76-01-B6

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Tax Reform

Transcript More than 100 yrs. ago a French economist named Bastiat1 said, “When a nation is burdened with taxes nothing is more difficult or impossible than to levy them equally.” I’ll be right back. It has been said that nothing in life is certain except death & taxes. Well we can add the certainty of Congress talking about reforming taxes every election year. They are at it again with months and months of arguing in committee, then a house bill on the floor of each house and now a conference committee trying to reconcile the differences between the Sen. version & the House effort. All you and I can be certain of is that the income tax will still be too complicated to figure out without legal help and the government will get more money not less. Why can't Congress get the message the people are sending; that the income tax needs to be simplified, that the progressive surtax brackets need to be adjusted so that a cost of living pay raise doesn't put you into a higher tax bracket and that we are paying too much in taxes. That last point of course doesn’t really have to do with tax reform. It has to do with making government cost less and for Congress that is like going over Niagara Falls in barrel—the hard way—up stream. The Congressional approach to tax reform is to talk loudly of loopholes, creating the idea that everyone's burden can be lightened if only a mysterious “they” can be made prevented from escaping their fair share of taxes. The result is that when Congress finishes its loophole closing some taxpayers pay more, none pay less and government gets more money. I know it is difficult to follow figures reeled off by a voice on radio but let me try to shed some light on the whole matter of loopholes. Taking 1972 figures the total earnings and income of the American people was $945 Billion. Of that amount $500 Billion was exempt from income tax. Aha! you say $500 Billion worth of loopholes—who got the break? The answer is, you did. $155 Billion was that $750 personal exemption we all get for each member of the family. Another 70 Billion was what those of us take who use the Standard Deduction. Then $93 Billion was income from Social Security benefits, welfare grants and unemployment insurance. None of these I’m sure you’ll agree can be termed loopholes and they amount to 318 of that $500 Billion of untaxed income. Alright—but what about the remaining $182 Billion—that’s a lot of loophole. Not quite. Surely none of us believe we should pay a tax on a tax, so 36.2 Billion is the deduction we take because of other taxes we pay such as property tax on our homes. Then there is interest $27.3 Billion worth and 20 of that is interest on our mortgages. If we had to pay tax on that a lot of us couldn’t afford to own a home. Charitable contributions—money we give to church and worthy causes plus deduction for medical expense bring the total to more than $400 Billion. The balance covers all the other deductibles—casualty loss from accident, fire, flood, tornado, earthquake, investment loss, robbery, depreciation etc. Sure there is room in there for someone to take advantage of a legal technicality and get an undeserved break but those who do so are far fewer in number than political demagogues would have us believe. The truth is, to change the regulations JUST to catch that the the occasional few would deny a legitimate deduction to the many.		Details Batch Number 76-01-B6 Production Date 09/01/1976 Book/Page RPtV-68 Audio Yes Youtube? No
		Added Notes 1. The work of Claude Frederic Bastiat (1801-1850) has been widely published and translated. See e.g., Selected Essays on Political Economy, translated from the French by Seymour Cain and edited by George B. de Huszar (Princeton, NJ: Van Nostrand, 1964).