills. The right tax cuts can spur the economy, but even if you factor in economic growth for the next 20 years — with no recessions — we still can’t pay our debts. We’re projected to spend $1 trillion more a year than we bring in for the next 10 years.
We’re going to end up paying higher taxes eventually, and we’re likely to endure high inflation to boot. And yes, it will curtail the lifestyles we’ve grown accustomed to, but it’s time to take our medicine.
I learned long ago that the better the party, the worse the hangover.
And we’ve had one helluva party, folks. You may want to raise one final toast on this Tax Day.
Dan Haley can be reached at dhaley@denverpost.com
