Tax Day, 2008

Today is TurboTax’s day of reckoning. Will they burst their servers’ seams like last year or will they weather the storm? We shall see.

That is my introduction the day’s topic of discussion: Taxes. As an American who proudly states that I live in one of the best countries in the world¹, I really don’t have a problem with my tax load. According to my handy dandy calculations, our married-filing-jointly tax rate is surprisingly low. That is because we are doing some of the things that the tax code encourages us to do: be homeowners, donate to charity, etc. As soon as we have kids, or start contributing to IRA’s, or losing money on our farm, we’ll do even better!

Unfortunately, it’s an election season, and moreover it’s looking like there will be a changing of the guard from Spend More than our Income Republicans to Spend More than our Income, but Raise Taxes a Bit to Make The Deficit Less Democrats. It doesn’t seem that fiscal responsibility is a big ticket item this election cycle despite it is arguably the most important long-term agenda item. Part of that is the difficulty in presenting an effective plan to the public that won’t immediately result in a pitchforks and torches party. I’m a realist enough to admit that people don’t want to make the sacrifices necessary to adopt healthy fiscal policies. That doesn’t change the fact that we’re rapidly chasing the rabbit down the hole and soon we’ll be in crazy land where someone can say “it’s only a 200 billion dollar deficit” and everyone nods like that’s a good thing.

The process might be painful, but I see some low hanging fruit.²

• 1) Get the hell out of Iraq. Whether you agree or disagree about the policies that got us there/keep us there, you have to agree that the war is costing a ton of money. That is money that shouldn’t be spent at all. The argument that it’s money that should be spent at home is a false dichotomy. This is money we’re borrowing and paying interest on.
• 1a) Re-think the size of our armed forces. Armies and Navies are expensive. Do we really need to have one the size we do now? Military expenditures are the second highest item after social services. This is ultimately a policy decision, whether we want to maintain a force that can kick-ass any three places in the world. Personally, I think we have the premier fighting forces in the world, however the American philosophy of armed conflict is OVERWHELMING FIREPOWER until we win, then leave. We need to remember that last part: leave. I won’t stake too hard a position on this item, but it remains a huge portion of our national budget.
• 2) Implement the FairTax provisions. BAM! You just freed up overhead expenditures that are being used by the IRS to monitor, interpret and enforce the tax code. Those expenditures, not no longer going into a sinkhole can be applied elsewhere in the federal budget.
• 3) Do an across-the-board 10% budget cut. Or, show no budget increases for the next three years. That will equate to a 10% cut when inflation is accounted for.
• 4) Remove the ability for Congress to include earmark riders in federal legislation. Okay, this one isn’t a low-hanging fruit, but it’s necessary to display some fiscal restraint.
• 4a) Give the President the line-item veto ability when it comes to budget authorizations. That way, congress critters can tell their constituents that it wasn’t their fault that the pork subsidies weren’t increased. It was el Presidente!

The problem, of course, resides with the politicians. Despite campaign rhetoric, republicans have never been any more interested in small government than democrats. Even President Reagan only chose to exercise fiscal cutbacks in the arena of health and welfare. Ask the USSR about how much Reagan cut the military. The truth is that the demand for restraint is only going to work if the people get behind and push and I’m too much of a cynic to see that happening.

I invite anyone who’s answer to these proposals is “it’s just not that simple” to explain to me why it can’t be that simple.

Update: After I finished writing this, I saw a news item about McCain’s Tax Day speech. He’s proposing that congress “help spread relief across the American economy” by declaring a Federal gas & diesel tax holiday between Memorial Day and Labor Day. The Federal fuel taxes are 18.4 cents per gallon of gas and 24.4 cents per gallon of diesel. By my calculations, that will save me and Jenn about $59 this summer. I think I’ll let the Feds keep it, especially because that $59 directly funds my job. I can see where a gas tax relief would help people who are more dependent on vehicles, such as truckers, but this is just pissing in the wind. Three months of no fuel taxes will mean three months of no receipts into the Federal Transportation Infrastructure Fund, which will spell worse funding issues later, meaning the need to raise taxes. How does this help?

¹ that title is debatable, and I don’t necessarily disagree with those people who state that we are not the best country presently
² while reading this, please keep in mind that my salary is directly affected by government spending. I’m a traffic engineer working for states and counties, so it’s not like I’m divorced from this topic