Is the tax system fair?
Last Friday, former President Clinton said: "I think the people that benefit most should pay most. That's always been my position -- not for class warfare reasons; for reasons of fairness in rebuilding the middle class in America."
Readers can see for themselves how much more taxes higher income individuals pay using TurboTax here. Suppose that you have two married couples with two children and no other deductions. The only difference between these two couples is that one makes $60,000 per year and the other makes five times more, $300,000. Should people who earn 5 times more money pay 5 times more taxes? How about 49 times more in taxes?
How about going from $100,000 to $300,000, a three fold increase in income? Increasing income 3 times, increases the tax burden by 9 times (going from $8,069 to $71,134).
Even lower income earners actually get money back from the government. At $40,000, the couple will get $2,500 net back from the government, and this increases for lower income earners. Even at $50,000 the couple would get some money back.
Readers can see for themselves how much more taxes higher income individuals pay using TurboTax here. Suppose that you have two married couples with two children and no other deductions. The only difference between these two couples is that one makes $60,000 per year and the other makes five times more, $300,000. Should people who earn 5 times more money pay 5 times more taxes? How about 49 times more in taxes?
How about going from $100,000 to $300,000, a three fold increase in income? Increasing income 3 times, increases the tax burden by 9 times (going from $8,069 to $71,134).
Even lower income earners actually get money back from the government. At $40,000, the couple will get $2,500 net back from the government, and this increases for lower income earners. Even at $50,000 the couple would get some money back.
Labels: Taxes
posted by John Lott at 10:27 AM
4 Comments:
John, the tax system is about wealth redistribution, not about fairness.
First of all, when you take people's money via threats and coercion, that is called theft. Let's not make any bones about it. Taxation that is not voluntary, under any other name would be a crime and those involved in it would be put in jail.
Now that we have that behind us, when the super majority of taxpayers get money back, and those also are the super majority of voters, why wouldn't we expect the minority to be treated unfairly in relation to everyone else?
The whole system is a moral hazard. It teaches that theft is ok when the government does it. Then it sanctions class warfare. The most productive citizens are the one's most stolen from, to which, the least productive reap the rewards.
In 1913, as he was imposing an income tax on this country after the Supreme Court had declared Abraham Lincoln's income tax unlawful, Woodrow Wilson promised Americans that it would never go any higher than five percent, and that it would never affect anyone but the very wealthiest two percent of the population. Look how far we've come in 100 years!
The Income Tax system is a psychotic legal system and only gets worse year after year after year.
Citizens and businesses spend close to 140 Billion Dollars a year and spend 7 Billion Hours in attempted tax compliance.
The Income Tax code itself is 70,000 pages of arbitrary and contradictory laws and opinions.
This plus at least a million more pages of Revenue Rulings, Letter Rulings, Tax Memorandums, Tax Publications, Tax Court, Federal Court and Supreme Court Opinions that are written in an effort to explain the mind numbing Income Tax code.
Most personal, financial and business decisions all have to take into account the Income Tax system and generally require assistance from tax accountants and lawyers who themselves do not even understand the Income Tax code.
This is no way to fund a government.
I'm not altogether comfortable characterizing theft as "redistribution".
I cannot hear the word redistribution without imagining that I hear the voice of Marlon Brando as Don Corleone saying "we need to do some redistribution of wealth". It just sounds too much like a gangster's euphemism.
But beyond that, the word "redistribution" implies that something had been distributed before, and now is being distributed again. But clearly there was no "distribution" involved -- there was earning.
It is as though people who use that phrase imagine some great ruler above us all, that takes the total of the available wealth -- which is of course his to begin with -- and apportions it first one way and then another.
No such thing is involved. There is no damned distribution going on ... at least not until an act of theft is performed and then the loot is handed out.
People create wealth. Some of that wealth is then stolen. And some of that stolen wealth is then handed out to people that the thieves favor for one reason or another.
There is no REdistribution. Only theft *followed by* distribution.
We really have to come up with a better wording to describe this situation. The crooks are getting far too soft a ride with the wording as it now stands.
REdistribution my Aunt Fanny!
Income tax rates may not be equal, but here's why they're fair: in general, you're always better off earning more money even though you may pay more in income taxes. In your example, the $40k, $60k, and $100k hypothetical taxpayers would all gladly trade places with a higher income taxpayer and shoulder the "burden" of earning more money after taxes; while none of the taxpayers would voluntarily trade places with another taxpayer earning less. So while the $300k taxpayer might like to have the others' lower tax rates, there's no way she would trade paychecks with any of them.
Post a Comment
<< Home