Alexander's Column

Income Redistribution Day 2005

Mark Alexander · Apr. 15, 2005

The deadline for filing income taxes may be April 15th, but the average taxpayer will not earn enough cumulative gross income to pay for federal, state and local government spending and regulation until sometime in July. In fact, the cost of spending and regulation now exceeds $24,000 per person per year.

The total combined public and intergovernmental (so-called “trust-fund”) debt is approaching $7.8 trillion (see – http://www.publicdebt.treas.gov/). Not content to rest on their laurels, the FY 2006 House and Senate budgets will rack up an additional $365 billion in debt.

On top of the current ‘05 budget’s bloated social and discretionary spending, there were more than 14,000 clear examples of unrestrained spending (AKA “pork-barrel”) projects appropriated at a cost of about $27.3 billion. Case in point: Consider the $80 billion Emergency Supplemental Appropriations Act for Defense, the Global War on Terror, and Tsunami Relief (H.R. 1268). It includes $103 million for the Emergency Watershed Protection Program; $55 million for wastewater treatment in Desoto County, Mississippi; $25 million for the Fort Peck Fish Hatchery in Montana; and, well, you get the picture.

Fact is, as with previous budgets, Congress has NO Constitutional authority for a large portion of the FY06 budget.

In the late 19th century, Justice Stephen J. Field noted in an opinion: “If the provisions of the Constitution can be set aside by an Act of Congress, where is the course of usurpation to end? The present assault upon capital is but the beginning. It will be but the stepping-stone to others, larger and more sweeping, till our political contests will become a war of the poor against the rich; a war growing in intensity and bitterness.”

Indeed. For most of American history, taxes were levied primarily on consumption, rather than income, and for good reason. In The Federalist Papers, Alexander Hamilton argued, “It is a signal advantage of taxes on articles of consumption that they contain in their own nature a security against excess.”

All that changed in 1913, however, when the central government started taxing income. At that time, federal taxes were equal to 3% of GDP and the entire tax code was two pages. Now taxes are in excess of 20% of GDP and the tax code is more than 46,000 pages (including 481 separate tax forms). Additionally, taxpayers will spend a cumulative 6.5 billion hours complying with that code, and due to its complexity, more than half of taxpayers will rely on “professional preparation,” costing them more than $200 billion.

Government taxation and spending radically departed from constitutional limits under Franklin Delano Roosevelt’s reign. FDR launched myriad socialist programs, the effluent of which plagues us today. Roosevelt, by decree, redefined the role of the central government – and was class warfare’s greatest advocate. He proclaimed, “Here is my principle: Taxes shall be levied according to ability to pay. That is the only American principle.”

Of course, that wasn’t an “American principle,” but a paraphrase of Karl Marx’s Communist maxim, “From each according to his abilities, to each according to his needs.”

FDR set the stage for the entrapment of future generations by the welfare state and the incremental shift from individual freedom to dependence on the state. To that end, perennial Socialist Party presidential candidate Norman Thomas, proclaimed, “The American people will never knowingly adopt Socialism. But under the name of 'liberalism’ they will adopt every fragment of the Socialist program, until one day America will be a Socialist nation, without knowing how it happened.”

Indeed, FDR, himself the beneficiary of a great inheritance of wealth (like so many Leftist protagonists), was what V.I. Lenin called a “Useful Idiot” – a Western Leftist who took the side of the Socialists in political debates).

So where does that leave us today?

Former Federal Reserve Board Chairman Paul Volcker warned recently that, once again, America is “skating on thin ice” because of federal budget deficits (read: unrestrained federal spending) – and we are headed for another an inflationary cycle similar to that of the 1970s.

And there is no sign of restraint.

Regarding tax-code complexity, President George Bush noted in his State of the Union address in January, “Year after year, Americans are burdened by an archaic, incoherent federal tax code. [America] needs a tax code that is pro-growth, easy to understand, and fair to all.” Of course the notion of simplifying the tax code is nothing new. In a letter to James Madison in 1784, Thomas Jefferson asked, “Would it not be better to simplify the system of taxation rather than to spread it over such a variety of subjects and pass through so many new hands.” Mr. Bush now says tax reform my have to wait a year.

As for tax rates, we are reminded of these supply-sider words from a former president who crusaded for tax reduction: “Lower rates of taxation will stimulate economic activity and so raise the levels of personal and corporate income as to yield within a few years an increased – not a reduced – flow of revenues to the federal government. … The present tax codes … inhibit the mobility and formation of capital, add complexities and inequities which undermine the morale of the taxpayer, and make tax avoidance rather than market factors a prime consideration in too many economic decisions.”

Ronald Reagan? Nope. Try John F. Kennedy.

“Are you entitled to the fruits of your labor or does government have some presumptive right to spend and spend and spend? … Government is like a baby: An alimentary canal with a big appetite at one end and no sense of responsibility at the other.” Now that’s vintage Ronald Reagan!