TAXES

By Brian M. Rees

The present tax code "is economically destructive, and manifestly unfair. . . . [it] cannot be revised, should not be reinvented, and must not be retained."

Our current tax code is a disaster. We should throw it out completely and replace it with a simple, fair, easy to understand, LOW, flat tax.

The most powerful fiscal action our government can take to stimulate the economy is to lower taxes. The Natural Law Party can cut taxes deeply--and responsibly--without adding to the deficit or cutting essential services. Many parties have promised lower taxes, but have been unable to fulfill these promises due to the depth and complexity of problems faced by government. The Natural Law Party, through its cost-effective solutions to crime, spiraling health costs, and other costly social problems, will save the nation hundreds of billions of dollars annually. On this basis, we can offer a realistic strategy for significant tax reduction that protects the integrity of our important social programs.

Excessive taxes and a burdensome, overly complex, and punitive tax code stifle economic growth. The seven-million-word tax code is so convoluted that the Internal Revenue Service itself has trouble understanding it. Corporations spend four times as much on figuring their taxes (and dodging them) as they do on taxes! In addition, special interest groups have successfully manipulated the tax code by creating loopholes to benefit specific businesses--a practice that results in corporate welfare, creates disincentives to economic growth, and leaves the burden of financing government to us working stiffs.

In the words of the Kemp commission, the present tax code "is beyond repair--it is impossibly complex, outrageously expensive, overly intrusive, economically destructive, and manifestly unfair. . . . We believe [it] cannot be revised, should not be reinvented, and must not be retained."

One simple and viable way to implement across-the-board tax cuts is through a low flat tax. The Natural Law Party has designed a low flat tax that includes an exemption for America's poor and lower-income families. If we could begin in 1999 at 18%, our tax rate would fall to 10% by 2004 as the Natural Law Party's cost-effective solutions to the nation's problems began to bear fruit (see table from 1996 platform at www.natural-law.org). The Natural Law Party's low flat tax would propel the economy into a growth phase. This strong economic growth, with its associated increase in government revenues, combined with the savings from our cost-effective solutions, would balance the budget by 2001 (a true balanced budget, not our current make-believe social security ‘surplus.' See my comments under 'Budget' at democracy.net). This proposal would also reduce the size and scope of the IRS, eliminate loopholes for the wealthy, and put an end to corporate welfare.

In addition to our flat tax proposal, we must consider alternative tax options, such as a consumption tax, that might decrease the tax burden for Americans. We concur with the Kemp commission's fundamental requirements for a new tax code: fairness, simplicity, neutrality, visibility, and stability.

Overhauling the Federal Reserve Board

Since recent administrations have been unwilling to employ meaningful fiscal policy through tax cuts and reduced spending, monetary policy has been the only available means of controlling both economic growth and inflation. Thus, in an effort to control inflation, the Federal Reserve Board has used monetary policy (primarily the manipulation of interest rates) to prevent economic growth of more than 2.5% per year. This sluggish growth rate is responsible for economic stagnation, unemployment, and the declining real wage for most American workers.

By cutting taxes, the Natural Law Party offers a strong fiscal stimulus to economic growth while keeping inflation in check with appropriate monetary policy, thereby ensuring price stability. Unaccustomed to meaningful fiscal policy, the Fed will have to be overhauled in order to allow the economy to grow at a rate greater than 2.5%, which is crucial to the prosperity and economic security of all Americans. Creating new jobs through economic growth is far more effective than mere welfare reform in putting America to work again. And we need to create not just more low-paying jobs, but new GOOD jobs, so that both parents aren't forced to work to make ends meet, and aren't forced to farm their kids out to often inadequate child-care.