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Sunday, February 1, 2009

Too Many Taxes

The great philosopher David Hume said, “It is seldom that liberty of any kind is lost all at once.” It is generally lost about 1% at a time—usually through taxes. One of the surest ways to take away the liberties of a free people is to over-tax them. The great English jurist and professor, Sir William Blackstone, upon whom our Founding Fathers relied greatly when setting up our system of government, said “A power over a man's resources is a power over his will.”

On March 17 of this year, Hall County voters will again go to the polls to vote on a 1% SPLOST (Special Purpose Local Option Sales Tax). (Why wasn’t this vote held last November, saving taxpayers thousands of dollars?) The current SPLOST, if approved, would be the sixth SPLOST approved by Hall County voters since its inception in 1985.

Let me say right now that I believe that sales taxes are a far superior form of taxation than either income taxes or property taxes. Alan Keyes was right on when in 2002 he wrote that, “Real [tax] reform requires abolishing the income tax and returning to the system our Founders intended, funding the federal government with tariffs, duties, and excise taxes – sales taxes – not with the privacy-destroying income tax.”

However, even sales taxes can overreach and be misused, especially when we still have burdensome income and property taxes, and especially if they are used for “projects” that will require more taxation. My friend, Marine Major Kevin Jarrard, in his letter to the Times (here), recently pointed out the aquatics center as such a project.

Of course, government over-spending almost always results in more-and-more government, which then requires even more spending; this requires more tax revenue, which means more and larger taxes. It is truly a maddening and seemingly endless cycle.

Consider, if you will, all of the taxes paid by most Americans: income (state and federal), Social Security, Medicare, sales (state and local), capital gains, ad valorem (home and vehicle), inheritance, gasoline, unemployment, and so on. In 2007, MSN reported that, “In a study for the National Bureau of Economic Research, Boston University economists Laurence J. Kotlikoff and David Rapson found that our all-in marginal tax rate is 40%, give or take a bit. Yes, you read that right: 40%. Most workers will pay about that much on each dollar of income when all taxes -- federal and state income taxes, sales taxes, taxes for benefit programs, etc. -- are considered.”

Most of us are familiar with the Tax Foundation’s (a tax research organization) phrase “Tax Freedom Day,” which is the date to which the average American must work to pay all their taxes. For 2008 the date was April 21. That works out to be 30.3% of the calendar year. As I implied above, many of these taxes are in relatively small amounts (such as 1% sales taxes), but as you can see they all add up to a very significant total.

Governor Sonny Perdue recently announced budget proposals that failed to include the homestead exemption. That means an additional $200 to $400 in taxes for most Georgia homeowners. Needless to say, many are outraged. In reference to a caller’s concern about the removal of the homestead exemption, a local talk-show host correctly noted, “You cannot raise taxes in this environment.” The Chairman of the Hall County Commission recently called the governor’s actions on the homestead exemption “totally irresponsible.”

The 1% SPLOST also amounts to several hundred tax dollars a year for the average taxpayer, yet there is barely a hesitation on the part of most local voters, politicians, and pundits to continuously support and approve any and every SPLOST that comes along.

If conservatives are going to rail against wasteful government spending at the state and federal level, as well they should, we also need to hold our local officials accountable when it comes to spending. In his visit to Gainesville last year, Governor Perdue correctly declared that local governments were too big. “They blame and say we’re going to pass them (tax losses) right on to our citizens, and you’re causing their tax increase,” he said. “I’ve got the facts to prove the state didn’t cause their tax increase. Those are decisions made at the local level.”

As of October 2008, SPLOST VI contains 46 items (Curiously, as of this writing, the itemized list can’t be found on the Hall County SPLOST Web site.) at a cost of about $240 million. The current economic circumstances beg the questions: Are they projects that taxpayers should be funding; if so, is now the time; and would we be better off leaving the $240 million in the local economy?

As Major Jarrard also pointed out, we need to make sure that we are “funding practical, efficient, and necessary government facilities.” I agree. If governments are given more in taxes they are going to find a reason to spend it. We need to begin to wean our governments—local, state, and federal—from the current level of revenue that is required of the average American. That is why I’m voting against SPLOST VI.

Copyright 2009, Trevor Grant Thomas
At the Intersection of Politics, Science, Faith, and Reason.
Trevor and his wife Michelle are the authors of: Debt Free Living in a Debt Filled World
tthomas@trevorgrantthomas.com

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