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No New Taxes Goal
Recently I watched an interview of Grover Norquist on 60 Minutes. Norquist, if you are unfamiliar with him, is a conservative activist, a lobbyist, and the founder and president of the Americans for Tax Reform.
He is probably best known as the promoter of the “Taxpayer Protection Pledge,” which pledges the signer to never support a tax increase. Almost all congressional conservatives and all but one of the 2012 conservative presidential candidates have signed it.
While conservatives talk generically about smaller government, he's given specifics, saying federal government should shrink to its size in 1900. It is hard to measure the size of government, but I am going to use government revenues as a percentage of Gross Domestic Product (GDP) as a measure to give some idea of what Mr. Norquist would like to see for our country.
I am using data compiled by Christopher Chantrill. In 1900, U.S. federal, state and local tax revenues were about 8% of GDP with about half for federal taxes. In 2009 it increased to about 27% with about 2/3 going to the federal budget.
If you accept percent of GDP as a valid measure of the size of government, then that is almost a 350% increase in the size of government. No wonder Mr. Norquist wants to return to the past, but before we get to excited by this huge increase in government lets look at some of the facts to bring us back to earth.
First we should understand, although we have seen a big jump in the size of government most of the rest of the world has seen even bigger increases. Using data from the Heritage Foundation in Wikipedia there are 118 nations with lower and 58 with higher taxes out of the 178 listed. Which might sound pretty good until you look closely at the list and realize that only China and Singapore of the developed world have lower tax rates than the US. Most of the developed world pay higher taxes.
Lets think about some of the things that we would have to give to return to government of 1900. First there would be no Medicare or Social Security. Not a problem in 1900 when few people lived to old age. There would be no interstate highway system and few if any paved roads. There would be few protections for the environment, workers, and child labor.
I could make a long list of protections that we take for granted today that would not exist. Think about our defense spending, today it is roughly 5% of GDP in 1900 that would have exceeded the entire federal budget. If we spend the same percentage of GDP for defense as we did in 1900, we would have to worry about military invasion from nearly all nearby countries.
Norquist and his fellow “No New Taxers' ” goal is to turn our country into a Third World Nation. This is not the future I see for our country.
Posted in Fiscal Policy | Related Topics: "No New Taxes" Economic Inequality Federal Government