Copyright 1999 The Kansas City Star Co.
THE KANSAS
CITY STAR
February 17, 1999 Wednesday METROPOLITAN
EDITION
SECTION: BUSINESS; Pg. C1; JERRY HEASTER
LENGTH: 641 words
HEADLINE:
The deficit is dead, the taxes abide
BYLINE: JERRY
HEASTER
BODY:
When it comes to
budget policy, Uncle Sam plays a heads-I-win,
tails-you-lose
game with America's taxpayers.
The specter of
humongous deficits "as far as the eye could see"
as the
decade dawned justified tax increases as critical to stanching
chronic budgetary hemorrhages.
Call it a great
American tradition, and the telephone excise tax
is the
granddaddy of all such taxes. It was imposed 101 years
ago to
finance the Spanish-American War. The war
ended, but the levy
remained as a "luxury" tax because
only rich people and businesses
had telephones.
It lived
on in perpetuity, and the escalation of America's
involvement in
Vietnam prompted Washington to boost it from 3 percent
to
10 percent to help finance the war effort. The
telephone tax was
subsequently scaled back but
never repealed, even though it was a
target for
elimination in the '80s. In 1990, it was made
permanent as
part of the deficit-reduction arsenal.
Fast-forward eight years to the arrival of the first U.S.
budget
surplus in nearly three decades, which has been
accompanied by
forecasts of several trillions more in
surpluses over the next 15
years. Is anyone proposing
repeal of the telephone tax because its
putative purpose as a deficit-cutting tool no longer exists?
Or how about the gasoline tax boost legislated in
1993 to help
bring down the deficit? Gas taxes
had historically been levied to
raise money to build and
maintain roads and bridges for the motoring
public. After the deficit hit a record $ 290 billion
in fiscal 1992,
however, panic hit Washington. The
fear of half-a-trillion-dollar
shortfalls by the end of
the 1990s led to a sense of
revenue-enhancement urgency.
Thus, the federal gasoline tax was boosted a few cents a
gallon
to help ameliorate the deficit problem rather than
maintain the
highway system. As gasoline prices
have fallen to historic lows, that
tax increase has receded from
the national consciousness.
Nevertheless, it remains,
even though the deficit crisis used to
justify it no
longer exists.
The irony is that the cheaper gasoline
gets, the more it
encourages gas consumption, which increases
its revenue-raising
potential. Therefore, it's
small wonder nobody in Washington has
stepped forth to
advocate repeal of the tax now that the Treasury
expects to be
awash in surpluses.
To be sure, Washington will
dole out a lot of cash for highway
work. It
will also direct a lot of the gas tax revenue to pork-barrel
transit projects. At the same time, however, a lot of
money will be
used to finance budget outlays that have nothing
to do with
transportation needs. When this
happens, the highway trust fund will
get the same sort
of IOU the Social Security trust fund gets after
its
surplus revenue is spent on other things.
What most
Americans don't realize is that the looting of Social
Security surpluses is merely the largest of many such
trust-fund
rip-offs. Whereas the trust funds
once masked the size of deficits,
they now create
surpluses.
Some of the resulting surplus funds are made
possible by revenue
from taxes approved specifically to ease
deficits. The deficit is a
thing of the past, they
say, but these taxes remain.
Why?
Jerry
Heaster's column appears Wednesdays, Fridays, Saturdays and
Sundays. To reach him, write the business desk at
1729 Grand Blvd.,
Kansas City, MO 64108. To share a
comment on StarTouch, call (816)
889-7827 and enter
2301. Send e-mail to jheaster@kcstar.com
LOAD-DATE: February 17, 1999
