23 Apr 2011

Everybody Votes For Another Round of Drinks, If Somebody Else Is Picking Up the Check

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David Harsanyi argues that good government requires broadening, not narrowing, the impact of the burden of federal taxes.

(It is well-documented that the rich pay the majority of income taxes.) There are many arguments against progressive taxation economically, but it is also true that it erodes the health of our democratic institutions. Rather than shared responsibility, we have a growing number of people who rely on others to pay for their votes as they become increasingly disconnected from the cost of government.

The Tax Policy Center, a Washington think tank, estimated this week that 45 percent of U.S. households paid not a single dollar in federal income tax for 2010. And The Fiscal Times reported this week that “for the first time since the Great Depression, households are receiving more income from the government than they are paying the government in taxes.” This, in Obamaland, is called job creation. But does anyone believe the trajectory is healthy? No doubt, these events allow Obama to spread the wealth around to those who deserve it — clean energy outfits, teachers unions, czars, etc. — but they also create a growing number of voters with little stake in stopping out-of-control growth.

Many conservatives argued that lowering the tax burden would free up capital and induce job creation. “Washington would likely see increased revenues as prosperity grows,” they claimed. This must be a fact, as economists I choose to believe say it is. It’s unfortunate, though, that most Republicans won’t go further and argue that everyone, even the rich — even the super-filthy rich! — deserves to be treated equally by the government.

It is also too bad that these politicians won’t admit that revenue, whether we have more of it or less, is basically irrelevant. After all, doesn’t the federal government have enough money? We need spending caps and entitlement reform, not ways to generate more revenue — as if Washington’s expenditures ever match revenue anyway. The real size of government can only be measured by what D.C. spends, not by what it takes in.

If, as the enlightened voices on the left contend, the American people deeply love their federal services, their dependency programs, their regulations, their industrious public education department, let’s all pay. Why shouldn’t we take on a proportionally fair share in the joy? Even income tax-paying Americans don’t really feel the cost of government because of how we collect taxes. But let’s create better consumers. Consumers pay and demand results. Dependents, on the other hand, just demand. They have no reason not to.

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When polled 42 percent of people say they pay too much in taxes while 43 percent think that the amount they pay is “just right”. Hmmm. This breakout is almost identical to the breakout of those who actually pay income taxes and those who don’t.

If you’re not paying income taxes, of course they’re “just right”. And why should you be concerned with government spending when there will be no cost to you? In the words of the immortal John Blutarsky, “Grab a brew! Don’t cost nothin’.”


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