CannaBoss
Well-Known Member
One of the reasons Ron Paul is gaining such enthusiastic support is that he is the only major party candidate calling for significant change. Besides withdrawing from Iraq, instituting a more sensible foreign policy, and reinstating our fundamental Constitutional freedoms, Ron Paul is also calling for substantial reductions in federal spending, enough to eventually end the income tax and abolish the Internal Revenue Service.
But how realistic is that goal? How would the government be able to operate without income taxes? Ron Paul points out that the federal government did just fine for the first 137 years of its existence without the income tax, which wasn't enacted until 1913. But federal spending has gone up a lot since then, so where would the reductions come from?
Ron Paul has not yet published a detailed plan, but has stated several ideas in the debates and other speeches. Withdrawing US forces from Iraq and other countries around the world would save close to $200 billion per year. Closing down the departments of Education ($56B), Energy ($23B), and Homeland Security ($32B), and ending foreign aid ($26B), could save well more than $100 billion annually. In his speech announcing his presidential bid, Ron Paul said that no real fiscal conservative could doubt that federal spending could be reduced by at least 25 percent, so expect further across-the-board budget cuts.
We may have to wait for specific proposals, but a few key facts are worth noting. In Fiscal Year 2007, individual income taxes amounted to $1.17 trillion, just 42% of the total federal outlays of $2.78 trillion. Abolishing the individual income tax would not destroy the federal government, it would only force a reduction in spending levels back to FY1997, hardly the era of small government, when the total federal budget was $1.60 trillion. In other words, we could have ALREADY abolished the income tax, if Congress and the President hadn't increased spending by 74 percent in the past ten years.
Of course, the preceding argument ignores the deficit, projected at $240 billion for FY2007. Without the individual income tax, total federal receipts would have been $1.37 trillion, requiring a reduction in spending back to FY1992 levels to balance the budget, but again, hardly the days of the robber barons and widespread starvation. Americans concerned about Social Security or Medicare payments being adversely affected by the elimination of the income tax needn't worry -- both programs are funded by FICA payroll taxes, not by federal income taxes.
Another objection often raised is the idea that only a portion of the federal budget ($854 billion in FY2007) consists of "discretionary spending," while the rest is "mandatory." These terms and the amounts are not set in stone, however, and are simply the results of existing federal law. Congress can change those laws at any time, and redefine what is "discretionary" and what is "mandatory."
Where does the rest of the federal government's revenue come from? For FY2007, corporate income taxes amounted to $342 billion, payroll (FICA) taxes brought in $873 billion, federal excise taxes totaled $56 billion, and $99 billion was labeled "other" -- consisting of estate and gift taxes ($25B), customs duties and fees ($27B), Federal Reserve deposits ($33B), and miscellaneous ($14B). Even without the individual income tax, the federal government's revenue would still be enormous.
Would Congress go along with Ron Paul's plans to cut spending significantly? If Ron Paul is elected President in 2008, it will be a clear signal that the American people want dramatic changes, including substantial tax and spending cuts. Since the primary objective of most politicians is to stay in office, those who are most adept at judging the public mood shouldn't take too long to figure that out. And the changes don't need to be pushed through in the first 100 days, or even the first year.
Simply by holding the line on spending, President Paul could gradually eliminate the income tax while in office. Federal receipts from sources other than individual income taxes have gone up by 44 percent in the past eight years. A similar increase over two terms of the Paul Administration, coupled with the savings from a non-interventionist foreign policy, could be enough to free Americans from the income tax forever, and secure Ron Paul's place in history.
But how realistic is that goal? How would the government be able to operate without income taxes? Ron Paul points out that the federal government did just fine for the first 137 years of its existence without the income tax, which wasn't enacted until 1913. But federal spending has gone up a lot since then, so where would the reductions come from?
Ron Paul has not yet published a detailed plan, but has stated several ideas in the debates and other speeches. Withdrawing US forces from Iraq and other countries around the world would save close to $200 billion per year. Closing down the departments of Education ($56B), Energy ($23B), and Homeland Security ($32B), and ending foreign aid ($26B), could save well more than $100 billion annually. In his speech announcing his presidential bid, Ron Paul said that no real fiscal conservative could doubt that federal spending could be reduced by at least 25 percent, so expect further across-the-board budget cuts.
We may have to wait for specific proposals, but a few key facts are worth noting. In Fiscal Year 2007, individual income taxes amounted to $1.17 trillion, just 42% of the total federal outlays of $2.78 trillion. Abolishing the individual income tax would not destroy the federal government, it would only force a reduction in spending levels back to FY1997, hardly the era of small government, when the total federal budget was $1.60 trillion. In other words, we could have ALREADY abolished the income tax, if Congress and the President hadn't increased spending by 74 percent in the past ten years.
Of course, the preceding argument ignores the deficit, projected at $240 billion for FY2007. Without the individual income tax, total federal receipts would have been $1.37 trillion, requiring a reduction in spending back to FY1992 levels to balance the budget, but again, hardly the days of the robber barons and widespread starvation. Americans concerned about Social Security or Medicare payments being adversely affected by the elimination of the income tax needn't worry -- both programs are funded by FICA payroll taxes, not by federal income taxes.
Another objection often raised is the idea that only a portion of the federal budget ($854 billion in FY2007) consists of "discretionary spending," while the rest is "mandatory." These terms and the amounts are not set in stone, however, and are simply the results of existing federal law. Congress can change those laws at any time, and redefine what is "discretionary" and what is "mandatory."
Where does the rest of the federal government's revenue come from? For FY2007, corporate income taxes amounted to $342 billion, payroll (FICA) taxes brought in $873 billion, federal excise taxes totaled $56 billion, and $99 billion was labeled "other" -- consisting of estate and gift taxes ($25B), customs duties and fees ($27B), Federal Reserve deposits ($33B), and miscellaneous ($14B). Even without the individual income tax, the federal government's revenue would still be enormous.
Would Congress go along with Ron Paul's plans to cut spending significantly? If Ron Paul is elected President in 2008, it will be a clear signal that the American people want dramatic changes, including substantial tax and spending cuts. Since the primary objective of most politicians is to stay in office, those who are most adept at judging the public mood shouldn't take too long to figure that out. And the changes don't need to be pushed through in the first 100 days, or even the first year.
Simply by holding the line on spending, President Paul could gradually eliminate the income tax while in office. Federal receipts from sources other than individual income taxes have gone up by 44 percent in the past eight years. A similar increase over two terms of the Paul Administration, coupled with the savings from a non-interventionist foreign policy, could be enough to free Americans from the income tax forever, and secure Ron Paul's place in history.
