According to a recent “60 Minutes”/Vanity Fair poll, 61% of Americans want to raise taxes on the “rich” to balance the budget. The next popular option is reducing defense spending. Cutting Medicare or Social Security is not very popular. Less than five percent of those polled want to reduce the federal government’s Ponzi schemes.
The poll’s flaw is obvious. The poll asked the question: “What would you do first to balance the budget?” Of course most Americans who are not rich support raising taxes on their wealthier neighbors. Why not? Most Americans support higher taxes as long as they do not have to pay them. But low and middle income Americans should be careful what they wish for. If taxes are raised on the “rich,” then taxes will be raised on the average family. That is the history of taxation in America.
The federal income tax began as a “rich man’s tax” 100 years ago, when the 16th Amendment to the U.S. Constitution was ratified. Only 2 percent of Americans paid the income tax. In a few years, virtually all Americans paid the tax after the United States entered World War I in 1917.
To support the current size of the welfare-warfare state, taxes will have to increase for everyone, if we want the federal budget to be balanced without issuing more debt. The federal budget is always “balanced.” Taxes + debt = spending. If the American people think that raising taxes on the “rich” is the first thing to do to balance the budget, then they have embraced “Willie Sutton” economics—rob one segment of the population to continue the morally and financially bankrupt welfare-warfare state.
The federal government needs an “extreme makeover.” We need to reduce military spending to a level that meets the real defense needs of the American people instead of perpetuating a global empire and nation building efforts in the Middle East. We need to phase out ASAP the two Ponzi schemes, Social Security and Medicare, and phase out all subsidies and entitlement spending ASAP, so the people will determine what goods and services should be produced in the marketplace.
In short, the federal government needs to be downsized by more than two trillion dollars per year. That would balance the federal budget at a level that is consistent with good economics, limited government and sustainable prosperity.