According to Webster taxation is the “most difficult subject of legislation”.
Perhaps this is because taxation is the primary subject of legislation.
In my last post, I discussed the constitutionality of tax hikes needed to pay for unconstitutional federal programs. I’ve also been discussing the sticky and muddled relationship between the state and federal governments, created by the financial strangle-hold the federal government has over states.
Money truly is a critical source of power in government. And power is the primary resource that everyone in government is after. The federal government is able to wield power over the citizenry through taxation (and the laws the taxation funds) while wielding power over the states through taxation and funding.
I want to take a moment in this post to discuss the economic impact of taxation. There are repercussions for unconstitutional government behavior and there have been economic impacts from tax raises, especially increased taxation on the wealthy.
Taxation discourages.
It just does. When people are taxed for making more money, people are incentivized to make less money. When people are taxed for owning something (property tax), they are discouraged from owning things. Taxation is no joke.
It is a necessary evil. But it has very real consequences.
And here’s what happening. Most of the taxes we now pay are funneled into something called “mandatory” spending. Mandatory spending is spending that is… well … mandatory. In other words, Congress is required by law–their own law–to spend the money necessary for mandatory spending. This includes things like, welfare, medicare, medicaid and social security. These are forms of spending that MUST be spent when a certain criteria is met in the citizenry.
For instance, once an individual reaches a certain age, he is, by law, required to be paid social security by the federal government. Congress has no option here. Congress has no option about whether or not they will pay for medicare or medicaid expenses when someone is deemed eligible.
The number of people who are eligible for these payments only increases by the day. This means that the financial burden on Congress and the federal government only increases by the day. As this burden increases on government, the burden increases on the citizenry to provide the financial support for Congress to pay for these programs. As of 2019, 62% of the federal budget was mandatory spending, while 30% was discretionary spending (Tax Policy Center).
Discretionary spending means that the federal government has discretion over what to use money for and how much to spend. This means when the federal government is pressured to cut spending, they are really being pressured to cut discretionary spending. They can’t legally cut mandatory spending. That will never be cut. It will only, inevitably, grow.
So, the government is lying to you when they say that they want to tax the rich because it’s unfair that the rich have more money than they poor. What they’re really doing is trying to get more money for all their unconstitutional programs that they can’t afford. They’ve unconstitutionally written themselves into a hole. AND, to make matters worse, they’ve incentivized citizens to make themselves eligible for all of these forms of government welfare. So, no matter what, the government’s budget is going to grow.
Taxation never encourages anyone. For instance, no one wants to start a business and deal with all the business taxes. People start and run businesses in spite of business taxes.
The founders wanted anything but this. They wanted a country overflowing with people who don’t need government, who are self-sufficient and willing and capable to help those who need a hand. This was the theoretical ideal. The state and local governments could involve themselves a bit in the endeavor of helping their fellow man, but the federal government would stay out of it.
However, the more the federal government has gotten involved, the more the financial burden for the federal government has increased. In turn, so has the citizen’s financial burden. This has only disincentivized those who provide for the federal government in the first place—the citizenry.
Increased taxation and tax hikes are basically the consequence of an overblown, unconstitutional and unhealthy federal government. Limiting or lowering taxes is like putting a bandaid on a mortal wound. It doesn’t address the actual problem — the overblown, unconstitutional and unhealthy government that is struggling on the life-support of ever increasing taxation.
The more we demand of government, the more we have to pay.
It’s simple math, folks.
The Liberty Belle
Chris:
You have written a considerable amount on how the federal government oversteps it’s bounds with the states when it comes to finance and spending. If you have a moment would it be possible for you to explain to your readers just how the term earmarks come into play in this and also how gerrymandering by Congress affects who and how states are represented?
Once again I thoroughly enjoy your articles and wish to thank you for your tutelage on how OUR government works(?). ………………”B”
Great idea… thanks for the comment and will work that in the schedule. 🙂