The Myth of Government Money
Benjamin Franklin said there are only two things certain in life: death and taxes. Few things
touch our lives more directly than the government reaching into our billfold and taking our hard-
earned money. Since government is ordained from above and money is mentioned in scripture
four times more than faith or prayer, it’s important we get our thoughts right about tax dollars,
where they go and for what purpose.
Because our current tax structure has become so complicated, average citizens must hire
professionals to fill out the forms for us each year and, for business owners, tax preparation is a
massive expense paid throughout the year.
Such a system penalizes citizens for their hard work and productivity and punishes business
owners for their success which provides jobs to their employees. Also penalized are the risk-
takers who invest in the stock of companies. Current tax policy disincentivizes achievement, is
counter-productive to a free-market system and drains the lifeblood of our economy.
The purpose of government is to promote an environment where citizens are safe and enjoy
peace so they can thrive and be productive. When that peace is threatened or violated, the
government is obligated to bring justice, punish the wrongdoer and restore peace. Anything
beyond these basic services should be contracted out to ensure efficiency in an arena of
competition.
Politicians often talk about the government investing in this or that program using “government
money.” However, such statements are based on blatant myths that unfortunately way too many
Americans believe.
Government has no money of its own. Any money it spends should rightly be referred to as
“taxpayer dollars,” because they have first been taken out of the pockets of citizens.
Furthermore, the government doesn’t produce anything (except maybe red tape) and its so-
called “investments” rarely, if ever, show any actual return.
For instance, the Heritage Foundation says Social Security—which a worker pays into
throughout his life—has a whopping 1.23 percent rate of return when adjusted for inflation. Your
passbook savings account does better than that, and an S and P 500 Index Fund has averaged
almost 10 percent annual return since 1929. An investment in that fund would have doubled
seven times during your working years while your money in Social Security would not have
doubled even once. This is a bad investment that you are forced to participate in, but since it’s a
government monopoly, you have no choice.
Society does have an obligation to help people in their hour of need, but this is best met by those
who know them and their situations, such as their families, neighbors and local churches. Such
relationships provide compassionate accountability, but government provides precious little of
this and the massive inefficiency and fraud in the welfare system results in a tremendous waste
of taxpayer money.
Meanwhile, our local property taxes mostly go to support our public local schools. We all desire
for our students to get a solid education, however, all too often our school budgets grow, our
school buildings are getting newer and bigger, but we are not seeing a better product, which is students
who have been prepared for the future by having acquired skills, such as critical thinking, and
are ready to move on to the next step of their training.
Far from producing students who can think for themselves and become lifelong learners,
American education is devolving into a system of propaganda wherein young people are
indoctrinated into ideologies that are opposed to traditional values.
This is what has brought us from leading the rest of the world in literacy to being among the
lowest of the industrialized nations. The status quo is not working, and the idea of simply
throwing more money at a broken system is unwise and a bad return on investment.
Competition is always a good thing, so when our tax money goes solely towards a monopoly in
our government-run education system, we are losing. Competition and choice in education can
and will bring down school costs and will improve the quality of education for the generations to
come.
The ratification of the 16th Amendment to the U.S. Constitution 114 years ago allowed the
congress to tax the incomes of ordinary citizens and resulted in a massive shift of power and
influence away from the states and to the federal government. Later, New Deal programs
ushered in by President Franklin Roosevelt during the Great Depression greatly increased that
power to the point where it feels like today our lives are micromanaged from Washington, D.C.
With that in mind, two alternative tax systems are currently being discussed on the national
level. They are identified as the Fair Tax and the Flat Tax.
The Fair Tax is a tax on consumption. This hefty national sales tax would completely eliminate
the income tax and the Internal Revenue Service. (Who wouldn’t cheer for that?) Everyone
would pay a tax on everything they buy from bubble gum to a 70-foot yacht. I can’t think of a
more fair and efficient way to make sure the wealthiest among us pay their share of taxes.
They would pay the same percentage of taxes on their expensive toys as the rest of us would
pay on our essentials.
The Flat Tax is simply a single percentage income tax (perhaps 17 percent) for everyone, no
matter what the income level. Everyone would pay the same percentage amount into the federal
treasury. On the state level, Sen. Steve Erdman has introduced the EPIC Tax bill which stands
for Eliminate Property, Income and Corporate tax. Those would be replaced by a consumption
tax (Fair Tax). To learn more about it, check out the website at EPICTax.org.
Nebraskans possess a strong work ethic and the sense of personal responsibility in the
heartland is clearly evident in young and old alike. Unfortunately, this is not necessarily the case
throughout our country. People cry out for the government to take on more and more
responsibility for their lives and the government does so…extremely poorly. Nearly one half of
our state budget is driven by mandates handed down by the federal government. We have
allowed this to happen incrementally and we need to wrest back local control of our tax dollars.
To put it bluntly, the government uses our money extremely inefficiently! Taxpayers should be
alarmed at how much of our income we are allowing various levels of government to take from
us and do everything we can to make sure they take only what is absolutely necessary. After all,
it is supposed to be a government of, by and for the people!
