The recent tax reform proposals by the Republican Congress and a recent public Torah reading made me think about tithing. In one of the first verses in Saturday’s Torah reading Vayeitzei ((Jacob) departed from …), the Jewish Patriarch Jacob promises G-d a tenth of everything G-d gives him after waking up from his dream. Bereishis Rabbah (a collection of rabbinical interpretations) interpret this as meaning that Jacob pledged not only to give a tenth of his earnings, but also a tenth of his sons (other than the first-born sons to each of his wives and handmaids) to G-d’s service, which he did with his son Levi.
Pastor Cary Gordon also discussed tithing in his book A Storm, A Message, A Bottle,in relation to taxes. Pastor Gordon wrote that G-d required no more than 10% from G-d’s people (tithing) and that any tax rate above that suggests that government is positioning itself to be greater than G-d. In these united states, the federal, state and local governments collectively spend 38.3% of our republic’s average annual gross domestic product over the last three years according to the Heritage Foundation. Clearly, our federal government and our local governments are collecting more in taxes than the 10% tithe that G-d commanded the Jews to set aside to support the Levites and assist the poor. This paradigm will continue even if Congress passes and President Donald Trump signs one of the two competing tax reform proposals currently under debate in Congress.
I would give the corporate tax reforms a B+. I like that Congress has proposed to reduce the corporate tax rate from 35% to 20% by no later than 2019. I would like to have seen the tax rate reduced further, to 10%, and I do not agree with curtailing the use of interest expense deductions, as interest expense is a legally mandated expense for indebted companies, because you either pay it or seek bankruptcy. Interest expense is tax deductible because it meets the IRS’s test as an ordinary and necessary expense to obtain capital to underwrite business operations. Nevertheless, the corporate tax reforms are a good first step towards reducing the tax burden on American companies. This would give businesses the means to expand production and staffing in America rather than engage in corporate inversions to reincorporate in foreign tax havens or engage in offshoring American jobs to Third World countries to take advantage of cheap foreign labor.
However, the proposed individual tax reform is underwhelming. The problem is that the reform consists of temporary tax rate cuts (which will expire after 2025 unless renewed) coupled with permanent elimination of numerous itemized deductions. We need spending cuts to fund deeper individual tax cuts and make them permanent. The State of Kansas tried to cut taxes without cutting spending in 2012. The experiment failed as the state’s deficits grew, its credit rating declined, state officials had to issue bonds in order to nominally balance the state’s budgets and the legislature ended up repealing the tax cuts in 2017 over Governor Sam Brownback’s veto.
Perhaps the U.S. Senate could dust off Senator Rand Paul’s (R-Kentucky) proposal to cut $500 billion annually in wasteful and unconstitutional spending (which includes eliminating Amtrak subsidies, the National Endowments for the Arts and Humanities, and the departments of Housing & Urban Development and Education) and pass it in order to have permanent tax relief for individuals without risking higher deficits.
In a previous New Boston Post column, I referred to spending on federal programs not authorized by the United States Constitution’s enumerated powers clause and how this accounts for about 15% of our Gross Domestic Product. If America refrained from spending on unconstitutional social programs — that fail to solve the problems that they are charged with solving, anyway — let the individuals and businesses who earn that money decide what to do with it, America would enjoy a huge boost in productivity. More importantly, the country would make huge progress toward constraining federal taxes and spending to a level of 10% or less of our GDP, which is in line with the 10% tithing plumbline to ensure that the federal government does not view itself as on par with or greater than G-d.
Although individual income tax rates have been at 10% or greater since 1916 and corporate tax rates have equaled or exceeded 10% since 1918, much credit should go to Calvin Coolidge for his sterling fiscal stewardship when he served as vice president and president from 1921 to 1929. Coolidge and his predecessor President Warren Harding cut the top individual rate from 73% in 1921 to 25% in 1929, reduced annual federal spending from $5.06 billion in 1921 to $3.1 billion in 1929, balanced the budget every year, and reduced federal debt by $6 billion (27%) during this eight-year period. Coolidge recognized that collecting more in taxes than is necessary is legalized robbery, so he worked to roll back the federal fiscal burden on Americans. We could use more people in Washington today who share Coolidge’s worldview on fiscal matters. Maybe this way, we could cut, cap, and roll back our $4.1 trillion federal budget and $20.56 trillion federal debt burden.
Joshua Norman lives in Auburndale and serves as Ward 4 Chairman of the Newton Republican City Committee.
