The "Higher Taxe$ Are Better" Myth

By Dr. John E. Russell

It is a paradoxical truth that tax rates are too high today and tax revenues are too low and the soundest way to raise revenues in the long run is to cut rates now. The experience of a number of European countries has borne this out. This country's own experience with tax reduction has borne this out. The reason is that only full employment can balance the budget and tax reduction can pave the way to full employment. The purpose of cutting taxes is not to incur a budget deficit, but to achieve the more prosperous, expanding economy which will bring a budget surplus.

—President John F. Kennedy, December 1962

The Maze

Government Sources of Income

1. Taxes,
2. Borrowing and
3. Printing Federal Reserve Notes.

Categories of Taxes

1. Property Taxes,
2. Income Taxes and
3. Taxes on Transactions.

The first two categories are unethical and may be unconstitutional.

Income taxes include personal income taxes on city, state and federal levels. There are corporate income taxes, sometimes called shifted taxes, because corporations pass these on to consumers. These, along with other "sneaky" taxes make up the vast kingdom of hidden taxes. In 1982 there were 47 hidden taxes on a loaf of bread!

Taxes on transactions include general sales taxes, excise taxes and tariffs. Sales taxes are on the city, county/parish and state level in the United States. Excise taxes include the "sin taxes" on tobacco and alcohol, and gasoline taxes. Also included in excise taxes are license taxes (liquor, marriage, hunting and fishing taxes). Excise taxes also include franchise taxes (the right to carry on certain kinds of businesses). Excise taxes also include the severance tax (tax levied on the processing of natural resources such as timber, natural gas, and petroleum).

Other taxes include

1. Estate tax (property taxed before the heirs receive it);
2. Inheritance tax (property taxed after the heirs receive it); and
3. Gift tax (property taxed on property given during the lifetime of the donor).

Former President Clinton, bless his heart—I know he feels our pain—was planning on raising tax rates and adding the value-added tax. The value-added tax is a hidden tax that should be banned by Congress. The VAT has a bad track record in Europe and has enabled the growth of socialism and big government. He would like to have added an energy tax! The socialist element of our government has betrayed us through exorbitant taxes.

$$$ Now the government is taxing our patience! $$$

Social security or payroll tax, along with medicare tax, unemployment tax and retirement tax amount to 33 percent of federal income. Personal income taxes produce 48 percent of federal income. Corporate income taxes (paid by consumers) produce 11 percent of federal income. excise, customs, estate, gift, and miscellaneous taxes produce 8 percent of federal income. (Federal borrowing is not included.) [Forms and Instructions for form 1040: 1999. (Washington DC: Department of the Treasury, Internal Revenue Service, 1999), third page from the back].

Our Sinful Tax Rate

Dr. Munzert says that our combined tax rate including hidden taxes in 1982 was 51 percent! [Alfred W. Munzert, PhD. Poor Richard's Economic Survival Manual (Franklinville, NY: Hemisphere Publications, Inc., 1982)]. One reason for the American Revolution was the high tax rate of 21 percent! Now, the American government is trying to raise taxes again!

How stupid does the government think we are? Stupid enough to believe that tax money will be "reinvested in government-generated jobs" and will be used to reduce the deficit? (Well, maybe not that stupid.)

A Spending Problem

"Our government does not have a revenue problem. It has a spending problem!" So says Dr. Larry Bates, an economic expert who is a former banker and state legislator. [Larry Bates, The New Economic Disorder, (Orlando: Creation House, 1994), p. 119].

Unconventional Taxes

1. Lotteries,
2. Inflation and
3. Regulations.

Also, the 1982 tax rate of 51 percent did not include inflation. From 1945 to 1982, the value of the American Dollar dropped 92 percent. Compared to the 1940 dollar, the 1994 dollar is worth less than 3 cents! [Larry Bates, The New Economic Disorder (Orlando: Creation House, 1994), p. 125]. The Federal Reserve (U S Government-controlled) raises this tax simply by printing more money at its own whim. If we as citizens were to print money to pay our bills, we would go to prison for counterfeiting. This raises the question, "Why did we go off the gold standard?" Could it have been to enable our government to devalue our money by printing Federal Reserve Notes, thus introducing inflation and a very hidden "stealth tax"?

Concerning regulations, former presidential candidate Lamar Alexander said,

Sometimes I believe regulations take as much money out of our pockets as taxes do. [Lamar Alexander, We Know What To Do: A Political Maverick Talks With America (New York: William Morrow and Company, 1995), p. 185].

The cost of unneeded regulations by the federal government is passed on to the consumer. Fines go directly to the federal government exactly like a sales tax. The cost of businesses to implement regulations is passed on to consumers exactly like a sales tax . The cost of supporting the EPA and other bureaucracies come from taxpayers. Since there are 300,000 federal regulations, Uncle "Boss Hogg" Sam can really soak us good. "Hazzard County" has been widened to include "Hazzard Nation"! For examples of government misuse of federal regulations, see Randy Fitzgerald, "Mugged by the Law," Reader's Digest, April 1996, pp. 165-176.

A socialist government plunders its citizens. Read the booklet, The Law, by Frederic Bastiat. If you haven't read this 150-year-old classic, Download this book free at http://www.BusterSoft.com/JRCM