We all have heard much throughout our lifetimes, and seen little
happen, on the subject of high taxes. Where is the politician who has
not promised his constituents a fight to the death for lower taxes--and
who has not proceeded to vote for the very spending projects that
make tax cuts impossible? There are some the shoe does not fit, but
I am afraid not many. Talk of tax reduction has thus come to have a
hollow ring. The people listen, but do not believe. And worse: as the
public grows more and more cynical, the politician feels less and less
compelled to take his promises seriously.
I suspect that this vicious circle of cynicism and failure to perform
is primarily the result of the Liberals’ success in reading out of the
discussion the moral principles with which the subject of taxation
is so intimately connected. We have been led to look upon taxation
as merely a problem of public financing: How much money does the
government need? We have been led to discount, and often to forget
altogether, the bearing of taxation on the problem of individual
freedom. We have been persuaded that the government has an unlimited
claim on the wealth of the people, and that the only pertinent question
is what portion of its claim the government should exercise. The
American taxpayer, I think, has lost confidence in _his_ claim to his
money. He has been handicapped in resisting high taxes by the feeling
that he is, in the nature of things, obliged to accommodate whatever
need for his wealth government chooses to assert.
The “nature of things,” I submit, is quite different. Government does
_not_ have an unlimited claim on the earnings of individuals. One
of the foremost precepts of the natural law is man’s right to the
possession and the use of his property. And a man’s earnings are his
property as much as his land and the house in which he lives. Indeed,
in the industrial age, earnings are probably the most prevalent form
of property. It has been the fashion in recent years to disparage
“property rights”--to associate them with greed and materialism. This
attack on property rights is actually an attack on freedom. It is
another instance of the modern failure to take into account the _whole_
man. How can a man be truly free if he is denied the means to exercise
freedom? How can he be free if the fruits of his labor are not his
to dispose of, but are treated, instead, as part of a common pool of
public wealth? Property and freedom are inseparable: to the extent
government takes the one in the form of taxes, it intrudes on the
other.
Here is an indication of how taxation currently infringes on our
freedom. A family man earning $4,500 a year works, on the average,
twenty-two days a month. Taxes, visible and invisible, take
approximately 32% of his earnings. This means that one-third, or seven
whole days, of his monthly labor goes for taxes. The average American
is therefore working one-third of the time for government: a third of
what he produces is not available for his own use but is confiscated
and used by others who have not earned it. Let us note that by this
measure the United States is already one-third “socialized.” The late
Senator Taft made the point often. “You can socialize,” he said “just
as well by a steady increase in the burden of taxation beyond the 30%
we have already reached as you can by government seizure. The very
imposition of heavy taxes is a limit on a man’s freedom.”
But having said that each man has an inalienable right to his property,
it also must be said that every citizen has an obligation to contribute
his fair share to the legitimate functions of government. Government,
in other words, has _some_ claim on our wealth, and the problem is to
define that claim in a way that gives due consideration to the property
rights of the individual.
The size of the government’s rightful claim--that is, the total
amount it may take in taxes--will be determined by how we define the
“legitimate functions of government.” With regard to the federal
government, the _Constitution_ is the proper standard of legitimacy:
its “legitimate” powers, as we have seen are those the Constitution
has delegated to it. Therefore, if we adhere to the Constitution, the
federal government’s total tax bill will be the cost of exercising such
of its _delegated_ powers as our representatives deem necessary in the
national interest. But conversely, when the federal government enacts
programs that are _not_ authorized by its delegated powers, the taxes
needed to pay for such programs _exceed_ the government’s rightful
claim on our wealth.
The distribution of the government’s claim is the next part of the
definition. What is a “fair share?” I believe that the requirements of
justice here are perfectly clear: _government has a right to claim an
equal percentage of each man’s wealth, and no more_. Property taxes are
typically levied on this basis. Excise and sales taxes are based on the
same principle--though the tax is levied on a transaction rather than
on property. _The principle is equally valid with regard to incomes,
inheritances and gifts._ The idea that a man who makes $100,000 a year
should be forced to contribute ninety per cent of his income to the
cost of government, while the man who makes $10,000 is made to pay
twenty per cent is repugnant to my notions of justice. I do not believe
in punishing success. To put it more broadly, I believe it is contrary
to the natural right to property to which we have just alluded--and is
therefore immoral--to deny to the man whose labor has produced more
abundant fruit than that of his neighbor the opportunity of enjoying
the abundance he has created. As for the claim that the government
_needs_ the graduated tax for revenue purposes, the facts are to the
contrary. The total revenue collected from income taxes beyond the
twenty per cent level amounts to less than $5 billion--less than the
federal government now spends on the one item of agriculture.
The graduated tax is a _confiscatory_ tax. Its effect, and to a large
extent its aim, is to bring down all men to a common level. Many
of the leading proponents of the graduated tax frankly admit that
their purpose is to redistribute the nation’s wealth. Their aim is
an egalitarian society--an objective that does violence both to the
charter of the Republic and the laws of Nature. We are all equal in the
eyes of God but we are equal _in no other respect_. Artificial devices
for enforcing equality among unequal men must be rejected if we would
restore that charter and honor those laws.
