EDITORIAL
Does DeMint Deserve
Savaging? Candidate has tax reform
half wrong, half right
Maybe U.S. Rep. Jim DeMint deserves the scorn that his Democratic
opponent for the U.S. Senate has heaped upon him for suggesting that
a national sales tax become the No. 1 federal revenue source. Just
as S.C. Superintendent Inez Tenenbaum says, replacing the personal
income tax with a national sales tax is a bad idea - and not only
because it would push the federal tax burden down the
personal-income slope.
But DeMint, R-Greenville, is right in asserting that middle-class
Americans would clamor for fewer government programs if the
programs' true cost was more vivid to them. A national sales tax
would certainly accomplish that.
The current tax code invites Americans to believe that someone
else should pay for popular government programs that primarily
benefit the middle class: Medicare, Social Security, higher
education loans and grants, veterans benefits, nursing-home
subsidies, farm subsidies, mortgage subsidies and highway
construction, to name just a few.
At the same time, Americans vote in politicians who promise to
cut taxes. Politicians who dare to tell them the truth - that the
government is broke and they share responsibility for that - get
"rewarded" with a one-way ticket to retirement. Is it any wonder
that Congress resorts to deficit spending to keep us all happy,
while paying for the war on terrorism and the military adventures in
Iraq and Afghanistan?
That said, DeMint's national sales-tax proposal, one of several
tax-reform ideas he has talked up for years, is the wrong way to
force middle-class responsibility. To bring the budget into balance,
the tax rate would have to be pegged at 20 cents per dollar, maybe
higher. Americans from the middle to the bottom of the
personal-income slope would spend proportionally more of their
incomes on taxable items than the wealthy few - a violation of the
ability-to-pay principle that drives all fair-taxation systems.
Moreover, a national sales tax would punish consumption. At a
time when so many households are overextended and personal savings
are dangerously low, a tax code that discourages personal spending
might not seem such a bad idea.
But millions of American jobs are tied to consumption. Here on
the Grand Strand alone, thousands of jobs depend on the consumption
of hotel stays, airline tickets, amusement tickets, retail sales,
car rentals and restaurant meals. Statewide, thousands more jobs are
tied to the manufacturing of consumer goods - such as the BMWs
produced in DeMint's House district. It isn't an exaggeration to say
that a national sales tax could trigger a recession from which it
would take decades to emerge.
DeMint would be wiser to focus on simplifying the income tax - an
idea much discussed in Congress during the late 1980s and early
1990s. By eliminating deductions and tax breaks and reducing the
disparity between the highest and lowest tax rates, Congress could
preserve fair taxation - and make the connection between program
costs and taxes paid clearer to middle-class Americans.
Tenenbaum, meanwhile, should explain how, exactly, she would pay
for the middle-class tax cuts and education-spending increases she
advocates without increasing the federal deficit.
If she truly wants this year's Senate campaign to be about the
role of the federal government in the lives in Americans, she needs
to be honest about program costs,
too. |