Diane Francis, after her stint at Harvard, once again proposes the wrong answer to the financial mess in which the US Government finds itself. Yes, the United States has run deficits for too long using foreign lenders as a source of funding for US government programs. But the solution is not more taxes on Americans – it’s less government. The government cannot create wealth – it can merely redistribute it, generally in a less than fair or efficient manner.
Real economic activity – work, ideas and investment in activities that have a positive return – improve the standard of living of a people. I agree – if the people want to continue the current level of government spending, then increased taxes are better than long-term borrowing. But I suspect that many Americans would cringe mightily at paying higher taxes. The problem is that politicians have spent too long lying to the public about how programs get paid for or how much they are really going to cost. The people have to start to be honest about such things.
If Californians knew the full consequences of Proposition 13 when they passed it in 1978, and all the similar propositions that reduced the ability of the state to raise money while at the same time mandating funding of government programs that they would have voted for it? I doubt it.
So the prescription should not be higher taxes, but transparency by government about how much a program will cost and what the tax burden must be to support it – and then let the people decide in an open and honest manner.
2 comments
Bill MacLean says:
2 September 2009 at 6:22 (UTC -7 )
The Americans need to shift the burden of taxes from the creative class to the population base. Half of all Americans pay no federal taxes. A sizeable portion should be realocated to a consumption tax. This would spread load aver many more people. Everyone should pay rent for the country they use!
Taliesyn says:
2 September 2009 at 10:53 (UTC -7 )
Bill – I don’t disagree with consumption taxes. I agree they are economically preferable. But Diane Francis seems to have forgotten that not all government spending is worth it and that if the people had to pay for the services rather than borrow the money and sentence their children to indebtedness political decisions might be different (and better).