Log In | Register
A friend of mine recently remarked that, while he wasn't thrilled to give the government a large chunk of his earnings every year, it beat the alternative: no work. Particularly in these tough times, most Americans feel the same way, and on the Ides of April, taxpayers dutifully submitted their returns to federal, state and local governments in what has been described as the greatest voluntary surrender to authority in the world.
But the prospect of higher taxes sent a few people into the streets to protest. These were scattered events around the country, and they received a smattering of media coverage. There was some genuine high dudgeon, but the gatherings featured many people in costume and were pervaded more with the air of Fat Tuesday and spring break than with open revolt. It's a good thing, too, because a widespread and successful tax protest would make governance nearly impossible.
Not that our system of taxation is intelligently constructed or fairly administered---it most certainly is neither of those things. Rates, deductions, exclusions, credits and just about everything else are arbitrary constructs designed in a fragmentary, incremental and illogical way. At the moment, top earners pay Washington 35%, but in our history, tax rates have varied wildly and irrationally. Until the 16th Amendment to the Constitution, the federal government had no permanent income taxing authority, and so most citizens paid nothing, but in some years (1944-45 and 1941-63), top earners had to pour more than 90% of their net earnings into insatiable the maw of Washington. Despite the fact that few people qualified to pay a rate that high, and almost all of them found ways to dodge paying, there was---and still is---no more perfect disincentive to investment than high taxes, and the hysteria of income redistribution eventually yielded to the pragmatic desire for widespread prosperity.
President Obama is proposing to let the last round of tax cuts lapse, and some people---indeed perhaps even most people---will be paying higher taxes. To those who side with John Marshall in the case of McCulloch v Maryland (and with Daniel Webster, who said pretty much the same thing), any power to tax is destructive, and a tax increase, even if it is to previous, moderate levels, is an abomination. People who live in states like New Jersey that impose a gross income tax will see their obligations rise further, and the huge federal deficits that show no sign of dropping may spur the benighted officials whom we persist in electing to raise tax rates higher yet. China's recent decision to reduce its appetite for American debt instruments will send officials scrambling to find other ways to generate cash flow, and the path of least resistance has historically been higher taxes.
Mr. Obama is only the latest in a long series of officials who have correctly stated that the tax code is impossibly convoluted, is full of loopholes and needs to be revised dramatically. Some people have been arguing that we should have a flat tax, that in operation it would be far less regressive than the system we have now. Still others have identified our tax problem as the underground economy, in which undocumented cash changes hands, and the vast black market in the labor of aliens, neither of which makes any contribution to the society that tolerates them.
But as difficult as these supply-side solutions seem to be, it is the demand side---the cost of government---that is the proximate cause of anguish. Governments needs to raise more money simply because they spend so much, often on things that do nothing to improve the lives, liberties or happiness of Americans. Every agent, commissioner, bureaucrat, contractor and lobbyist has his hand in your pocket. And although elected high officials---presidents, senators and congressmen---have the authority and responsibility to make the government serve the people, their efforts often result in the reverse, and it is not surprising, therefore, that some citizens despair of reform and take to the streets.
After more than 200 years, perhaps Americans have become inured to stupidity, inefficiency, waste, fraud, abuse, graft, corruption, insensitivity and arrogance, but it is neither necessary nor healthy to accept these things, Churchill's observations about modern democracy notwithstanding. Perhaps the first step is to be more selective in sending officials to represent us. It's bad enough that strangers are picking our pockets. We don't need our protectors helping them, too.
Start Tracking
Stop Tracking
Thanks. As much as an extremist as I am---and as we all tend to be on some subjects, especially as we get older---I find it useful to cut to basics, something we all learned as brand new soldiers.
