Since the end of World War II, America has debated back and forth the merits of a large federal government or a smaller one. Incrementally, politicians have steadily increased the influence of the government in virtually every area of American life. In the 1960s, President Lyndon Johnson brought about the Great Society in his war on poverty. The Great Inflation lasted from 1965 to 1982.
The result was it didn’t change much regarding poverty. Still, government spending spiraled the economy into a lost decade of economic challenges, a devastating recession, and rampant double-digit unemployment. In the 1970s, Nobel Laureate Economist Milton Friedman proved his theory true that when government increases the money supply, prices rise along with it. He noted that the only way to reduce inflation was to “reduce the rate at which total (government) spending is growing.”
Over the last several years, in both Republican and Democratic Congresses, lawmakers spent over $4.6 trillion through COVID legislation alone. In addition, Democrats spent $369 billion on the so-called Inflation Reduction Act and a nearly $2 trillion omnibus bill in 2022.
Over the last five or so years, not only did Congress spend wildly, but it also increased taxes significantly, though not nearly enough to afford its trillions of dollars in spending. The national debt is around $31 trillion and growing. That’s up from $22 trillion since 2019.
As inflation continues at historic levels, business taxes are rising despite economists warning of an impending recession. It’s a feat not commonly done, and the tax hikes could make matters much worse for businesses and families.
So, let’s get this straight and untie the knots. Lawmakers on both sides used tax policies to bribe voters under the guise they were helping Americans. Now, the very people they claimed to help are the very ones that are likely to hurt the most as new business tax increases put a strain on employers’ finances amid a possible recession.
If inflation continues, the Federal Reserve keeps increasing interest rates, and business struggle, one of a few things, or a combination, is likely to happen. First, businesses of all sizes would be forced to let go of employees in order to stay profitable. The impact on millions of families could be significant. If that doesn’t help businesses, some could find themselves out of business.
The National Association of Manufacturers is warning that layer upon layer of new taxes on top of the slowing economy, which is growing more expensive by the day, puts companies in a series bind.
Last week, a minimum corporate tax on big corporations enacted solely by Democrats kicked in. It’s so complicated that even the Treasury Department is trying to figure out how it works and how many companies will owe the tax. In addition, last year, several taxes enacted by Republicans as gimmicks to pay for its 2017 tax cut kicked in. At the time of its passage, no one expected them to make it this far and thought Congress would terminate them. All told, the new business taxes alone could take an additional $1.5 billion from companies this year. Last year, corporate taxes totaled $425 million.
Politically, the issue is dangerous for both political parties. Republicans have been labeled over the last several decades as soft on businesses over corporate tax breaks. Democrats run the risk of being too hard on companies that people rely on for their jobs and livelihoods.
Still, there’s a bigger question that should be considered.
Should the federal government be this large and have such strong controls over the economy? Traditionally, Republicans argue that a smaller government is more efficient and ensures the liberty of its citizens. Democrats say the government has a responsibility to provide for people’s needs.
The problem is that many Republicans are no longer conservatives who genuinely believe in smaller government. Democrats, well, they keep advocating for larger and larger government.
It’s far from the founding father’s vision for America. They wanted to ensure the country’s common good, safety, and welfare. James Madison, the chief architect of the Constitution, told George Washington in 1791 that to “take a single step beyond the text (of the Constitution) would be to take possession of a boundless field of power.”
There is no doubt Congress has the power to tax. Yet, once again, through tax policies, both Democrats and Republicans abuse their taxing powers for political ambition. Republicans have a terrible habit of reducing taxes unwisely without offsetting spending. This is another form of robbing taxpayers to pay those who own America’s debt they create.
On the other side, Democrats raise taxes but also explode spending even more — often on social welfare programs that trap people in deeper government dependency. As the economy worsens, jobs become less numerous, and prices continue to rise, they are likely to propose more government programs to “help” people. The problem with their ideas is they don’t see people as investments. They simply see them as political tools. Take away the programs, and the masses will rebel to their political advantage.
So, here we are again for the third time since the 1970s. It’s time to change the narrative, invest in people, and unleash them to become contributors to society through dignity and work. It will take bravery and courage from lawmakers, who will be criticized for even making the suggestion. Still, creating opportunity policies encouraging entrepreneurship, hard work, and self-dignity for all would go a long way toward transforming the tax code and eradicating the social welfare state.
Ultimately, it would make America a thriving and prosperous country unparalleled anywhere in the world.
The Conservative Era, Copyright 2023
