TAXES AND BIG BROTHER
The Congressional Budget Office recently boosted its estimate for the overall fiscal 2000 budget surplus from an earlier guess of $179 billion to a total surplus now expected to be $233 billion. Sources at the independent agency have also boosted their estimate for the overall budget surplus for the next ten years, by an additional $1.4 trillion (yes, trillion) to $4.6 trillion! Further, the Congressional Budget Office projects next year's surplus to grow to $276 billion, and you can almost bet there will be further projected increases as the year moves on.
Of course, in light of all the surpluses, the debate goes on regarding what to do with the money. Recently, the Senate approved, by a vote of 60 to 39, a bill that Republican backers say would largely end the so-called marriage penalty tax, in which married people pay more in taxes than single people filing separately. The White House says they will veto the measure.
The Republican plan would increase the standard deduction, so that it is twice that of single filers. Well, let's think about that for a minute. Since a married couple constitutes "two," it sounds fair to me that they should have double the deduction of a single person. But the White House says we can't afford it.
Earlier last month the Senate approved and sent to the White House a gradual elimination of estate and inheritance taxes. Again, the White House says, 'We can't afford it.'
Now, the Republicans have passed a long-overdue expansion in Individual Retirement Accounts. The IRA contribution limits have been set at $2,000 since 1981. And, do you know what a 1981 dollar is worth today? Then, why not raise the limits? Well, the Republicans have responded with a proposal that would raise the limit for the contributions to an individual IRA from $2,000 to $5,000, starting next year on a phased-in basis. Many people will be allowed to increase their contribution by $1,000 a year, ultimately to reach $5,000. But, if you are 50 or older, you can start next year with a $5,000 contribution. This is fabulous news for those close to retirement, especially from an administration that is always beating us over the head about how Americans don't save enough money. The proposal would also increase contributions to corporate retirement accounts such as 401(k)s.
Well, is the White House in favor of this? Again, the answer comes back, "No, we can't afford it." You can't have it both ways. You can't try to promote personal long-term savings, especially in light of the ticking time bomb that is Social Security, and be against the expansion of IRAs. Additionally, the Republican IRA proposal would index contributions to inflation. Also, a terrific idea, because it takes care of the inflation creep which would eventually make even a $5,000 contribution smaller and smaller, just as a fairly generous $2,000 contribution of 20 years ago is today fairly small. As I said before, this time I really think the Republicans have got it. They keep coming up with solid proposals-an end to the marriage tax, to estate taxes, the increase in IRAs-and the administration keeps saying they can't afford it. With friends like this, Al Gore doesn't need enemies, and all of this is revealing to each party's point of view and what they each have in store for us over the next four years.
As we move toward the upcoming November election, it becomes the same old story. If you want more government, then even a $4.6 trillion surplus isn't enough to share some of it with the nation's taxpayers. But if you want less government, then the citizens themselves get to keep their own money and decide for themselves what they want to do with it. It is so simple. It's about more government always needing more money, or less government allowing you to keep more money in your pocket so that you make the decisions. It really boils down once again, to you and me vs. BIG BROTHER.
(Tom Butenhoff is a First Vice President with J. E.
Liss & Company in Milwaukee. The views are his and not necessarily
those of Liss Financial Services or the Job Connection/Hiring
Network.)