In 476 AD, observers
standing on Palatine Hill overlooking the Roman Forum stood aghast at what they
witnessed: an army of Visigoths, Gauls, and Huns sacking and looting what had
been the most powerful city in the ancient world. As the barbarians overran the
seventh hill, completing their plunder of the once impregnable imperial city,
the observers raced back to Byzantium to report to Zeno, ruler of the Eastern
Roman Empire: “Rome has fallen. The world is no more.” More than a millennium
would pass before the ragtag remnants of European civilization dared venture out
of the darkness that ultimately defined the age that would follow the decline
and fall of the West. Two thousand years after the fall of Rome, historians
still debate the causes of Rome’s decline, and the collective contribution that
political corruption, cultural disintegration, and the political malaise
experienced by Roman Citizens made to the West’s demise.
As an employee of the
IRS, I know perhaps better than anyone how important tax revenue is to
maintaining civilization, and though I disagree with how our government spends
that revenue, in fact, I disagree with the whole concept of government spending
our revenue, this nation depends on that revenue nonetheless. No one enjoys
paying taxes, but without tax revenue, we would have no schools, no highways, no
hospitals, and no social services (police, firemen, paramedics, teachers, etc).
However, an increasing number of Americans consume those resources but make no
financial contributions to maintain them. For instance, in 2011, 46 % of
American households either paid no income tax or received a net refund. The
blame for that rests solely on Congress, which has the sole authority, under the
Sixteenth Amendment, to tax and spend. Congress has historically used the tax
code to both reward well-heeled campaign donors (special interests), and with a
sweep of the same legislative pen, use welfare benefits to placate the poor who
would otherwise riot and overthrow the Congress for dereliction of its fiduciary
responsibilities over the economy. As a result, the tax code has rendered my
employer, the IRS, nothing more than a bank, ironically, a bank financed largely
from the savings of Chinese citizens whose American jobs in China finance higher
savings rates for the Chinese than their American counterparts enjoy stateside.
There simply is no
denying that the main obstacle to reforming the tax code is the popularity of
tax deductions and credits. Nothing generates more calls to the IRS than demands
for refunds generated from Americans enjoying a net refund of income taxes paid.
Perversely, half of all American households that don’t pay taxes would still
have owed no taxes in 2011 even if all tax benefits (deductions and credits)
were repealed and only the standard income tax provisions remained in effect.
These standard income tax provisions include personal exemptions for taxpayers
and dependents and the standard deduction. Furthermore, three tax
expenditures—the child tax credit, the earned income tax credit and one of the
education credits—are refundable credits: if they exceed tax liability, the
excess is paid to the taxpayer making their tax liability a negative amount.
Around 42 percent of the 76 million nontaxable households had a negative tax
liability in 2011. In plain English, the American tax system is subsidizing
those households that are not paying federal income taxes.
The cost to the nation to
mail out refunds to Americans who pay no taxes can be measured in dollars and
cents – literally, the dollars and cents taxpayers are paying on interest
borrowed from foreigners to finance the national debt. According to the Joint
Committee on Taxation, the most popular deductions and their costs (in billions
of dollars) include: Mortgage Interest Deduction: $68,166; Earned Income Credit:
$59,028; Child Tax Credit: $56,678; State and Local Income, Sales, and Personal
Property Tax Deductions: $43,826; Charitable Contributions Deduction: $37,578;
Untaxed Social Security and Railroad Retirement Benefits: $31,167; Real Estate
Tax Deduction: $24,310; Education Credits: $18,217; Medical Deductions:
$11,683; and last, but certainly not
least, the Student Loan Interest Deduction: $1,305. Those who actually are
paying income taxes have already paid a staggering $151 billion dollars in
interest on the national debt in fiscal year 2013 (October to January 2013) ,
which will result in taxpayers cutting an even bigger check to treasury holders
around the world than they cut last year: $359 billion. While the nation
careened over the “fiscal cliff” at midnight, 12/31/12, the nation’s children
were borrowing $140 million an hour from the world just to keep the country
running. This amount represents the money that could have been invested in the
United States if only Congress could balance the nation’s checkbook as soundly
as America’s workers balance theirs. Think of the national debt as money taken
out of your children’s future earnings to reward foreigners whose savings
accounts are larger than yours. Congress in turn uses money withdrawn from
primarily Chinese bank accounts to bribe you to reelect your incumbents year
after year ad nauseam with the aforementioned tax deductions and
credits.
Perched high above the working masses, securely fastened to their political soapboxes, members of Congress use their monotonous campaign speeches to encourage Americans to regard the IRS as the nation’s MAC machine: “just run your 1040 through the IRS and money will come shooting out” they tell their voting constituents. Congress deliberately tweaks the tax code to reward properly motivated voters using the Earned Income Credit, the Mortgage Interest Credit, the Student Loan Interest Deduction and other tax baubles that you love so much. For instance, the home mortgage interest deduction, which is the single biggest cost to the US Treasury – will cost the nation’s workers an estimated $464 billion from 2011 to 2015. Those at the higher income levels ($200,000+) get an annual tax deduction from this deduction of over $2,000 alone. The IRS also allows owners of luxury yachts to deduct the mortgage interest so long as they have sleeping quarters, a kitchen and a toilet. Lavishly appointed recreational vehicles also qualify for the home mortgage interest deduction. Essentially, working taxpayers are subsidizing these deductions, the second homes of the super rich, a policy that is condoned, if not supported, tacitly or otherwise, by a population that, like the super rich, is content with whatever tax spoils they can wrest from the hands of the Congress, who in turn purloins those spoils from the public purse.
A restless citizenry
is the best assurance that the chords of freedom will continue to resonate with
the vibrancy required to sustain it. The parallels between American power at its
apex and the Pax Romana are not singularly reflected in Rome’s triumphs, but
also in our mutual malaise for all things political. Apathy defeated the
citizens of Rome long before the high walls of their vaunted city were breached
by foreign invaders. In the twilight of their empire, Romans were more inspired
by what they could receive than what they could contribute, perpetually gorging
on an insatiable appetite of bread and circuses – a diet of entitlement fed to
them by the Roman Senate. At the dawn of their empire, their ruler Octavian
bequeathed his name to the age: the Augustan Age. By the end of his forty year
reign he was qualified to boast: “I found Rome a city of brick and left it a
city of marble.” The question in our time is whether the entitlement pabulum
Congress spoon feeds the voting public at election time will once again
precipitate Western decline, or whether we will muster up the integrity to do
what we must do to save the Republic: secure the blessings of employment to
ourselves and our posterity, give to America more than we take from her, and on
the last day of our lives, as we draw our last breaths, leave our nation a
better state than we found it.
This transcript of a
real call provides an example of the effect that Congressional control over tax
dollars has on the American people:
IRS: Thank you for calling the Internal Revenue
Service. How may I help you?
TP: I want my money. IRS: Pardon me?
TP: I read in the paper that ISR was giving away money so I wanted my share.
IRS: You mean IRS, don’t you ma’am…are you calling about a refund ma’am?
TP: I’ll take whatever you have to give me.
With attitudes like
this, it’s no wonder that the American economy fell off the fiscal cliff and
landed head first into the muddy political waters of sequestration!
No comments:
Post a Comment