Honesty on Tax Increases

I appreciate a February 2013 editorial in the New York Times about raising taxes. They emphasize the need to raise taxes because of fairness, but ... Well, here is how they say it:

 

new taxes on high-income Americans are a matter of necessity and fairness; they are also a necessary precondition to what in time will have to be tax increases on the middle class. …As the economy strengthens and the population ages, more taxes will be needed from further down the income scale… But there will never be a consensus for more taxes from the middle class without imposing higher taxes on wealthy Americans, who have enjoyed low taxes for a long time.

 

Frankly, I appreciate the honesty. The reality is that there is not enough money there, even if you confiscated it, to eliminate the deficit. Further, If you confiscated the money, it would be there only for one year. They would find ways to avoid going over the amount that would be confiscated.

 

One of the stated concerns of the United Methodist Social Principles (163) is sound fiscal policy. Although the principles go a quite different direction than what I am suggesting, John Kennedy admitted the difficulty in believing in the positive effect of low taxes. It does not seem fiscally responsble, but he points out why it is. "It's 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 the rates now." Those are the words of President John F. Kennedy in 1962. He went on to say, "The purpose of cutting taxes now is not to incur a budget deficit but to achieve the more prosperous, expanding economy which can bring a budget surplus." What's more, in Kennedy's annual message to Congress, in 1963, he said, "In today's economy, fiscal prudence and responsibility call for tax reduction, even if it temporarily enlarges the federal deficit. ... Reducing taxes is the best way open to us to increase revenues."

 

I recognize that the rates were quite different in the day of Kennedy, but the change he brought was in the right direction. Part of the point is that higher tax rates leads to more energy put into hiding income. What I think is a more important point is that the present tax rates, which leads to many people giving over 50% of their income to various levels of government, is simply unfair. People have a right to what they have earned.