Tax and Spending
Reform as a Moral Issue 

By John Hendrickson

 “Where is the politician who has not promised his constituents a fight to the death for lower taxes — and who has not proceeded to vote for the very spending projects that make tax cuts impossible,” asked Senator Barry M. Goldwater?[1] Goldwater, a Republican Senator from Arizona, an unashamed leader with conservative principles, and the 1964 presidential nominee, was a true advocate for constitutional government. In fact Goldwater believed that his responsibility was to not only uphold the Constitution, but as he told his constituents, his job was to repeal laws and not make them. He understood that high levels of taxation and spending would lead directly to detrimental economic policies.

Goldwater argued that “tax reduction has thus come to have a hollow ring.”[2] Goldwater believed that taxation was not just a question of economic and fiscal policy, but a question of morality. “The Conservative believes that man is, in part, an economic, an animal creature; but that he is also a spiritual creature with spiritual needs and spiritual desires,” noted Goldwater.[3] One of the main liberties that were important not only to American colonists, but also to the Founding Fathers was the principle of economic liberty, including property rights. The wages that a worker or business owner earns is “his property as much as his land and the house in which he lives.”[4] As Goldwater wrote:

Indeed, in the industrial age, earnings are probably the most prevalent form of property. It has been the fashion in recent years to disparage “property rights,” to associate them with greed and materialism. This attack on property rights is actually an attack on freedom. It is another failure to take into account the whole man. How can a man be truly free if he is denied the means to exercise freedom? How can he be free if the fruits of his labor are not his to dispose of, but are treated, instead, as part of a common pool of public wealth?

“I know of no society, today or in any era of history, in which high degrees of intellectual and political freedom have flourished side by side with a high degree of state control over the relevant citizen’s economic life,” noted Justice Antonin Scalia.[5]  

The principle of private property and economic liberty is central to a free and stable society. “The free market, which presupposes relatively broad economic freedom, has historically been the cradle of broad political freedom, and in modern times the demise of economic freedom has been the grave of political freedom as well,” wrote Justice Scalia.[6] In other words, as Goldwater argued, “government does not have an unlimited claim on the earnings of individuals.”[7] High rates of taxation are not only a moral issue, but are not sound policy. Higher rates of taxation not only curb an individual’s incentive to work, but they also cripple business confidence and entrepreneurial activity.  

In addition, high tax rates do not mean more revenue to the government. “It seems difficult for some to understand that high rates of taxation do not necessarily mean large revenue to the government, and that more revenue may often be obtained by lower rates,” argued former Secretary of the Treasury Andrew Mellon.[8] In fact it has been proven in the presidential administrations of Warren G. Harding, Calvin Coolidge, John F. Kennedy, and Ronald Reagan that cutting taxes results in more revenue. Significant tax reform would not only be moral, by allowing people to keep more of their earned property, but also allow businesses to expand and encourage entrepreneurial activity which is desperately needed to reverse the climbing 9.8 percent unemployment rate.  

Although a sound tax policy is both a moral and economic necessity — the issue of government spending must not be ignored. In order for tax policy to be successful, rates must be kept low, but government spending must be reduced, that is, without government spending reductions tax cuts will not be as effective. Goldwater argued that “as a practical matter spending cuts must come before tax cuts.”[9] “If we reduce taxes before firm, principled decisions are made about expenditures, we will court deficit spending and the inflationary effects that invariably follow,” noted Goldwater.[10] 

Both political parties have failed to restrain government spending and at the heart of this problem is disregard for constitutional limited government. “The root evil is that the government is engaged in activities in which it has no legitimate business,” argued Goldwater.[11] As Goldwater wrote “the government must begin to withdraw from a whole series of programs that are outside of its constitutional mandate — from social welfare programs, education, public power, agriculture, public housing, urban renewal and all other activities that can be better performed by lower levels of government or by private institutions or individuals.”[12] 

The United States in the current recession is at a dangerous crossroads with an out of control budget with massive debt and deficits, and a rising unemployment rate. In addition the entitlement programs of Social Security and Medicare are approaching bankruptcy and Washington is considering a new entitlement program under health-care reform.  

Goldwater offered a solution that would focus on both spending and tax reductions. He called “for a 10 percent spending reduction each year in all of the fields in which federal participation is undesirable.”[13] The solution for economic recovery is a moral solution of returning back to constitutional limited government based on reducing spending and taxes, which in the end will unleash the entrepreneurial spirit that has guided the United States and the values that have built our great nation.

John Hendrickson is a Research Analyst at Public Interest Institute.

The views expressed herein are those of the author and not necessarily those of Public Interest Institute or Tax Education Foundation. They are brought to you in the interest of a better-informed citizenry.