The size of the government’s rightful claim—that is, the total amount it may take in taxes—will be determined by how we define the “legitimate functions of government.” With regard to the federal government, the Constitution is the proper standard of legitimacy: its “legitimate” powers, as we have seen are those the Constitution has delegated to it. Therefore, if we adhere to the Constitution, the federal government’s total tax bill will be the cost of exercising such of its delegated powers as our representatives deem necessary in the national interest. But conversely, when the federal government enacts programs that are not authorized by its delegated powers, the taxes needed to pay for such programs exceed the government’s rightful claim on our wealth.
The distribution of the government’s claim is the next part of the definition. What is a “fair share?” I believe that the requirements of justice here are perfectly clear: government has a right to claim an equal percentage of each man’s wealth, and no more. Property taxes are typically levied on this basis. Excise and sales taxes are based on the same principle—though the tax is levied on a transaction rather than on property. The principle is equally valid with regard to incomes, inheritances and gifts. The idea that a man who makes $100,000 a year should be forced to contribute ninety per cent of his income to the cost of government, while the man who makes $10,000 is made to pay twenty per cent is repugnant to my notions of justice. I do not believe in punishing success. To put it more broadly, I believe it is contrary to the natural right to property to which we have just alluded—and is therefore immoral—to deny to the man whose labor has produced more abundant fruit than that of his neighbor the opportunity of enjoying the abundance he has created. As for the claim that the government needs the graduated tax for revenue purposes, the facts are to the contrary. The total revenue collected from income taxes beyond the twenty per cent level amounts to less than $5 billion—less than the federal government now spends on the one item of agriculture.
The graduated tax is a confiscatory tax. Its effect, and to a large extent its aim, is to bring down all men to a common level. Many of the leading proponents of the graduated tax frankly admit that their purpose is to redistribute the nation’s wealth. Their aim is an egalitarian society—an objective that does violence both to the charter of the Republic and the laws of Nature. We are all equal in the eyes of God but we are equal in no other respect. Artificial devices for enforcing equality among unequal men must be rejected if we would restore that charter and honor those laws.
One problem with regard to taxes, then, is to enforce justice—to abolish the graduated features of our tax laws; and the sooner we get at the job, the better.
The other, and the one that has the greatest impact on our daily lives, is to reduce the volume of taxes. And this takes us to the question of government spending. While there is something to be said for the proposition that spending will never be reduced so long as there is money in the federal treasury, I believe that as a practical matter spending cuts must come before tax cuts. If we reduce taxes before firm, principled decisions are made about expenditures, we will court deficit spending and the inflationary effects that invariably follow.
It is in the area of spending that the Republican Party’s performance, in its seven years of power, has been most disappointing.
In the Summer of 1952, shortly after the Republican Convention, the two men who had battled for the Presidential nomination met at Morningside Heights, New York, to discuss the problem of taxes and spending. After the conference, Senator Taft announced: “General Eisenhower emphatically agrees with me in the proposal to reduce drastically overall expenses. Our goal is about $70 billion in fiscal 1954 (President Truman had proposed $81 billion) and $60 billion in fiscal 1955.... Of course, I hope we may do better than that and that the reduction can steadily continue.” Thereafter, the idea of a $60 billion budget in 1955, plus the promise of further reductions later on, became an integral part of the Republican campaign.
Now it would be bad enough if we had simply failed to redeem our promise to reduce spending; the fact, however, is that federal spending has greatly increased during the Republican years. Instead of a $60 billion budget, we are confronted, in fiscal 1961, with a budget of approximately $80 billion. If we add to the formal budget figure disbursements from the so-called trust funds for Social Security and the Federal Highway Program—as we must if we are to obtain a realistic picture of federal expenditures—total federal spending will be in the neighborhood of $95 billion.
We are often told that increased federal spending is simply a reflection of the increased cost of national defense. This is untrue. In the last ten years purely domestic expenditures have increased from $15.2 billion, in fiscal 1951, to a proposed $37.0 billion in fiscal 1961[2]—an increase of 143%! Here are the figures measured by a slightly different yardstick: during the last five years of the Truman Administration the average annual federal expenditure for domestic purposes was $17.7 billion; during the last five years of the Eisenhower Administration it was $33.6 billion, an increase of 89%.
Some allowance must be made, of course, for the increase in population; obviously the same welfare program will cost more if there are more people to be cared for. But the increase in population does not begin to account for the increase in spending. During the ten-year period in which federal spending will have increased by 143%, our population will have increased by roughly 18%. Nor does inflation account for the difference. In the past ten years the value of the dollar has decreased less than 20%. Finally, we are often told that the government’s share of total spending in the country is what is important and consequently we must take into account the increase in gross national product. Again, however, the increase in GNP, which was roughly 40% over the past ten years, is not comparable to a 143% increase in federal spending. The conclusion here is inescapable—that far from arresting federal spending and the trend toward Statism we Republicans have kept the trend moving forward.