Wednesday, April 7, 2010
Taxes and even more taxes
From The Heritage Foundation in response to the VAT (Value Added Tax) idea:
Our nation faces a financial crisis. But low revenues are not the problem. Spending is. Heritage fellow Brian Riedl explains:
Real federal spending remained steady at $21,000 per household throughout the 1980s and 1990s, before President Bush hiked it to $25,000 per household (in response to 9/11). Now, President Obama has a proposed a budget that would permanently spend a staggering $32,000 per household annually – and that’s before all the baby boomers retire and add another $10,000 per household in Social Security, Medicare, and Medicare costs to the bottom line.
So the problem is not declining revenues, but rather a spending spree unlike any in American history. If Washington insists on spending $32,000 per household, it will have to tax $32,000 per household – an unaffordable and unfair tax burden regardless what kind of tax collects it.
Rather than tax America into permanent economic stagnation, President Obama and Congress must rein in runaway federal spending. Simply bringing real federal spending back to the $21,000 per household average that prevailed in the 1980s and 1990s would balance the budget by 2012 without raising a single tax on anyone. Even returning spending to the pre-recession level of 20 percent of GDP would eliminate two-thirds of the projected 2019 budget deficit without raising taxes.