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Politics : PRESIDENT GEORGE W. BUSH -- Ignore unavailable to you. Want to Upgrade?

To: Howard C. who wrote (485935)	11/3/2003 3:21:28 PM
From: Kenneth E. Phillipps	Read Replies (3) \| Respond to of 769670

The biggest 'tax' is debt By Byron Auguste and Mark Strama, 11/3/2003 IN RECENT YEARS, much has been made over the repeal of the estate tax -- or "death tax." Much less attention has been paid to a far more pernicious tax -- the "debt tax" -- which is bigger than the estate tax, capital gains tax, and so-called "marriage tax" combined. When the Democratic presidential candidates convene here on Tuesday to engage a skeptical generation of younger voters at the Rock the Vote debate, we ask them to address the debt tax as the most important issue affecting young Americans today. American taxpayers paid $332.5 billion in interest last year on the national debt. This huge payment, equal to 11 percent of the total federal budget, does not improve education, enhance homeland security, or rebuild Iraq. It merely services the $6.6 trillion (and growing) national debt. These interest payments are a "debt tax" -- a tax that drains income without producing any material benefits for taxpayers. Today's average American household pays an astounding $3,153 in taxes annually just to service the debt -- about enough to lease a car for a year. These debt tax payments are required because of the fiscal irresponsibility of previous federal budgets. A government running a large national debt is like an individual running a big balance on a credit card. Most American households use credit cards, and more than half of cardholders carry over credit card debt from one month to the next. But few would go as far as the federal government currently does; today's national debt is the equivalent of a whopping $62,000 on each family's credit card. And each month, the debt is rolled over, with no plans to pay down the principal. The debt tax is likely to grow in the coming years, placing an enormous burden on tomorrow's taxpayers. Even if the national debt does not increase, projected increases in interest rates will increase the cost of borrowing money -- increasing the debt tax. But the national debt is increasing, because the government is spending beyond its means. In the past three years, federal spending has increased by 13.5 percent. Only half of this increase is attributable to the war on terrorism. And this figure does not even include the $87 billion recently requested for our efforts in Iraq and Afghanistan. Meanwhile, the tax cuts of 2001 and 2003 are projected to reduce revenues by $1.35 trillion. Even if interest rates remain constant, this year's budget alone will add approximately $22 billion to annual interest payments -- $22 billion in debt taxes. "Tax relief" for today's taxpayers is, plain and simple, a tax increase for tomorrow's taxpayers. As a result these factors -- rising interest rates, growing spending, and massive tax cuts -- the debt tax burden will continue to mushroom. The administration's own projections show the debt growing by half through 2008. This means that in five years, the average family could be paying between $4,500 and $6,000 or more each year in debt tax alone. The problem is compounded by the impending retirement of the baby boomers, whose tax contributions will decline at precisely the same time entitlement spending to support them will explode. For younger voters, this is like watching a train wreck in slow motion. We see the impact that is about to occur, and we are the ones who are going to get crushed. It's not too late to avoid disaster, but doing so will require sustained, rigorous focus by our leaders. While many Democrats and Republicans have criticized current fiscal policies, none has introduced a plan that will solve the debt tax. The time has come for our leaders to step up to the plate. Americans understand this problem and are willing to help solve it. A recent Gallup poll revealed that by a 53 to 41 percent margin, Americans say they would rather hold down the federal deficit than lower their taxes. Each generation of Americans has had the opportunity to determine our nation's priorities. In the middle of the 20th century, our grandparents expanded higher education and homeownership. Over the past 35 years, our parents invested in fighting communism abroad and poverty at home. Will our generation have similar opportunities, or will our only choice be to service the debts of our predecessors? The debt tax is a problem with grave consequences for our future. It is a problem that won't be solved until we start talking about it. For the sake of our generation of voters, we hope the presidential candidates will start the discussion this week. Byron Auguste is a partner at a global management consulting firm. Mark Strama is a technology executive and is the former director of programs at Rock the Vote. They are directors of the Hope Street Group, a nonprofit organization of young business professionals. © Copyright 2003 Globe Newspaper Company.