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Responsibility #73
To the People of the United States of America:
6th postscript, April 1994. We continue the critique of the progress made in resolving problems addressed in these RESPONSIBILITY papers since the 103rd Congress and the 42nd President took office.
Taxes/Appropriations/Organization Reforms. There have been a number of books and articles in the last couple of years, that trace the levying of taxes and the appropriation of these revenues, going back as far as the first recorded taxing systems 6000 years ago. Abuse of these functions has been the death knell of empires and nations, since the earliest of recorded history. For the purposes of these essays, we need look at only a few examples in the history of the United States, to appreciate the perils and costs our nation has endured, due to the unbridled and unprincipled latitudes that our politicians have taken, with taxes and appropriations.
After our Declaration of Independence, and prior to the formulation and ratification of our Constitution, under the Articles of Confederation from 1776 to 1789, the thirteen original states acted like sovereign nations. Each looked to the interests of their state, and levied taxes and made appropriations accordingly. The central government had no taxing power. It had to ask for "contributions" from the states, for what little it was empowered to do, for the common defense and general welfare. Tariffs on trade among the states inhibited the unity and welfare of the federation. Without the reforms brought about through the Constitution, the newly founded nation no doubt would have perished.
But the unity, sought through the adoption of the Constitution, did not result in equitable and healthy tax policies. Much of the federal revenues were dependent upon tariffs raised on imports. From the first there were regional conflicts between the heavily manufacturing, northern states, and the almost entirely agricultural, southern states.
High tariffs made the south highly dependent on the northern states for finished goods, rather than permitting the ready trade of the southern states' raw materials to European powers, in exchange for their lower priced manufactures. Some historians suggest the loss of the southern states' market, and the possible growth of a competitive manufacturing and trading nation on the North American continent, was a (the?) major reason the north would not acquiesce, to the secession of the southern region at the outset of the Civil War.
As quoted from an essay in a March 6, 1993, editorial: ".... by the end of the 1880s there was intense pressure to reduce tariffs, the largest source of federal revenue." As discussed in previous RESPONSIBILITY papers, by Constitutional amendment in 1913, the income tax became a permanent source of federal revenue (also for most States and many cities). Income taxes are by far the largest source of government revenues. In the way that the tax codes have been enacted and administered, income and other taxes and appropriations are not consistent with the preamble to the Constitution; they are contrary to "property rights" laid out in the Bill of Rights.
The various levels of government have invented, adopted, and adapted many types of taxes to bring in revenues to pay for enacted appropriations. In general the taxes are based on political expediency or pressures, not on prorated RESPONSIBILITY for benefits received or costs incurred. This political irresponsibility has led to tax revolts, varying in severity from constraining referendums, or actions at the ballot box, to being a factor in the outbreak of the Civil War.
Deficits and the national debt are deferred taxes, the consequences of which are unpredictable. What will be the reaction when circumstances (national bankruptcy?) dictate that further deficits and debt accumulation are intolerable?
Unfortunately the nation is burdened with trillions of dollars more of hidden, current and deferred, indeterminate, taxes (in the forms of federal government guarantees of deposits, loans, pension plans, etc.). More unfortunate, all these obligations are likely to become due and payable at the same indefinite date (e.g., at the onset of a deep recession or depression). Moreover, there is the prospect that the federal calamity will be accompanied by many States' inabilities to increase taxes, to keep current payments on their large accumulated debts.
The above discussion reemphasizes the absolute necessity to enact inviolable principles, to govern the generation of federal revenues, and the expenditure of federal appropriations. It would be wise that these principles also be applied to States and lesser levels of government.
Now let us discuss a potpourri of news items concerning taxes and appropriations advocated, proposed, and/or enacted, all the way from the individual citizen right up to the President, during the terms of our present Congress and President. These demonstrate how clearly and widely the nation continues to avoid the lessons of history at the risk of catastrophic consequences.
1. Three weeks before the election (October 12,1992) that brought us President Clinton and the 103rd Congress, a newspaper article was headlined "Tax 'cuts' in '80s changed little". Within the text, it was stated: "New evidence shows that despite repeated efforts [in the past 12 years] at lowering federal taxes, the average American family's federal-tax burden, including Social Security, and corporate and excise taxes, has failed to shrink at all." ".... mostly, the problem was that for every tax cut, there was a tax increase." "A Reagan tax increase, called the Tax Equity and Fiscal Responsibility Act of 1982, vies with the much-lamented Bush tax increase, the Omnibus Budget Reconciliation Act of 1990, as one of the country's biggest tax increases."
With this evidence at hand, the government that took power in January 1993 should have devoted its energies to leading the nation, to reform of how taxes and appropriations are enacted, with the overriding criteria of "justice for all". Not so! Not so! As we shall see in the examples in the next essays, leadership is lacking; it is business as usual. God Save the Nation!
Publius IV
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