All Commentary
Tuesday, May 1, 1984

A Page on Freedom: Number 6


Government and Taxes

Government has to tax citizens for every dollar it spends. And these taxes are extracted from the citizens in three ways. One is visible. The other two are hidden.

Visible taxes are so unpopular that the majority forces its representatives—at the peril of losing their jobs—to minimize these taxes their constituents see. Yet this same majority continues heedlessly demanding more from government than they will knowingly pay to government. The excess must be collected in unsuspected ways.

The first hidden way is through taxes outwardly levied on business but necessarily passed on in higher prices which the misled majority does not blame on government but on business. This is a regressive consumer sales tax.

The second hidden way—to make up the difference between the spending and the two above taxes—is through the government borrowing. Some of this is from private sources—resulting in reduced capital for productive uses, in higher interest rates, and thus in slowing or preventing progress in values and jobs.

The final and major part of the $200 billion excess spending is collected from citizens through the borrowing that is monetized. This dilutes the value of everyone’s earnings, savings, pensions and welfare checks. It is the tax of inflation—the most brutal, deceitful, debilitating and regressive of all taxes. Lenin predicted we would destroy ourselves with it, and we have been trying our best to prove him right.

Thus, if the now suggested $50 billion new tax money were all miraculously allowed by a vote-hungry Congress to pass through into a deft-cit reduction of like amount, the debilitating cost of government would still be exactly the same.

Only a net reduction in spending—and thereby in the total of the three taxes—will reduce the cost of government and its major contribution to our inflation, unemployment, high interest rates and non-competitiveness. []

Lemuel R. Boulware

THE FOUNDATION FOR ECONOMIC EDUCATION, INC.
IRVINGTON-ON-HUDSON, NEW YORK 10533