By John Hendrickson
“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,” asked Senator Barry Goldwater in his landmark book The Conscience of a Conservative? Goldwater, a Republican Senator from Arizona and unashamed leader with conservative principles, was a true advocate for constitutional government. In fact Goldwater believed that his responsibility was not only to uphold the Constitution, but as he told his constituents, his job was to repeal laws and not make them.
He understood that high levels of taxation and spending would lead directly to detrimental economic policies. Goldwater argued that “tax reduction has thus come to have a hollow ring,” and taxation was not just a question of economic and fiscal policy, but a question of morality. “The Conservative believes that man is, in part, an economic, an animal creature; but that he is also a spiritual creature with spiritual needs and spiritual desires,” stated Goldwater. One of the main liberties that was important not only to American colonists, but also to the Founding Fathers was the principle of economic liberty, including property rights.
The wages that a worker or business owner earns are “his property as much as his land and the house in which he lives,” argued Goldwater. Goldwater argued that “government does not have an unlimited claim on the earnings of individuals.” High rates of taxation are not only a moral issue, but are not sound policy. Higher rates of taxation not only curb an individual’s incentive to work, but they also cripple business confidence and entrepreneurial activity.
In addition, high tax rates do not mean more revenue to the government. “It seems difficult for some to understand that high rates of taxation do not necessarily mean large revenue for the government, and that more revenue may often be obtained by lower rates,” argued Secretary of the Treasury Andrew Mellon in his book Taxation: The People’s Business.
This principle has been proven in the Presidential administrations of Warren Harding, Calvin Coolidge, John F. Kennedy, and Ronald Reagan. Significant tax reform would not only be moral, by allowing people to keep more of their earned property, but allow businesses to expand and encourage entrepreneurial activity which is desperately needed to reverse the climbing 10.2 percent unemployment rate.
Although a sound tax policy is both a moral and economic necessity — the issue of government spending must not be ignored. In order for a tax policy to be successful, rates must be kept low, but government spending must be reduced, that is, without government spending reductions tax cuts will not be as effective. Goldwater argued that “as a practical matter spending cuts must come before tax cuts.” As he argued: “if we reduce taxes before firm, principled decisions are made about expenditures, we will court deficit spending and the inflationary effects that invariably follow.”
Both political parties have failed to restrain government spending and at the heart of this problem is disregard for constitutional limited government. “The root evil is that government is engaged in activities in which it has no legitimate business,” argued Goldwater. The nation is at a dangerous crossroads with an out of control federal budget, national debt of $12 trillion, a rising deficit at $1.4 trillion, and rising unemployment. The entitlement programs of Medicare and Social Security are in danger of bankruptcy and Washington continues to spend and push for new entitlements.
Goldwater offered a solution that would focus on both spending and tax reductions. He called “for a 10 percent spending reduction each year in all of the fields in which federal participation is undesirable.” The basis of any free society is economic liberty and the solution for economic recovery is returning back to constitutional limited government based on reducing taxes and spending, which in the end will unleash the entrepreneurial spirit that has built our great nation.
The views expressed in this column are those of the author and not necessarily those of the Public Interest Institute. They are brought to you in the interest of a better informed citizenry.
John Hendrickson is a Research Analyst with the Public Interest Institute in Mount Pleasant, IA.
Web site: www.limitedgovernment.org.