There are several semi-permanent fiscal policy fights in Washington, most of which somehow are related to the big issue of whether government should be bigger or smaller.
Today, I want to focus on two of those battles, and point to developments in Japan to make the case that the left is wrong.
First, let’s look at a couple of sentences from a Wall Street Journal story about Japanese fiscal policy.
Top officials from Japan’s government and ruling party formally endorsed a revised bill to double the country’s sales tax, despite strong objections from other party members, in a sign of their determination to rein in the nation’s soaring public debt. …The legislation will double the current 5% sales tax in two stages by 2015 as a way to help pay for the nation’s growing social welfare costs as the population ages.
I realize I’m a strange person and I look at everything through a libertarian lens, but I think this story provides strong support for my viewpoint on two important issues.
1. Higher taxes lead to higher spending – Just like in the United States, politicians in Japan claim that they have to raise taxes to deal with deficits and debt. Indeed, the excerpt above includes that assertion, reporting that the VAT increase would be “to rein in the nation’s soaring debt.”