Taxes, and Deficits, and Cliffs – Oh My

 

Tim Bean

11/2/2012

 

We have heard an awful lot about how the top earners in this country need to pay more of their fair share.  For many people this makes all the sense in the world.  I mean some of those top earners own private planes, multiple houses, drive expensive cars, wear expensive clothes, eat at nice restaurants, take vacations in exotic locales, etc. etc. Meanwhile the vast majority of us (myself included) schlep along , toiling away in our comparatively pedestrian lives, living the life of a lowly commoner.  It is no wonder then that many, many people, including the sitting President, think that the egregious excesses by those dastardly “one percenters” should come to an end, and they not just should, but NEED to pay more into the public coffers.

Well according to the IRS the top 10% of earners in this country pay 71% of all federal income taxes, so the big question is, what exactly is defined as paying one’s “fair share,” when more than two-thirds of all tax revenue already comes from people who are a hell of a lot wealthier than me?  Should they account for 8o, 90, or 100% of all tax revenue?  Would that be fair?  Of course not; and envy or jealousy should not be  an impetus for taking away (which is what taxes do) from another.  I mean doesn’t the 10th commandment say, “Thy shalt not covet thy neighbor’s house, thou shalt not covet thy neighbor’s wife, nor his manservant, nor his maidservant, nor his ox, nor his ass, nor any thing that is thy neighbor’s.”  (King James Version).

Yeah, but look at this next graph using data compiled from the Congressional Budget Office; “we” need to bring in more revenue to account for and to continue paying for these vital entitlement programs, so someone needs to pick up the tab and since I don’t have the money then it must be passed to the wealthiest; right?

Umm, yes and no.  “We” could tax everyone to the high heavens and it will not satiate the bureaucratic beast’s want for money.  It isn’t just a lack of funds, it is spending more than “we” take in.  Simply taxing any and everyone more really solves nothing if spending isn’t curbed too.  Sadly little to nothing has been said by either of the big tent party candidates about comprehensive spending cuts.  Both advocate spending a little less over here, and spending a little more over there.

I think this next graph illustrates why most people my age and younger believe that there will be no Social Security benefits for us by the time we reach retirement age.  Sadly a growing percentage of younger Americans also believe that they will never be able to retire, so if we are just going to work ourselves into the grave, then I guess we really won’t need to receive any Social Security benefits anyway.  That should get Uncle Sam off the hook for having to pay Social Security to at least a generation, or two…

Talk about a fiscal cliff!  Take a look at this next chart, again using CBO projections.  At least we can wait until 2050 though, so we have plenty of time to kick that can down the road, if not ignore it all together.  I should be dead by then, so why should I care?  Though my kids, my brother’s kids, my sister’s kids, and all of my friends’ kids won’t be so fortunate.  Maybe someone from their generation will finally have the stones to actually do something – probably not though, as politicians rarely have the fortitude to do anything, except make grand promises to ensure they get elected – plus by then it will already be too late.

With the outlook so rosey for our country’s future, it kind of begs the question, why don’t we ever hear one of our illustrious elected officials, or those seeking to become one of those illustrious elected officials, actually talk about this?  First of all, and this is the cynic in me talking, none of the above scenarios will actually affect our ruling elite, they will continue to get paid, and enjoy the benefits that comes with being a member of the ruling elite.  Think Marie Antoinette’s infamous comment about cake.  Secondly, and this is slightly less cynical, there have been a handful of candidates, and elected officials who have made these warnings; but they have been either ignored, or panned as kooks by the media, for daring to try and bring attention to what will must assuredly spell the end of America as we know it, if things aren’t addressed soon.  Who are some of these people?  Well, the first one that I can remember is Ross Perot.  He ran twice for President, in 1992, and 1996; and his message was very much about getting America’s financial house in order.  He was lampooned, and snickered at for his demeanor, and his use of charts like the ones presented here.  Then there is current Texas Representative Ron Paul.  He too has consistently espoused the need to shore up America’s finances, but was widely portrayed as a kook, and a bit of a political sideshow, or oddity by the media, and especially within his own party, the GOP.  There is his son, Kentucky Senator Rand Paul, who also garners little attention for his want to get things shored up sooner, rather than later, and is often portrayed as being extreme, or radical.  Then there is Gov. Gary Johnson, who is actually running for President in this election, with the same message that America has to get its fiscal sh#t together, and yet all he gets is token attention from the media, more so because of their view of him being a spoiler, rather than his policies.  There’s Paul Ryan too, and even he, and his warnings are viewed as extreme, heartless, out there in left field, and exaggerated.

It isn’t the fiscal cliff at the end of this year that we need to worry about.  I can promise you that dilemma will be solved very shortly after the elections.  It is the literal fiscal abyss where we are heading, and odds are we will begin to see the precipice by the end of this decade – if not sooner.

So, for those of us who have not yet voted, think about the information provided here.  Think about how either of the two mainstream parties and candidates have, and are going to address this multi-trillion dollar elephant that has been sitting in the room for well over twenty plus years.  Think about how this once hypothetical scenario is becoming more and more likely, and how many of us will actually have the “pleasure” of living through it.  Think about it as you press that button in the voting booth for which ever candidate you choose.  If, and more likely, when the other shoe drops though from our fiscal irresponsibility, just don’t ask yourself how did this happen; because there are, and have been people, and given the sources for the data in the above charts, even government organizations, who actually have been telling us what lies ahead.

 

The real goal should be reduced government spending, rather than balanced budgets achieved by ever rising tax rates to cover ever rising spending.  (Thomas Sowell)

 

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