TAX NEWS - June 2010

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US VAT on the table?

Some grim humor could be found earlier this week, in the spectacle of the President's "deficit reduction commission" going over budget and running out of money. The entire premise of the commission is absurd.  The deficit is not the problem. It's a symptom. The disease is government spending.  No administration or Congress dominated by Democrats has any chance of diagnosing this disease, let alone treating it effectively.  There is some chance the Republicans will do better, but only if we keep on top of them.

Watching this Presidential commission discuss strategies for deficit reduction is like watching a pack of gluttons talk about getting in shape while they prowl up and down a buffet table. They linger over the deep-fried mortgage interest deduction caps, dip their spoons into the rich chocolate of the VAT tax, and lick their lips as they wait for the expired Bush tax cuts to pop out of the oven.  They end up perched on the edge of creaking chairs, tittering at the wonderfully naughty idea of devouring everyone's 401k plans for desert.  It's a nauseating spectacle that will only end when they're escorted from the restaurant by angry voters.

The President made some headlines when he reversed his campaign promises, and spoke of broad tax increases being "on the table." This is an outrage, in light of the vast, corrupt, and wasteful government Obama presides over.  It's also dangerously foolish. The American economy has no more pounds of flesh to feed the government leviathan.  From here on in, everything cut from us will be muscle and bone.  Higher taxes will consume the wealth needed for investment and job creation, reducing the value of the economy… leading to calls for even higher tax rates, to maintain the government's revenue stream.

President Obama was elected by an emotionally and morally exhausted populace, convinced it could find refuge from the rough battlefields of international prominence and free-market responsibility in the arms of maternal government.  The automated growth of government requires the public's continued fatigue. We are assured that every nickel of the bloated State is locked into place, protected by a permanent constituency, and every dollar of its future growth is a matter of destiny.  Spending cuts are impossible, so if you want something done about that deficit, we'll have to talk about some exciting new tax increases. As the 2010 campaign swings into high gear, the Democrats will be cautiously probing voters, to learn if they're weak enough to believe the opponents of those "inevitable" tax increases are the deficit-busting spendthrifts.

I think the Democrats will be disappointed. The Tea Party movement (TEA: Taxed Enough Already) is all about citizens re-discovering their strength, and rising to challenge a system that claims to be inescapable.  There are a lot of things we want to put "on the table."  For starters, let's not send almost half a billion dollars to fund a genocidal terror state dedicated to the destruction of our allies.  We don't want to eliminate all foreign aid, but we can certainly halt the madcap extravagance of checkbook capitulation to remorseless evil.

No politician has any business talking about tax increases until ObamaCare is repealed.  It's the most comprehensively failed legislation of the modern era.  Like a taxi that runs on plutonium, it's costing us a fortune, and making us sick, even while it's sitting there and doing nothing.  Sold with fanciful promises and fraudulent cost estimates, it's another expensive scheme to buy votes with taxpayer money, ending with a planned crisis the government will be only too happy to step in and "solve" by seizing even more of our wealth and liberty.  Its passage stymied serious attempts at real improvements to our health-care system, including tort reform and allowing the interstate sale of insurance plans to increase competition.  As with so many other delusional Big Government programs, the opportunity cost of passing ObamaCare, and passing up on reasonable plans that enhance individual liberty, rivals its staggering price tag.  We'll come trillions closer to a balanced budget by shredding it.

Another item that must be on the table is the abolition of public-sector employee unions.  The entire concept is ridiculous, a system that transforms taxpayers into serfs for a pampered aristocracy that hates them.  Public employee unions produce a cycle of demand, despair, and violence that begins with fingers bitten off, and ends with murder by arson in the streets of Athens.  Much of the loot from Obama's $800 billion stimulus heist was used to pay off public unions.  All talk of government "austerity" is meaningless babble until these organizations have been dissolved.

The titanic federal payroll surged with incredible speed under Obama, even as private sector employment crashed.  This trend must be reversed, quickly and forcefully.  A government reduced to playing Parcheesi with census workers to inflate employment figures has drained far too many resources from the private sector. Reducing government payroll will cause unemployment to rise in the short term, but releasing both workers and capital into the private sector is the only way to improve the long-term health of the economy.  Those terminated government workers will have to live without their gold-plated benefit packages and bloated salaries, and they'll need to make do with the same health-care options as the rest of us… but we will find good use for their talents, beyond the imagination of central planners.

The state religion of environmentalism goes on the table, too. The lawless, unelected bureaucracy of the Environmental Protection Agency must be dissolved.  Further attempts to divert public funds into the global-warming fraud should be prosecuted.  No more rogue government agencies with limitless power, bottomless budgets, and fanatical agendas.  No more forced tithe to the primitive spiritual beliefs of our arrogant elite.

The time has indeed come to put many things on the table. All of them are dusty, overpriced relics of discredited statist theories and collectivist ideology.  How long has it been since Americans were allowed to tackle anyserious problem by enhancing their liberty?  Who can remember the last time we approached a situation by reducing the burden of regulation and taxation on our private citizens, unleashing their energy and creativity?  When was the last time we were allowed to view a crisis as an opportunity for the private sector, rather than the State?

The government's table covers thirteen trillion square yards, held together with platinum nails.  It seats an exclusive clientele of top politicians and their allies, but there's plenty of room beneath it, for the rest of us to fight over the scraps.  We can fit an awful lot of garbage on that table, when we've dismissed the representatives who can't suggest anything but tax increases as a solution to the deficit.  After we complete that process in 2012, we can start chopping the table up for firewood, to fuel the unfettered forges of American industry and imagination.  What happens after that will be unpredictable, uncontrollable, and exhilarating.  We shouldn't want it any other way.

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