Tax Attack

Should five percent appear too small
Be thankful I don't take it all
--The Beatles

Congress has passed a bill that, among other things, extends current income tax rates for two more years. Absent this action, tax rates were set to increase on Jan 1st to levels that preceeded intervention during the Bush administration.

The bill is hard to swallow for some who believe in smaller government. Lower taxes are certainly good, but additional items in the bill call for increased government spending (e.g., extension of unemployement benefits, cost ~$60 billion). As such, some Tea Party types like Senator Jim Demint gave the bill a thumbs down, and incoming Senator Rand Paul has indicated he would have done the same.

Representative Ron Paul, perhaps the poster guy for the Tea Party movement, gave the bill a thumbs up. Basically, he's saying that the benefit of tax cuts outweighs the spending increase.

Either way, this is an excellent debate--one that should get louder w/ the incoming class of Congress.

In this particular case, I'm on the same side as Ron Paul. As I see it, the only way to chop the Federal government down to size is to cut off the resource stream. Taxes are a primary source of government size and power.

Sure, government can spend its way higher in the short term without additional tax related resources. Over time, however, market forces will make it difficult to acquire resources via other channels such as the Fed or thru borrowing.

As such, less resources from the tax stream serves as a choking manuever that cuts off resources vital to keeping Big Government alive. Which steps us closer to voluntarily dismantling the State on our own terms, or involuntarily standing by as market forces topple the system.