A repost from 6/1/03 that still seems pertinent. Links were valid at the time.
My philosophy is simple. If an individual or a family has a disproportionate part of the wealth, money or whatever you want to call it, they have the responsibility to pay a disproportionate part of the federal taxes.
Well, they already do. To be in the top one percent of annual income, you need make only $208,000. I say "only" $208K because while that is an awful lot of money, it is quite within the reach of ordinary Americans who work hard and invest wisely, especially if they begin an IRA young.
Contrary to populist belief, One Percenters actually pay more in taxes than others and have done so for years. And while liberals have long derided the notion that tax cuts lead to more tax revenues, experience proves otherwise. When President Reagan cut the top income tax rate from 70 percent in 1980 to 28 percent in 1988, the tax burden of the top 1 percent increased from 17.6 percent of total taxes to 27.5 percent. Today, the top 1 percent pays about 30 percent. Two Percenters pay a lot, too. So do Three, Four and Five Percenters. In 1998, the top 25 percent paid 80 percent of the total tax burden, according to the Tax Foundation, a Washington-based research group. Even more sobering, the top half of all taxpayers (with taxable incomes exceeding $100,000) pay 95 percent of all state and federal taxes. [link]
The letter-writer betrays what seems to me to be a common misunderstanding: that because paying taxes is a civic responsibility, hence a civic virtue, it is therefore also a moral responsibility and a moral virtue. Not so.
Taxes are exactions by force by the government from the people. Taxation is the coercive appropriation of private property for purposes held to be the public good. But the government does not have a
right to the people's money, it has only a need for it. We established a government of limited, delegated powers, and have authorized the government to exact taxes - but the government
has no right to do so, it has only the authority to do so. All rights remain solely the possession of the people, who may, if they wish, revoke the taxation authority of the government altogether. (In theory, of course, since in practice it could never be done.)
Everyone is legally obligated to pay the taxes s/he rightfully owes - but not one cent more. As Justice Learned Hand wrote in
Helvering v. Gregory (1934),
Anyone may so arrange his affairs that his taxes shall be as low as possible; he is not bound to choose that pattern which will best pay the Treasury; there is not even a patriotic duty to increase one's taxes.
The wealthy always pay more in taxes. They have to, because, as Willie Sutton famously explained why he robbed banks, "That's where the money is." Government is expensive and only the comparatively wealthy have enough money to fund it. Hence, about half of all citizens pay practically nothing. In large measure, the federal revenue system is designed to transfer money from the top half to the bottom half. As
I wrote before,
. . . the federal government really is a money-distribution organization. We govern ourselves by the way we spend each others' money. How much gets spent and for what is determined by how much agreement can be reached by a majority. But whether Left or Right, whether Democrat or Republican, the only real questions of American government and governance are, "Who will be be the beneficiaries of government spending? How much shall we exact from the public for it, and by what means?"
In 1984, the Grace Commission was formed by President Reagan to examine where tax revenues disappear to inside the great government money maw. The commission reported that
none of the money collected by income taxes paid for services - all income-tax revenue serviced the national debt. The commission said that one third of income taxes,
. . . is consumed by waste and inefficiency in the Federal Government as we identified in our survey. Another one-third of all their taxes escapes collection from others as the underground economy blossoms in direct proportion to tax increases and places even more pressure on law abiding taxpayers, promoting still more underground economy - a vicious cycle that must be broken.
With two-thirds of everyone's personal income taxes wasted or not collected, 100 percent of what is collected is absorbed solely by interest on the Federal debt and by Federal Government contributions to transfer payments. In other words, all individual income tax revenues are gone before one nickel is spent on the services which taxpayers expect from their Government.
According to a slightly breathless web site owned by an outfit called
The Solutions Group, income taxes were never intended to pay for services. Although personal income taxation dates to the early 20th century, income-tax withholding was instituted in World War II, conceived of by then-Chairman of the Federal Reserve Bank of New York, Beardsley Ruml.
To explain the new tax, and its purposes, Chairman Ruml wrote an article which appeared in the January 1946 issue of "American Affairs," the "newsletter" publication of the Council on Foreign Relations. Appropriately enough, the article was entitled, "Taxes For Revenue Are Obsolete." . . .
So taxes aren't needed for running the federal government anymore. This leaves many asking, "Why does the government take so much of what I earn?" Chairman Ruml, under the heading "What Taxes Are Really For," gave the following answers: "Federal taxes can be made to service four principle purposes of a social and economic character. These purposes are:
1. As an instrument of fiscal policy to help stabilize the purchasing power of the dollar;
2. To express public policy in the distribution of wealth and of income, as in the case of the progressive income and estate taxes;
3. To express public policy in subsidizing or in penalizing various industries and economic groups;
4. To isolate and assess directly the costs of certain national benefits, such as highways and social security."
Our government has used our federal tax program consciously for each of these purposes. In serving these purposes, the tax program is a means to an end.
So, here is what IRS taxes are -- and -- are not used for:
1. They are used to help implement economic policies designed by the federal government,
2. They are used for social purposes (meaning, to determine who should or should not, in the opinion of Congress, have certain amounts of money -- commonly called redistribution of wealth), and
3. They are used to subsidize various groups and interests, such as private banks.
-But-
4. They are NOT used to pay for any government services!
These are the reasons I say that no one has a moral duty to pay taxes, just a social-contract and legal obligation to do so. The moral imperatives pertaining to the wealthy lie elsewhere. But that's a topic for another post.
Update: Commenter Jack reminded me that President Obama has said that the point of raising taxes is not to raise revenue, but to be more "fair," whatever that means.
Here's the cite:
[A]fter ABC's Charlie Gibson noted that the record shows increased taxes on capital gains -- which would affect 100 million Americans -- would likely lead to a decrease in government revenues: "Well, Charlie, what I've said is that I would look at raising the capital gains tax for purposes of fairness."
During the campaign the Brookings Institution's Tax Policy Center examined Obama's
Tax Proposals' Impact on Tax Revenue, 2009-18, which further proves that actually funding the government's operations is the furthest thing from the president's mind when it comes to tax policy.
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