Monday, July 11, 2011

Pennies from Heaven in Iowa

Here in my pastoral Iowa town of Monticello (pop. 3,796) there's been a small debate about getting a new terminal building for our airport.  I say a "small debate" because only a couple of people have spoken out against it at City Council meetings.  Why would the community be against it?

According to our local paper the Federal Aviation Administration will fund 95 percent of the new structure and the remaining 5 percent will come from private donations to the airport.  Perhaps the gist of the pro-terminal side of the debate can be summed up in the words of one member of the local Airport Board.  He said: “This is a ‘no brainer.’ It will cost the Monticello taxpayer nothing[.]”  [Emphasis added.]

Free money!  The federal government will pick up the tab. It's a common refrain all across the fruited plain.  It won't cost local taxpayers anything... unless they also happen to be live in the U.S. or have children who will.

The U.S. is already $14 trillion in debt and is borrowing another $3 million every minute.  That's $46,000 of debt for every man, woman and child in America.  If you include the unfunded liabilities for Social Security, Medicare and the Republican prescription drug entitlement, that number is much, much higher.  According to Strong America Now, "Americans born in the 1980′s and 1990′s could face an income tax rate of 60% just to cover the interest on our national debt."

President Obama and the Democrats say we can pay for government's constantly skyrocketing spending by increasing taxes on those dastardly rich people.  But, as Amy K. Frantz (writing for Iowa's own Tax Education Foundation) points out, already "the top 10 percent of tax returns paid 69.9 percent of all federal income taxes, and the top 25 percent of tax returns paid 86.3 percent of all federal income taxes."

A recent Wall Street Journal article cited by Frantz states that even if the Democrats placed a confiscatory top income tax of 100% on all millionaires and billionaires "[t]hat yields merely about $938 billion, which is sand on the beach amid the $4 trillion White House budget, a $1.65 trillion deficit, and spending at 25% as a share of the economy, a post-World War II record."

In a Washington Times article, Cato Institute senior fellow Richard W. Rahn concludes that to balance the budget through tax increases, "[T]he only way for the government to obtain significantly more revenue is to increase taxes greatly on the lower- and middle-income groups who now pay very little. But increasing tax rates on the upper-, middle- or lower-income groups will have the nasty side effects of further slowing economic growth and increasing unemployment."

What money the government can't tax or borrow to cover its spending it often prints out of thin air which causes inflation. U.S. Representative Ron Paul has called inflation the "hidden tax" since nobody really thinks about what causes it. Paul explains: "The inflation tax, while largely ignored, hurts middle-class and low-income Americans the most. Simply put, printing money to pay for federal spending dilutes the value of the dollar, which causes higher prices for goods and services. Inflation may be an indirect tax, but it is very real — the individuals who suffer most from cost of living increases certainly pay a 'tax.'” Those "individuals who suffer" higher prices include those lucky folks in Monticello or your community who got some "free" goody from the feds.

My point here is not that my community does or doesn't need a new airport terminal or that your community does or doesn't a new parking ramp or Earwax Museum.  The point is that we can no longer treat federal largess as manna from heaven that comes with no cost whatsoever.  It comes with the shackles of indebtedness that we are slapping on our children.  May they and God forgive our selfishness.

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