[EDITORIALS]Our belts are tight enoughIn the United States, tax collection is going swimmingly. In the first nine months of the 2006 fiscal year (Oct. 2005 to June 2006), $200 billion more was collected in taxes than the year before. Businesses did well, and as a result, corporate tax income rose 26 percent. Thanks to this, the inveterate deficit budget is expected to be reduced to under $300 billion.
Until now, the administration of U.S. President George Bush has followed a tax-reduction policy for corporations and individual, and now that the economy is reviving, the amount of taxes is going up, for the most part. The New York Times found that the government is collecting much more taxes thanks to economic growth. The budget deficit is still quite high and experts are split over whether it will continue to fall. Regardless, it seems clear that the American economy has found the first step in a circulation of “reducing taxes equals revitalizing the economy equals increased tax revenues equal reduced budget deficits.”
Henry Paulson, the newly appointed secretary of the Treasury, recently said that he would stimulate economic growth and suppress financial expenditures. This implies that he will execute growth-centered economy policies that promote consumption and investment, and that the government will continue to be a “small government.”
What is our situation like? People are worried about paying taxes, and tax yields are insufficient, the economy is stagnant, and the country’s finances are becoming weaker.
The government might think that the tax yield will rise if they squeeze the people, but if the burden of taxes increases, individual consumption will go down and companies will reduce production and investment. That is the basics of economics.
If circumstances don’t allow this, the government should at least cut down on its spending, but it clearly isn’t doing that. The state is sticking with its “big government” theory, increasing the number of public servants by 23,000 and starting huge projects that leave people wondering who will pay for all this. It is not natural that the government is using up more money than it collects.
Over the last three years, the government has had to issue deficit state bonds worth 14.5 trillion won ($15.2 billion) until 2009 to plug in these fiscal “holes.” Additionally, it must issue 7 trillion won to 8 trillion won’s worth of state bonds a year.
The government is sticking to its current policies and saying that nothing is wrong with the economy. It’s time for the government to tighten its belt ― a better policy than having it tighten ours.