November 1, 2017

The Redistributionist Consensus in DC

What is the proper purpose of federal taxation? Is it to fund the constitutionally limited functions of the federal government? Or to seize wealth from one group in order to give it to another?

What is the proper purpose of federal taxation?

Is it to fund the constitutionally limited functions of the federal government? Or to seize wealth from one group in order to give it to another?

We now have two parties in Washington, DC — the Democrats and the Republicans — who act as if it were the latter.

The debates they have today are not about whether taxing and spending should redistribute wealth, they are about competing plans for doing so.

This puts Americans who live a traditional life in financial jeopardy.

People who get educated, get a job, keep a job, get married, have kids, buy a home, and save for a self-sufficient retirement are precisely the class of people whose would-be wealth a redistributionist government must target for seizure.

This is because people who live this lifestyle are in fact the most reliable creators of wealth.

And if government is going to give handouts to one class, it must take from another. Thus, a key question becomes: Which class are you in?

A corollary question: How many are now left in the class that must, on net, surrender wealth to the government?

The ultimate question: When does that class become too small to sustain the redistributionist state?

Two examples of the Republican Party’s embrace of redistributionism are written into the “framework” for tax reform that the White House, the House Ways and Means Committee and the Senate Finance Committee published at the end of September.

In the first example, this Republican “framework” calls for creating a larger bloc of Americans who pay very little or no income taxes at all to the federal government.

The plan doubles the “standard deduction” taken by people who do not itemize their tax deductions, while taking away the personal exemptions that would apply, in a family, to both parents and children.

“In combination,” says the framework, “these changes simplify tax filing and effectively create a larger ‘zero tax bracket’ by eliminating taxes on the first $24,000 of income earned by a married couple and $12,000 earned by a single individual.”

The second example is the unquestioning commitment the Republican “framework” makes to maintaining a “progressive” tax code — that seizes escalating percentages of a person’s earnings if they insist on earning more money.

The “framework” initially says there will be three tax brackets: 12 percent, 25 percent and 35 percent.

But then it says: “An additional top rate may apply to the highest-income taxpayers to ensure that the reformed tax code is at least as progressive as the existing tax code and does not shift the tax burden from high-income to lower- and middle-income taxpayers.”

Imagine if all the Republicans who ran for president last year had sworn to voters: No matter what, I guarantee you that I will keep the tax code “at least as progressive” as the one you have now under Barack Obama and John Boehner.

What if they had said: I’m not sure 35 percent is a high enough tax rate on some people’s income. We may need to make it higher.

The pattern of federal spending in fiscal 2017 — when Republicans controlled both houses of Congress — amply demonstrates the redistributionist nature our federal government has assumed.

The Department of Health and Human Services (which oversees, for example, Medicaid, Medicare and Temporary Assistance for Needy Families) spent more money — $1,116,764,000,000 — than any other government department. Its spending was up from $1,102,965,000,000 in fiscal 2016.

Social Security Administration spending topped $1 trillion for the first time ever — hitting $1,000,812,000,000.

The $2,117,576,000,000 in combined spending by HHS and SSA equaled 53 percent of the $3,980,605,000,000 in total federal spending for the year.

By contrast, the Defense Department and Military Programs ($568,905,000,000), the State Department ($27,061,000,000), the Department of Homeland Security ($50,502,000,000) and the Justice Department ($30,977,000,000) spent a combined $677,445,000,000 in fiscal 2017.

HHS and SSA, in other words, spent three times as much in fiscal 2017 as these four departments that carry out core constitutional responsibilities of the federal government.

As the Treasury collected about $3,314,894,000,000 in federal taxes during the year, the total federal spending of $3,980,606,000,000 caused a deficit of $665,712,000,000.

The budget resolution the Republican Congress passed last week anticipates that the federal debt will continue to rise for the next 10 years.

That will redistribute some of the cost of today’s government — and political posturing — onto the backs of younger Americans who decide to become net givers to the federal Treasury rather than net takers.

COPYRIGHT 2017 CREATORS.COM

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