The Revenue Canard

Senator Schumer, who has been going around defending managers of hedge and private equity funds from being singled out for a big tax increase, now speaks "approvingly" to the New York Times of raising the top federal income tax rate to 40% from 35% and applying it to those earning more than $400,000 a year. That would be even higher than the Clinton-era rate of 39.6%. Plus Mr. Schumer has his eye on raising taxes just as the stock market and real estate markets are faltering. If this tips the economy into a retreat, the editorial writers can call it the Schumer Recession, though the Democrats appear to be hoping this will all happen soon enough for them to blame it on President Bush rather than on President Hillary Clinton.

As if that weren't bad enough, Mr. Schumer, in the same Times interview, holds out the prospect of increasing the tax rate on capital gains to 20% from 15%. "Mr. Schumer has said he agrees with the general notion that Congress needs to raise more money for vital initiatives," the Times reports, quoting the senator describing himself as a "pro-government type person who believes the government needs some revenues."

Maybe Mr. Schumer hasn't noticed, but the federal government's revenues for 2006, according to the Tax Policy Center of the Urban Institute and the Brookings Institution, were $2.4 trillion dollars. That's an all-time record, both in absolute terms and in constant, i.e., inflation-adjusted dollars. Even when one looks at it in terms of the percentage of Gross Domestic Product, the 18.4% share claimed by the federal government from taxpayers was larger than that in any year between 1955 and 1968, and it was exceeded in only seven of the past 24 years.

In other words, the federal government is wallowing in revenues. It's fairly drowning in revenues. The idea that Mr. Schumer, one of the Democratic leaders in Congress, wants to raise federal revenues even more by extracting even more money from the taxpayers is a tribute to the insatiable appetite of the Democrats in Congress for spending. The senator doesn't even try to camouflage his tax and spend reflex, acknowledging that he is a "pro-government type person" and filling his Web site with boasts about various spending projects he has championed, the latest being $1.5 million to provide what the senator describes as "desperately needed help" for "New York Bee Keepers." Well, guess who's going to get stung.

As it is, the Congressional Democrats have to work to spend $2.4 trillion dollars a year; it adds up to about $4.6 million every minute, or roughly $76,000 every second. It's easy to understand the feeling of wanting more money to spend. It is a feeling shared by many individual Americans. Those Americans will have less money of their own to spend if the Democrats in Congress, led by Mr. Schumer, seize more of it to accommodate the habits of tax-and-spend politicians in Washington who can't cope with the constraints of more money than Americans have ever sent to Washington in history.