Because our country is in pain like many of us have never felt, I’m going to spend the next five of these broadcasts talking about what I would do today to assure a stronger, safer and more prosperous America 20 years from now.
I am going to start with taxes.
We should never go like sheep to the slaughter when it comes to paying taxes but all too often we do. Quick, what percentage of your paycheck, to the nearest whole percent, is sucked out before you ever see it? If you don’t know, you’re not sufficiently engaged. And that’s what power-grabbing politicians count on.
According to the IRS, the treasury takes in about $1.2 trillion dollars every year in income taxes from wage earners. The vast majority of that money, as you know, is withheld from the paychecks of nearly everyone that holds a job.
So with respect to taxes, if a good crisis is a terrible thing to waste, let’s don’t waste this economic crisis. The economy needs a shot in the arm and our tax code is broken. These two facts present opportunity. If we’re going to fund a stimulus, let’s fund it from the bottom up instead of the top down. And let’s deeply revisit the tax code in the process.
With respect to the ‘stimulus’ I say rather than take in through taxation a trillion something dollars only to turn around and pay it back out through a bloated, porked up ‘stimulus’ plan, let’s just mainline it into the economy by leaving the money in the pay envelopes of those that earned it in the first place.
Want to see ‘stimulus’? Watch what happens when nearly every wage earner gets anywhere from a 15 to a 35 percent pay raise.
Letting workers keep what they earned would be electrifying. But that shot of adrenalin, powerful as it would be, would only be a part of the benefit.
During a one-year U.S. federal tax holiday, we could engage in a debate leading to an overhaul of our tax code that is critically needed. Putting the government on a severe tax diet for a year would force an examination of how and on what the government spends our money. It would reawaken a discussion on how much tax is enough and how much is too much. It would force a discussion on what is an appropriate, constitutionally-mandated expenditure of the American worker’s income. It would force us to confront the fact that a huge proportion of our current tax code is in fact meddlesome social engineering and not the necessary funding mechanism for the legitimate functions of government.
And the fact that the tax savings bonanza would have a finite end date would re-engage American taxpayers in the process of thinking about how their money is spent. It would be good civics. When the taxman returned a year later to again collect from our paychecks, a whole lot more of us would say, “Hey, that’s my money.”
A one-year tax holiday would re-acquaint wage earners with the ‘gross pay’ box on their paychecks. Few workers ever consider that the entire gross pay on their paychecks was, for a nanosecond, their money. Mandatory withholding for federal income taxes began in 1943. Prior to that, people like my father wrote a check for their taxes once a year. The writing of that check put a sharp point on paying taxes.
Since then, three generations of workers have been successfully numbed to federal taxation by never getting to actually touch the money in the first place. A one-year federal tax holiday would allow all of us reconnect to our own money and then be able to truly feel its confiscation by the coercive force of government.
Of course, none of this is going to happen. But thinking about it is useful nonetheless. Because when you imagine keeping what you earn, you are forced to think about how it feels when what you have earned is taken from you.
Our current tax code is causing us to be poor citizens. Because of generations of federal withholding, we have become acquiescent and willing to allow our wealth to be squandered by power-hungry politicians and cosseted government bureaucrats.
For the sake of my two daughters, who 20 years from now will be raising their own families and trying to provide for their own retirements, we need to push the reset button on income taxes.
Now would be a good time.