VASICEK: Taxes and challenges

By ED VASICEK
Tribune columnist

September 29, 2007 11:39 pm

— Taxation is constantly in the news. And why not? After all, back in 1776, America’s battle cry for independence was, “No taxation without representation.” Even after America had won the war, some states rebelled against paying taxes. Americans do not like taxes – that’s just the way it is. And I am very American. Ouch!
Hoosiers (and Americans across the land) are frustrated by what seems to be constant and relentless taxation. Many Americans want someone else – anybody else – to bear the brunt of tax increases. None of us wants to pay the piper.
At the same time, few of us want a decrease in government services. Yet, as America ages (the biggest generation of all time, the Baby Boomers, is tilting the scales toward “elderly”), we find ourselves in a dilemma: just to maintain the status quo means more taxation. As we Baby Boomers leave the work force and deplete Social Security funds (and cash in CD’s and retirement accounts – investment money that sparks business), America will hurt even more.
In addition to maintaining the status quo of past years, we have been forced to spend more on security and the military because of the fallout from 9-11. Jobs are moving to China and surviving American corporations often cut employee benefits to stay afloat. Less income to workers means fewer income tax dollars. With rising health care costs, many employers no longer include health insurance (if they were forced to do so, they would hire fewer workers and the result is higher unemployment), so Uncle Sam is now insuring children who once were covered by their parents’ insurance. The disintegration of the traditional family is having its economic impact, leaving more children in poverty and thus government dependent.
Taxation is complicated. If we increase property taxes, we drive up rents and hurt the poor. If we increase corporate taxes, we drive away industry from our community (or nation) and net fewer jobs and less tax money. If we tax the rich, this trickles down to hurt the poor (for the rich invest their money, thus creating jobs); if we tax the poor, this trickles upward to hurt the rich (who now must pay more taxes to subsidize the poor). If we increase taxes for the middle class, we force them down to the lower class (and then they receive more government help, depleting government funds).
The bottom line is this: No matter how we shift taxes, it is a painful process. We are almost always better off saving money (when reasonably possible) than increasing taxes.
Some Tribune readers may lean toward socialism or welfare statism; they want the government to meet everyone’s basic needs at taxpayers’ expense (forced financial equality). Others may lean in the opposite direction toward libertarianism; they want only minimal government services. Most of us (including yours truly) find ourselves between the extremes.
Whether we opt for a sales tax on food, higher income taxes, or allow increased property taxes to stand, we will all feel the painful impact. If we want increased government services, we must pay for them. Full-day kindergarten? We pay. Health care for children? We pay. Terrorist security? We pay. But will increased taxes really help close these gaps – or will they backfire by hurting our economy and thus reducing tax income at large?
I am not against all these government expenditures, but we might need to be more selective; we must remember that the money for these programs has to come from somewhere, and we are that “somewhere.” Neither local nor federal agencies have a bottomless pit filled with capital. Government money is OUR money.
Our only option is to seek “least-worst choices,” balancing cuts in spending with what seems to be the least painful tax options. There are no good choices. We want more government services, but we cannot even afford to pay for the ones we’ve had for years. Something has to give.
Ed Vasicek is pastor of Highland Park Church and a weekly contributor to the Kokomo Tribune.

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