I Want to Raise Our Federal Taxes

Laramie Boomerang ^ | 2/23 | Martin L. Buchanan

[nickcarraway]

Our federal government is too big and spends too much money.

As a lifetime fiscal conservative, I want to raise our federal taxes and give it even more money. I want our government to take more money because the alternative, future federal bankruptcy, would be much worse.

In fiscal year 2022 the feds took $4.9 trillion in revenue and spent $6.3 trillion, a deficit of $1.4 trillion, added to our national debt.

My Oct. 22, 2022, column, “Cut federal spending,” described draconian cuts, including eliminating entire cabinet departments, but such major spending cuts would only reduce our deficit by one-third. As our government finances are on an unsustainable path, major tax increases are also needed to get closer to a balanced federal budget. Here is what we can do:

First, repeal the 20% pass-through deduction from self-employment income that charges the self-employed a lower tax rate than those employed doing the same work. This deduction was created in 2017. Increases annual revenues $56 billion.

Second, eliminate special credits, deductions and exemptions in the corporate tax code. Increases annual revenues $118 billion.

Third, eliminate similar business preferences on individual tax returns. Increases annual revenues $50 billion.

Fourth, eliminate the step-up basis of capital gains at death and three other provisions that avoid capital gains taxes. Increases annual revenues $52 billion.

Fifth, repeal the tax exemption for interest on state and local government bonds and similar interest tax exemptions. This will also discourage state and local government debt and encourage pay-as-you-go practices. Increases annual revenues $44 billion.

Sixth, collect taxes owed but unpaid. The annual “tax gap” of taxes owed but uncollected is about $600 billion. The Biden administration’s $80 billion IRS funding increase, over 10 years, will generate an estimated $320 billion in added revenue, a four-to-one return on investment. Republicans in Congress are trying to reverse those IRS improvements, which would be a grave mistake.

IRS improvements will start with better computer systems, including connecting more often with people electronically. If someone misses a filing date and the IRS sends an email two weeks later inquiring about that filing, then they will be more likely to stay on track with their tax obligations. Those better computer systems must be matched by “boots on the ground.” Given the high amount of tax noncompliance and the frequent use of aggressive tax evasion strategies, we need a large number of auditors and a 100% audit rate for large businesses and large fortunes.

If we could reduce the tax gap by an additional net $80 billion, perhaps $100 billion in added revenue net of another $20 billion annually in added IRS costs, then the total revenue increases proposed in this column reach $400 billion.

These revenue increases would not increase general tax rates and would not add new federal taxes. Few of us wake up in the morning and say “increase my taxes,” but the tax increases described here would help delay a dangerous day of reckoning for federal finances and for all of us.

It is worth pondering how we got into this predicament. After Democrat Bill Clinton’s administration produced four straight years of budget surpluses, Republican President George W. Bush enacted major taxes cut twice, including after 9/11 and the start of the global war on terror. Under Bush, federal revenue as a share of gross domestic product declined from 20.9% in 2000 to 16.3% in 2004. Republican willingness to lower taxes while increasing spending during two wars produced continuous deficits, approaching half a trillion dollars annually. In a similar vein, Republican’s 2017 tax cuts added $2 trillion to the deficit over the following decade. Democratic shortcomings are more subtle but equally real, notably a desire for greater entitlements without reconciling that desire with an American distaste for taxes that dates back to the Revolution of 1776.

In George Orwell’s 1984, a sign of submission to big brother is believing that 2 + 2 = 5. That also seems to be an axiom of current federal budgeting. Let’s fix that.

Martin L. Buchanan is a software developer and writer in Laramie. His email is MartinLBuchanan@gmail.com.

[central_va]

Brain, Everytime marginal rates were lowered tax revenue INCREASED.

"Along with growth, tax revenue is a major indicator of the success or failure of a tax cut. The Joint Committee on Internal Revenue Taxation (now the Joint Committee on Taxation) estimated that the Kennedy plan would result in a tax shortfall of $7.6 billion in 1964, and $11.4 billion in 1965. What actually happened was that total revenue rose by $6 billion in 1964 and by $5 billion in 1965."

[Axenolith]

I didn’t think there were people this dumb in Wyoming...

[Gene Eric]

>> than those employed doing the same work

What a #ing joke. Idiot has no clue what it means to be self-employed.

[norwaypinesavage]

Only Idiots and liberals (but I repeat myself) don’t understand that history PROVES that raising taxes doesn’t raise revenue. There is far, far more to be gained by cutting spending. If the US simply clawed back the unspent COVID funds, and eliminated useless departments and personnel, we could vastly improve the budget problems instantly.