Another record by the federal government-- a $1.1 trillion budget deficit (doesn’t look so bad without all the zeroes, does it?) for the current fiscal year.  More than twice the previous record-- and there are still 3 more months to go!  Shall we go for a triple?

Phil Kerpen, writing “Obama’s Scary Hoover-Style Tax Hikes“ in the Fox Forum, draws parallels between tax hikes in the 2010 budget and the Revenue Act of 1932 which put in place tax hikes that expanded under FDR to create a tax burden on millions of Americans, largely through excise taxes.

“Despite President Obama’s promise that ‘If your family earns less than $250,000 a year, you will not see your taxes increase a single dime. I repeat: not one single dime,’ his new budget raises 45 percent of its revenue from energy taxes that will be paid by everyone who fills a gas tank, pays an electric bill, or buys anything that was grown, shipped, or manufactured.”

In addition, in 2010, under a proposal hidden in a footnote in the budget, the death tax will go from zero under current law to the same 45 percent rate that was implemented in 1932.

In a February 20, 2009 commentary at thenorthwestern.com, Ron Griffin (no relation to the Washburn Law professor) encourages President Obama to adopt real reform in the way the nation collects the revenues needed to run the government by reforming of the income tax system.  Suggested reform measures include:

• a flat tax rate (everyone pays the same tax rate but almost everyone pays something);
• a cap on the maximum rate (increased only by a two-thirds majority vote by Congress);
• a variable tax rate linked to the federal budget (set each year by Congress during the budget approval process);
• only one “deduction,” and that is the establishment of a base nontaxable rate of pay (this standard deduction, could, for example, be $10,000 per wage earner and $5,000 per dependent);
• a higher tax rate and cap for income from short-term stock speculation.

Advantages of implementing these measures include: no deductions means no annual filing of forms, minimizing withholding from our income, lower cost of collecting taxes, lower fraud and less potential abuse by the IRS in collection of overdue taxes.

Jim Kunstler, in “The Abyss Stares Back” on February 23, 2009, writes:

“Among the questions that disturb the sleep of many casual observers is how come Mr. O doesn’t get that the conventional process of economic growth — based, as it was, on industrial expansion via revolving credit in a cheap-energy-resource era — is over, and why does he keep invoking it at the podium? … Among other things, contraction means that all the activities of everyday life need to be downscaled including standards of living, ranges of commerce, and levels of governance.”

“If contraction and downscaling are indeed the case, then the better question is: why don’t we get started on it right away instead of flogging rescue plans to restart something that is DOA? Downscaling the price of over-priced houses would be a good place to start. … Let the chumps and weasels who over-reached take their lumps and move into rentals. Let the bankers who parlayed these fraudulent mortgages into investment swindles lose their jobs, surrender their perqs, and maybe even go to jail (if attorney general Eric Holder can be induced to investigate their deeds). No good will come of propping up the false values of mis-priced things.”

…

“No good, in fact, will come of a campaign to sustain the unsustainable, which is exactly what the Obama program is starting to look like. In the folder marked ‘unsustainable’ you can file most of the artifacts, usufructs, habits, and expectations of recent American life: suburban living, credit-card spending, Happy Motoring, vacations in Las Vegas, college education for the masses, and cheap food among them. All these things are over. The public may suspect as much, but they can’t admit it to themselves, and political leadership has so far declined to speak the truth about it for them — in short, to form a useful consensus that will allow us to move forward effectively.”

“One of the methods used by statists to destroy capitalism consists in establishing controls that tie a given industry hand and foot, making it unable to solve its problems, then declaring that freedom has failed and stronger controls are necessary.”
—Ayn Rand, 1975
ARC’s Response to the Financial Crisis