May 6, 2008

May 6, 2008 | Commentary on Economy, Taxes

Tax Hike on the Horizon

There are some days (Christmas, the Fourth of July) that people look forward to, and there are some we dread. April 15 -- the deadline for filing taxes -- is certainly one of the latter.

We've just put another tax day behind us. But if you thought you'd handed over enough of your hard-earned money to the federal government, you may want to think again. Because unless Congress acts, our government is set to increase taxes on millions of Americans, including many New Yorkers.

Taxes are vital in a civil society. They allow governments to pay for paving roads and maintaining a national defense, for example. Put simply, our federal government could not operate without a steady supply of revenue from citizens willing to contribute to the system.

Unfortunately, not all of our tax money is well spent. Every year Congress sets aside money for projects that will benefit only their congressional districts. According to the non-partisan organization Citizens Against Government Waste , Congress stuffed 11,160 earmarks (allocations in federal appropriation bills) totaling $17.2 billion into spending bills for the 2008 fiscal year.

From $3 million for a golf organization in South Carolina to $148,950 for the Montana Sheep Institute we finance projects we simply don't need. Yet millions of Americans will unknowingly continue to support this congressional spending spree.

Back in 2001 and 2003, President Bush signed into law a series of tax cuts aimed at stimulating the economy. A key feature was an across-the-board cut in income tax rates. As a result, business owners kept more of their money and were able to invest more into their companies and hire more employees, all helping to strengthen the economy.

Unfortunately, those tax cuts are set to expire in a few years. Unless Congress acts, millions of Americans will see their taxes increase. Rather than having to stand up and vote for what would be a massive tax hike, Congress has rigged the rules so that it can simply chose to avoid the issue altogether. If that happens, according to my colleagues in the Center for Data Analysis, 390,680 New Yorkers will be hit with a tax increase when the Bush tax cuts disappear.

And even if you aren't personally hit by the looming tax hike, higher taxes will leave Americans with less to spend. They'll also have less incentive to invest in their businesses, save for their futures, or improve their educations to earn more. In an increasingly globalized and inter-dependent economy, we're all harmed when the federal government takes more of our hard-earned money.

New Yorkers already pay more than their fair share of federal taxes. And if Congress has its way, they'll pay even more.

At a time when our economy desperately needs a confidence booster, the last thing we need is the federal government threatening to raise our taxes. New Yorkers should demand that the federal government make its own share of sacrifices -- such as cutting back on pork-barrel projects -- and steer us back toward economic prosperity.

Israel Ortega is a Senior Media Services Associate at the Heritage Foundation. www.heritage.org.

About the Author

Israel Ortega Contributor, The Foundry
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Related Issues: Economy, Taxes

First Appeared in New York's El Diario