This past Saturday was Tax Day, April 15th, but the official day to turn in our financial homage to the federal government is Tuesday. We the people have been promised tax reform – of course to the progressive socialists of the Democrat Party that means wealth redistribution. However, if there is to be real economic growth in America, beyond the malaise of one to two percent GDP growth, it means supply side economics. But it also means a Washington DC that gets itself under control. And so far that ain’t happening.
As reported by the astute Terence Jeffrey over at Brent Bozell’s CNSNews.com, “The federal government collected record amounts of both individual income taxes and payroll taxes through the first six months of fiscal 2017 (Oct. 1, 2016 through the end of March), according to the Monthly Treasury Statement.
Through March, the federal government collected approximately $695,391,000,000 in individual income taxes. That is about $7,387,280,000 more than the $688,003,720,000 in individual income taxes (in constant 2017 dollars) that the federal government collected in the first six months of fiscal 2016. The federal government also collected $547,491,000,000 in Social Security and other payroll taxes during the first six months of fiscal 2017. That is about $2,731,820,000 more than the $544,491,000,000 in Social Security and other payroll taxes (in constant 2017 dollars) that the government collected in the first six months of fiscal 2016.
Despite collecting record amounts of individual income taxes and payroll taxes, the Treasury still ran a deficit of $526,855,000,000 in the first six months of fiscal 2017. Also, even with record revenues from individual income taxes and payroll taxes in the first six months of fiscal 2017, overall federal tax collections were slightly down. In the first six months of fiscal 2016, the federal government collected $1,513,124,070,000 (in constant 2017 dollars) in total taxes. In the first six months of this fiscal year, total federal tax collections have dropped to $1,473,137,000,000—a decline of about $39,987,070,000 from total tax collections in the first six months of fiscal 2016.”
Yes, we are talking in terms of billions and trillions of dollars. But most disconcerting is even with all these record revenues, our federal government is still running an almost $527 billion deficit. In other words, this is the difference between the revenues coming into the government and the “outlays” or expenditures going out. So the obvious deduction is that we don’t have a taxation problem in America. The last thing anyone in government should be promoting at this time is increased taxation. I find it rather disturbing that we’re sitting around and have had no new tax reform plan presented — and I mean back in January.
The first thing that should have happened was a one-time repatriation of the trillions of dollars of capital sitting offshore. The Congress — and President Trump — should have long passed this measure to offer this one time eight percent corporate/business tax rate repatriation retroactive to 2016. The revenue generated from this action would have been reserved as the public contribution towards U.S. infrastructure repair.
Now, I don’t agree with having a government “infrastructure” bank, just like I’m against the Export-Import Bank and funny, I once thought President Trump was as well. We need to assess how a third party financial institution can be the trustee of these revenues and ensure they’re properly allocated and appropriated to the priority infrastructure needs of our country.
And no, I don’t trust the politicians to do this because they’ve done a pretty pathetic job managing our Transportation Trust Fund. After all, those shovel-ready jobs weren’t so shovel-ready. Remember, eight years ago, Barack Obama told us we needed a government fiscal stimulus to the tune of $1 trillion. It was supposed to go to infrastructure…what happened? That’s Exhibit A as to why these politicians have failed us and simply waste our tax revenues.
We need to quickly institute the reformed corporate/business tax rate, which is the highest in the world. It’s an indicator that says America is closed for business. The Trump campaign had articulated a reformed rate of 15 percent after repatriation and now I’ve been hearing of a 20 to 25 percent corporate/business tax rate. It appears the beast we know as the federal government just cannot truly reform tax policy in our Republic in order to inspire economic growth.
The markets have seen historic growth because they’re anticipating economic growth, but will it happen as it should? The answer is lower tax rates in order to have increased tax revenues, a premise antithetical to the tax policy of class warfare and insidious “fair share” beliefs of the liberal progressive left.
The small business sector of our nation comprises some 70 to 75 percent of our economic activity. Tax reform of the individual rates is vital to them as that’s the basis for their system of taxation. We haven’t heard too much from President Trump about individual tax brackets. Back during the campaign there was talk about four brackets, but I’d prefer a flat tax of two brackets. As well, what are we going to do about capital gains, dividends, and the infamous death tax? Heck, what are we going to do about repealing the twenty taxes of Obamacare, especially to provide small business relief?
And we MUST roll back many of the back-breaking regulations of the Obama era because the onerous financial rules of the bureaucratic administrative state represent hidden taxation, with no representation. Lest we forget the origination clause of the Constitution which states that all revenue generating measures of the federal government shall originate from the House of Representatives. Someone didn’t tell Barack Obama about that…
There’s a simple matter that’s an important aspect of tax reform, and that’s federal government spending and budget reform. The report from Terence Jeffrey evidences that we have record revenues, but still running our government in the red…why? It’s easy to comprehend: the federal government operates on what’s called “baseline budgeting.” This means that each year the federal government is increasing its spending. A spending cut is not a cut to spending; it’s a cut to the rate of the increase of the spending.
Y’all know, in the final months of a fiscal year, there are directives to spend the money in order to justify greater appropriations the following year. We cannot operate our homes that way. We instead use a zero based budgeting system, which means each fiscal or budget year we start from zero, as we must balance our revenues with expenditures. In federal government land, they’re fine with running massive $527 billion deficits, or printing money and manipulating interest rates in order to mask fiscal policy failure.
The other aspect that must happen with tax reform is government agency reform. Here’s an idea! Why not reconsolidate the Departments of Health and Human Services (HHS), Education, and Housing and Urban Development (HUD). After all before, Jimmy Carter we had an agency called HEW (Health, Education, and Welfare). Another recommendation would be the combine the Departments of Commerce and Labor into a singular Department of the Economy. When you look at the Department of Agriculture you’ll find 80 percent of its budget is focused on food programs…not agricultural policy. And I could write an entire missive just on the Department of Defense and how it could be better restructured…then again, this is something Jared Kushner is supposed to be in charge of making happen. It will be interesting to see what the 36-year-old commercial real estate dealer comes up with.
President Trump can assist government agency reform by repealing John F. Kennedy’s executive order 10988, which empowered federal government unions. After all, these civil servants are paid by the American taxpayer — quite sure there are some issues with bonuses, pay scales, and overall employee effectiveness.
The point is, it’s not just about tax reform. And the fact that the GOP is proposing a “border adjustment tax” is unconscionable. Why are they presenting us with a new tax as part of tax reform? It’s because there’s a sickness in Washington DC, and it comes down to these politicians being addicted to our tax resources. Instead of cutting back on their spending, reforming the federal government, or making their budgeting system resemble that of the American people…they want more tax dollars. I wish I could know the taxation philosophy of President Trump but he hasn’t tweeted it out…yet.
We want tax reform, but we, the people don’t want any more DC gimmicks, resulting in higher deficits, greater debt…and less money in our pockets.