It’s bad enough that Uncle Sam thrusts his hands into our pockets each payday; funding federal functions is never pretty. But it’s truly ugly to watch Uncle Sam keep his sticky fingers on our hard-won earnings long after specific taxes have outlived their stated purposes.
The best example of such a long-term “temporary tax” is the 3 percent federal charge on long-distance calls, also known as the Spanish-American War Tax. This levy was enacted as a short-term measure to finance America’s hostilities with Madrid in 1898. A century after Theodore Roosevelt fought in that conflict, the House voted 420 to 2 to bury this tariff for San Juan Hill. Taxpayers would save $19.8 billion in the first five years alone. The Senate is expected soon to drive its own nail into this tax’s coffin. Congress should open a cemetery for taxes that have outlived their reasons for being. In other words: no taxation without justification.
Today’s Death Tax, which tops out at 55 percent, is casket-ready in more than name only. The estate tax originally appeared in 1797 to fund America’s Navy. It was repealed in 1802. The Death Tax re-emerged during the Civil War and Spanish-American War, only to vanish soon after peace broke out. The current Death Tax returned to the books in 1916 and was raised the next year to help finance American intervention in World War I. With Kaiser Wilhelm II long-vanquished and the doughboys who beat him largely deceased, the Senate should follow the House’s 279-to-136 vote and wheel the Death Tax into a crypt.
The so-called “E-rate Tax,” a pet project of Vice President Albert Gore, also deserves last rites. Designed to fund school connections to the Internet, this roughly 5 percent tax on long-distance calls will cost $2.25 billion this year, or $30 per-phone-line, the National Taxpayers Union reports. This should have been, if anything, a state or local initiative rather than a federal project. Nonetheless, the E-rate Tax quickly fulfilled its stated objective.
“Vice President Gore led our fight to require in [the 1996 Telecommunications Act] something called the E-rate, the Education Rate, to guarantee that all schools and libraries could afford to log on to the Internet,” President Clinton explained in a May 8 web chat with Channel One. “It’s worth over $2 billion a year in subsidies to schools. That’s why 95 percent of our schools are hooked up now to the Internet.”
Despite these schools’ nearly-universal access, Gore’s E-rate Tax lives on. “We expect the program to cost American telephone users $15 billion through 2005,” says Ken Johnson, spokesman for House Telecommunications Subcommittee Chairman Billy Tauzin (R., La.). By then, one imagines, 190 percent of U.S. schools will be on-line.
The 4.3-cent-per-gallon gasoline tax increase continues to sock motorists already sore from sky-high fuel prices. This charge was part of President Clinton’s 1993 tax hike package and “was originally earmarked for deficit reduction,” says Rep Christopher Cox (R., Calif.). “Now that the deficit has been eliminated, the tax should be, too.”
Such a tax cut, although small, would provide relief for drivers reeling under $2-per-gallon pump prices. This is a tax cut that even President Clinton might learn to love.
Indeed, now that congressional Republicans once again are cutting taxes as Republicans were born to do, they could show true courage by killing the now totally insupportable Clinton tax increase of 1993. In his first year in office, Clinton felt the pain of recession-weary Americans by signing an overall $241 billion tax increase. None other than William Jefferson Clinton eventually apologized for this move when he told wealthy Democratic contributors in Houston on October 17, 1995: “Probably there are people in this room still mad at me at that budget because you think I raised your taxes too much. It might surprise you to know that I think I raised them too much, too.” By eliminating the Clinton tax increase and rolling the top income-tax rate from 39.6 percent back to 31, Congress could take Clinton’s comments to heart and provide the dramatic tax relief which he, by his own admission, indicated is the right thing to do.
Whether it’s revenue enhancements from the early Clinton years or the Spanish-American War Tax (which already was five years old when Bob Hope made his first entrance in 1903), taxes survive — like bureaucracies — long after their missions have been accomplished. There’s only one thing to do with such outdated taxes: throw them onto the funeral pyre.