Pennsylvanians in Support of the FairTax Act - Online Editorials

Atlanta, GA, Apr. 12 (UPI) -- Every spring, around the time Congress begins deliberating the next fiscal year budget and our tax returns are due, there are countless media stories about complexity of the tax code, overspending of our tax dollars, waste in government and the waste of our time spent trying to comply with an insane system of collecting federal revenue.

Albert Einstein once said, "The definition of insanity is doing the same thing over and over again and expecting different results." He was correct. When will Congress break this cycle of insanity I call Tax Cow Disease?

The usual response from members of Congress, who we elect to stop this tax-and-spend insanity, is to decry the outrageous waste and abuse of taxpayer dollars, promise more oversight and blame members of the other political party. And yet, year after year, federal expenditures on inefficient programs increase and the addition of new credits and loopholes creates an exponentially more complex tax code.

Mandatory entitlement spending on programs such as Social Security, Medicare and Medicaid accounts for more than half of the federal budget. By 2015, mandatory entitlement spending will account for more than 60 percent of budget outlays.

By 2017 the Social Security system will send out more money in monthly checks than it will receive in payroll taxes. By the year 2041 the system will be completely insolvent. Many in Congress deny this is a crisis situation, yet they spend the so-called surplus as fast as the dollars pour in.

When the Medicare program began in 1965 its projected cost by 1990 was $12 billion. By 1990 the cost surpassed that projection by 900 percent. Since 1995 Medicare spending has grown 88 percent. That means the cost almost doubled in 10 years. The Medicaid program has grown at an even faster rate. Since 1995 Medicaid spending has grown 211 percent, which means it has tripled in 10 years.

Complexity and waste caused by the income tax code is also growing at an unsustainable pace. An estimated $300 billion in tax revenues goes uncollected each year due to noncompliance with the tax code, caused by confusion, loopholes and numerous special interest credits.

The annual cost of compliance to businesses and individuals is more than $250 billion. The annual amount of payroll taxes paid to the broken Social Security system exceeds $560 billion, and the annual tax revenue loss attributable to illegal and underground activity is an estimated $1 trillion. That's more than 2 trillion reasons to stop the insanity and replace the tax code.

Much attention is paid to the federal budget deficit, which is projected to be $376 billion in 2006. Due to President George W. Bush's 2003 tax cuts, the deficit is projected by the administration to shrink to $229 billion by 2009. Eliminating the deficit is important, but the deficit does not drain our economy of resources as overspending and a grossly inefficient tax code do. The deficit is merely the product of overspending and overtaxing.

The good news is we know how to cure Tax Cow Disease.

We can begin to eliminate the entitlement spending problem by giving younger workers the option to place their payroll tax contributions in a personal retirement account. Sen. John Sununu, R-N.H., and Rep. Paul Ryan, R-Wis., have introduced a bill, as has Sen. Chuck Hagel, R-Neb., similar to the president's proposal that will provide retirement savings for future generations and decrease the rate of entitlement spending growth. Encouraging the use of health savings accounts and allowing states greater flexibility in administering the Medicaid program will also slow the rate of entitlement spending.

We can eliminate the trillions of dollars of waste created by the tax code by replacing it with a consumption tax, such as a national sales tax. A national sales tax, also known as the FairTax (H.R. 25 and S 25) will replace all the oppressive income taxes, capital gains taxes, estate taxes and payroll taxes. With a national sales tax, businesses and individuals will no longer have to waste millions of hours and billions of dollars each year struggling with compliance and complexity.

Tax Cow Disease will not be cured without insistent and consistent pressure from the public. Congress will not act aggressively without a massive public outcry. It is time to redirect the pain and agony we feel on those we elected and have given the power to break this escalating cycle of insanity.

(Herman Cain is chief executive officer of The New Voice, Inc. and New Voters Alliance, and host of the nationally syndicated radio talk show The Bottom Line with Herman Cain. He is past chairman of the Federal Reserve Bank of Kansas City, and past chairman and chief executive officer of Godfather's Pizza, Inc.)

(United Press International's "Outside View" commentaries are written by outside contributors who specialize in a variety of issues. The views expressed do not necessarily reflect those of United Press International. In the interests of creating an open forum, original submissions are invited.)