Americans Need Relief From Taxes
Newt Gingrich showed up in New Hampshire last week to sample the fresh air and take in a few Granite State sights. Reporters speculated that The Newt was rehearsing a presidential bid, but friends and associates offered another interpretation.
One confidante said, “He went to protect the agenda.” That is, he went to warn Bob Dole and the United States Senate: If you guys don’t get on the reform bandwagon, I will join the White House sweepstakes and make your lives truly miserable.
Gingrich will get a chance to test his threat this week when Republican leaders haggle over a “budget resolution” - a non-binding blueprint for spending and taxes in the coming fiscal year. The House wants to cut citizens’ tax payments $354 billion over the next seven years by offering a $500 per-child income-tax credit, repealing the administration’s tax hike on Social Security benefits and permitting the “prospective” indexation of capital gains.
The Senate, in contrast, doesn’t want to touch the revenue code. Budget Committee Chairman Pete Domenici grouses that it would be irresponsible to cut taxes without reducing spending first. His fiscal blueprint therefore promises to cut unspecified taxes - but only if a) the deficit falls, b) businesses perk up as a result and c) federal revenues rise.
Congress never honors such pledges, of course. Each time honorables raised taxes in the past decade, they vowed to use the extra cash to retire the deficit. But when the money poured in, they spent $1.59 for every extra buck they collected. Domenici’s vow to cut taxes tomorrow brings to mind the cliche: Tomorrow never comes.
But there’s a more powerful objection to the Senate’s approach: The tax system stinks.
In his new book, “The Tax Racket,” Martin Gross notes that American citizens now face more than 200 kinds of levies. Congress sets the tone for the plunder. The federal government imposes excises on 66 different items and extorts tribute for things that few of us notice. We pay $3.50 per month to the Federal Communications Commission for each phone in use, and the feds add 10 percent to every airline ticket. Uncle Sam also fattens up junk-food prices and accounts for more than 15 percent of gasoline prices.
That’s just the start. More than 3,000 jurisdictions tax income. States and localities also slap levies on real estate, “personal property” such as cars and boats, hotel rooms, electricity, commuting, bridges, subways, phone service, food, and cable television.
Government at all levels has become a 24-hour highwayman, filching a penny here and a nickel there. Americans generally accept Mark Twain’s observation that the principal difference between a taxidermist and a tax man is that the taxidermist leaves the skin. Rep. James Trafficant, D-Ohio, expresses the growing rage with his piquant battle cry: “Americans are taxed off!”
There’s another good reason to assail the status quo. The wheels of commerce have begun to wobble, partly because of taxes pushed into law two years ago by Bill Clinton.
Middle-class Americans already know the score. The median family income has been falling since 1993, and recent data hint that the slide will continue. The Department of Labor reports that median weekly earnings fell 0.7 percent between the first quarter of 1994 and the first quarter of this year.
The index of leading economic indicators also has dropped for three consecutive months - a traditional sign of recession. Exports have slacked off, even though the dollar has become a form of funny money in Japan and Germany. Car sales have gone south. Consumer confidence tumbled for the first time since the Bush recession - from 104.6 to 101.6 in the Conference Board’s scale. Non-farm payrolls fell by 100,000 workers in May.
Even the good news has a dark lining: The unemployment rate slipped in May - but only because 926,000 people stopped looking for jobs.
The budget confab will show what the new Republican Congress is made of and how it plans to reassure anxious Americans. On one hand, lawmakers could cut taxes and regulations - and guarantee more of the same next year. That strategy would give the economy a much-needed jolt and prove that the GOP has more than slashing on its mind.
Conversely, Republicans could adopt the green eyeshade approach and postpone the visionary stuff for later. That way, they could join President Clinton in accepting responsibility for the recession that almost surely would follow - and give Newt Gingrich a perfect excuse to buy a good map of New Hampshire.
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