One problem with regard to taxes, then, is to enforce justice--to
abolish the graduated features of our tax laws; and the sooner we get
at the job, the better.
The other, and the one that has the greatest impact on our daily lives,
is to reduce the volume of taxes. And this takes us to the question
of government spending. While there is something to be said for the
proposition that spending will never be reduced so long as there is
money in the federal treasury, I believe that as a practical matter
spending cuts must come before tax cuts. If we reduce taxes before
firm, principled decisions are made about expenditures, we will court
deficit spending and the inflationary effects that invariably follow.
It is in the area of spending that the Republican Party’s performance,
in its seven years of power, has been most disappointing.
In the Summer of 1952, shortly after the Republican Convention, the two
men who had battled for the Presidential nomination met at Morningside
Heights, New York, to discuss the problem of taxes and spending.
After the conference, Senator Taft announced: “General Eisenhower
emphatically agrees with me in the proposal to reduce drastically
overall expenses. Our goal is about $70 billion in fiscal 1954
(President Truman had proposed $81 billion) and $60 billion in fiscal
1955.... Of course, I hope we may do better than that and that the
reduction can steadily continue.” Thereafter, the idea of a $60 billion
budget in 1955, plus the promise of further reductions later on, became
an integral part of the Republican campaign.
Now it would be bad enough if we had simply failed to redeem our
promise to reduce spending; the fact, however, is that federal spending
has greatly _increased_ during the Republican years. Instead of a
$60 billion budget, we are confronted, in fiscal 1961, with a budget
of approximately $80 billion. If we add to the formal budget figure
disbursements from the so-called trust funds for Social Security and
the Federal Highway Program--as we must if we are to obtain a realistic
picture of federal expenditures--total federal spending will be in the
neighborhood of _$95 billion_.
We are often told that increased federal spending is simply a
reflection of the increased cost of national defense. This is untrue.
In the last ten years purely _domestic_ expenditures have increased
from $15.2 billion, in fiscal 1951, to a proposed $37.0 billion in
fiscal 1961[2]--_an increase_ of 143%! Here are the figures measured
by a slightly different yardstick: during the last five years of the
Truman Administration the average annual federal expenditure for
domestic purposes was $17.7 billion; during the last five years of the
Eisenhower Administration it was $33.6 billion, an increase of 89%.
Some allowance must be made, of course, for the increase in population;
obviously the same welfare program will cost more if there are more
people to be cared for. But the increase in population does not begin
to account for the increase in spending. During the ten-year period
in which federal spending will have increased by 143%, our population
will have increased by roughly 18%. Nor does inflation account for the
difference. In the past ten years the value of the dollar has decreased
less than 20%. Finally, we are often told that the government’s _share_
of total spending in the country is what is important and consequently
we must take into account the increase in gross national product.
Again, however, the increase in GNP, which was roughly 40% over the
past ten years, is not comparable to a 143% increase in federal
spending. The conclusion here is inescapable--that far from arresting
federal spending and the trend toward Statism we Republicans have kept
the trend moving forward.
I do not mean to suggest, of course, that things would have been
different under a Democratic Administration. Every year the Democratic
national leadership demands that the federal government spend _more_
than it is spending, and that Republicans propose to spend. _And this
year, several weeks before President Eisenhower submitted his 1961
budget, The Democratic National Advisory Council issued a manifesto
calling for profligate spending increases in nearly every department of
the federal government; the demands for increases in domestic spending
alone could hardly cost less than $20 billion a year._
I do mean to say, however, that _neither_ of our political parties
has seriously faced up to the problem of government spending. The
recommendations of the Hoover Commission which could save the taxpayer
in the neighborhood of $7 billion a year have been largely ignored. Yet
even these recommendations, dealing as they do for the most part with
extravagance and waste, do not go to the heart of the problem. The root
evil is that the government is engaged in activities in which it has no
legitimate business. As long as the federal government acknowledges
responsibility in a given social or economic field, its spending in
that field cannot be substantially reduced. As long as the federal
government acknowledges responsibility for education, for example,
the amount of federal aid is bound to increase, at the very least,
in direct proportion to the cost of supporting the nation’s schools.
_The only way to curtail spending substantially, is to eliminate the
programs on which excess spending is consumed._
The government must begin to _withdraw_ from a whole series of programs
that are outside its constitutional mandate--from social welfare
programs, education, public power, agriculture, public housing, urban
renewal and all the other activities that can be better performed
by lower levels of government or by private institutions or by
individuals. I do not suggest that the federal government drop all
of these programs overnight. But I do suggest that we establish, by
law, a rigid timetable for a staged withdrawal. We might provide, for
example, for a 10% spending reduction each year in all of the fields
in which federal participation is undesirable. It is only through this
kind of determined assault on the principle of unlimited government
that American people will obtain relief from high taxes, and will start
making progress toward regaining their freedom.
And let us, by all means, remember the _nation’s_ interest in reducing
taxes and spending. The need for “economic growth” that we hear so much
about these days will be achieved, not by the government harnessing
the nation’s economic forces, but by emancipating them. By reducing
taxes and spending we will not only return to the individual the means
with which he can assert his freedom and dignity, but also guarantee
to the nation the economic strength that will always be its ultimate
defense against foreign foes.