- The Washington Times - Monday, April 16, 2001

As millions of Americans sign their checks for money owed to the IRS and file their tax returns today, it is worth considering this fact: The only time Americans paid a higher percentage of their output in federal taxes than they will pay in the current year was in 1944, when the nation was simultaneously at war with the Third Reich and the Japanese empire. That year the government raised 20.9 percent of the nations output in federal taxes; and it ran a budget deficit comparable in size to nearly one-quarter of the nations economy. In 2001, the federal government is projected to collect 20.7 percent of output in taxes, while generating a budget surplus of nearly 3 percent, including $125 billion in tax overpayments unrelated to Social Securitys surplus. Were it not for several vetoes in recent years by then-President Clinton, the overpayments would have been less severe.
As it happens, because the tax statutes are so cumbersome and utterly indecipherable by the overwhelming majority of taxpayers, compliance costs will total another $125 billion, estimates the nonpartisan, nonprofit Tax Foundation, which also calculates that 4.3 billion hours will be expended preparing tax returns. Moreover, incalculable billions of dollars more are wasted on activities undertaken less to enhance the nations output than to mitigate tax consequences. At the dawn of the new millennium, this is nothing short of a national disgrace. And it certainly hasnt helped to reverse the dramatic slowdown that has taken place during the last three quarters.
The fact that fiscal policy has been increasingly contractionary during the past four years seems to be overlooked by many of those determined to isolate Federal Reserve Chairman Alan Greenspan and his central bank colleagues as the bogeymen responsible for the current economic slowdown. Unless reversed, the current trend in tax overpayments promises to be even more severe. Baseline budget surpluses both Social Security-related and non-Social Security surpluses are projected to rise inexorably from 2002 through 2011, exceeding a cumulative total of more than $5.6 trillion.
Thus, it seems bizarre that President George W. Bush would encounter difficulty within his own party, no less in convincing the Senate to meet his goal to reduce federal taxes by a relatively paltry $1.6 trillion over that same 10-year period. Not only is $1.6 trillion less than a third of total projected surpluses; it is only about 5 percent of the $28 trillion in projected tax revenues during the next 10 years.
During the debate over the adoption of a budget resolution, only one Democratic senator, Zell Miller of Georgia, voted against an amendment sponsored by Sen. Tom Harkin, the ultraliberal Democrat from Iowa, to reduce the presidents $1.6 trillion tax cut by $448 billion. Regrettably, three Republican senators (Arlen Specter of Pennsylvania, Lincoln Chafee of Rhode Island and James Jeffords of Vermont) found themselves unable to support Mr. Bush on the first major domestic-policy challenge the enactment of tax relief he faced in Congress.
The centerpiece of Mr. Bushs tax-relief proposal is to lower marginal income-tax rates. Arguing that no taxpayer should pay a higher marginal federal income-tax rate of 33 percent, Mr. Bushs plan would reduce the top rates of 39.6 percent and 36 percent to 33 percent, while lowering the 31 percent and 28 percent rates to 25 percent and adding a new 10 percent bracket. (After tax reform overwhelmingly passed in 1986 on a bipartisan vote, the top rate was 28 percent.)
In a recent interview on Fox News Sunday, Senate Minority Leader Tom Daschle refused to reveal what he believes to be the ideal top rate. The only inference one could draw was that Mr. Daschle was quite satisfied leaving the upper rates where they are, even in this era of massive tax overpayments. There are two important conclusions to be drawn from this. The Senate Democratic leader clearly intends to continue his odious class-warfare assault upon the administration and the Republican Party. And he obviously believes that government can better allocate the surplus windfall than the private sector. On this day more than any other, overburdened taxpayers would do well to contemplate the personal consequences Mr. Daschles philosophy will have for them, their families and the economy.

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