Taxes: When is Enough, Enough?

Member Group : Lincoln Institute

Does government have an insatiable appetite for cash �“ yours? Hearing the anxiety over the Tax Cuts and Jobs Act of 2017 by liberals one would think that the issue about winners and losers was more amount taxation as an entitlement program rather than about how much of YOUR income you are able to protect from the government.

The lack of honesty and transparency in this process have been palpable. People who felt that any deficit under Obama was acceptable but any deficit under Trump is catastrophic are of concern. By the same token those who had heart attacks with the national debt before Trump give it a passing glance now.

Public policy must be guided by a long term strategic vision and not a day-to-day situational tirade.

Public opinion polls that seem to indicate that the taxes popular in one area or another are disingenuous at best. It is government’s role to protect the minority from the whims of the majority. We have been warned consistently to be very careful when the majority of citizens are subsidized through entitlement programs at the expense of the minority who is paying for those entitlement programs.

In the Tax Cuts and Jobs Act of 2017, there is a $10,000 limit on SALT deductions for state and local taxes. My state of Pennsylvania and most of the Northeast states and West Coast states are in the high state tax category. Many of the legislators from those states objected to the tax reform saying that it would adversely affect their state. The prior tax code benefited the high-tax states at the expense of the lower tax states due to the federal subsidy through the tax code of the deductions for SALT taxes.

The previous tax code was in effect a subsidy of large government while penalizing states favoring small government.

The perception that regulations and tax policy do not impact economic growth is laughable at best if it were funny but unfortunately it is all too much of a reality. Our economy had been stagnating for almost 2 decades because of the strangling effects of burdensome tax policies and regulatory policies.

Government would have you believe that if it passed a law that said that people will demand more if prices are higher despite the law of demand which states otherwise then that misguided policy will become fact in the mind of the government. The perception that government can change economic laws at a whim may be the culprit behind the insanity of “No-Document Loans” which led to the housing market meltdown.

What should concern all of us is when government believes that another person’s property is theirs which can then be taxed without regard of the consequences on the property owner. For example, skyrocketing property taxes to support the insatiable appetite of government is bankrupting seniors and forcing thousands to lose their homes in many states.
The Whiskey Rebellion of 1794 should serve as a powerful reminder of how people react to an unjust tax.

In the Whiskey Rebellion:

“In January 1791, President George Washington’s Secretary of the Treasury Alexander Hamilton proposed a seemingly innocuous excise tax “upon spirits distilled within the United States, and for appropriating the same.“1 What Congress failed to predict was the vehement rejection of this tax by Americans living on the frontier of Western Pennsylvania. By 1794, the Whiskey Rebellion threatened the stability of the nascent United States and forced President Washington to personally lead the United States militia westward to stop the rebels”

This is not to imply that our citizens will rebel but the election of 2016 our citizens told the “swamp” that they have lost faith and will react in ways only they understand.

We have an opportunity to either rebuild that trust which is so lacking in government or to cement the destiny of the nation �“ a destiny that will continue to decline and thereby hasten our bankruptcy.

The decision is ours. Do we allow the government to abuse the taxpayer because they can? Do we allow the bureaucracy to win at the expense of those who were elected to serve? Do we succumb to the pressure to spend at the expense of being wise? Do we just surrender to that which is easy today but fatal tomorrow?

Your income is yours. You do not have to justify why you spend what you do, only government does. Fair is when government can legitimately justify why it spends what it does.

Col. Frank Ryan, CPA, USMCR (Ret) represents the 101st District in the PA House of Representatives. He is a retired Marine Reserve Colonel and served in Iraq and briefly in Afghanistan and specializes in corporate restructuring. He has served on numerous boards of publicly traded and non-profit organizations. He can be reached at [email protected].