The Immorality of Our Federal Income TaxFeaturedPolicy

George Bernard Shaw famously observed that those who rob Peter to pay Paul can always count on the support of Paul. And today, as Americans rush to file their federal income taxes, we’re reminded of how deeply modern politicians share Shaw’s cynicism, try as they might to ennoble it with smug moralizing about “shared sacrifices” and those who can “afford to pay a little bit more”.

But there’s nothing morally sound about robbing Peter to pay Paul.

As that great Virginian Thomas Jefferson wrote in America’s Declaration of Independence, governments exist to secure men’s rights.

And government wields the power to tax in order to pay for the costs of exercising of this function. But progressive taxation, and redistributionary spending, actually violate our rights. For the state to take from some of its citizens, not because they have broken any natural law but simply because they have acquired more than others, is to pervert its own function and to misuse for injustice the power that it has been granted to maintain justice.

And when it perverts its proper role in this way, civil government does moral harm. As I explained in Slaying Leviathan, in the natural order, virtue and vice each carries its own consequences. On the one hand, virtue yields largely positive results. Hard work, patience, and carefulness, for example, tend to generate prosperity. Vice, on the other hand, brings negative consequences. Sloth, impatience, and recklessness, for example, tend toward suffering. By taxing the fruits of the virtuous behavior that creates wealth, redistributionary fiscal policy discourages that behavior.

Our progressive tax system also takes too much money—not just from the so-called rich but also from the middle class—diminishing their economic, and thus their moral, freedom. It unintentionally steers behavior away from virtue; the classic example is of course the marriage tax, which encourages not only cohabitation but also divorce, and so fosters all their attendant social pathologies.

And many so-called tax breaks added into the code intentionally steer behavior; the mortgage deduction, for example, seeks to encourage something—home ownership—that we consider to be a mark of a healthy society, but at the cost of encouraging debt, and we’ve certainly seen over the last couple of years how dangerous that can be. But moreover, with these kinds of incentives, the federal government is actually inserting itself into the family’s or the individual’s decision-making process, usurping the moral authority to decide what’s best for their own situation, seizing a moral power it shouldn’t have.

Today, Americans across the country are gathering at Tea Parties to protest government’s confiscatory tax-and-spend policies and the economic harm that they cause. They are right to do so, but it is important to remember that the real harm is not merely financial but moral as well.

  • Henry Ryto

    Leslie,

    Behavior doesn’t have to be virtuous to create wealth.

    Okay, what would you replace the current tax system with? A national sales tax tends to be behavior-neutral, but a flat tax could be crafted to promote good behavior.

  • ToR

    Jesus called, you’re right, he was a huge Pontius Pilate fan. Chose a different word, there is nothing immoral about the Federal income tax. You might disagree with it but it is not immoral. No “moral harm” is done.

    Would it be immoral if a state decided to leverage a similar tax?

    Lets set a few of your “facts” straight:
    -Home ownership didn’t cause the financial crisis. Greedy lenders got the ball rolling there.
    -Many Tea Party groups gathered Friday, apparently they didn’t get the message that tax day this year was April 18th
    -Government encouraging certain behavior is a good thing: tooth brushing, reading, eating healthy, getting an education, home ownership, quit smoking, buying American made, etc.

    What’s immoral is you using morals to base your dislike for a tax.

  • Jerry Z

    What is immoral about the income tax is that it seizes a person’s money before they even have it in their hands. It infringes on our right to personal property (our money). Government encouraging certain behavior by taking one person’s money and giving it to another is also wrong. Just because the goal is a good one, does not mean the method is right.

  • Steve Vaughan

    I guess this is the logical extension of the philosophy of the current GOP that “all taxes are bad all the time.” So basically, you’re saying “taxes are theft.” How then would you propose to fund the the collective needs of the people, for transportation, for defense, for making sure that food and drugs are safe?

  • valentinus

    ToR,

    You have every right to express your opinions. But when you get to “facts” you turn them into ?”facts”? like every leftist I’ve known. Be intellectually honest and read your ?”facts”? once again or at ;east read them as if you thought Bush43 had said them. They sound about as childish as someone telling you to brush your teeth.

  • http://www.littledavidobermark.blogspot.com/ LittleDavid

    A progressive income tax is not immoral, it is the American Way. How can I make such a claim? The 1st time an income tax was implemented was by Abraham Lincoln to help pay for the costs of the Civil War. It was a forerunner of our modern income tax in that it was based on the principles of progressive taxation. It is a flat tax, the so-called “Fair Tax”, or even a VAT (Value Added Tax) which should be described as un-American.

    If we want to discuss the morality of a tax system, well I love Jesus, and I ask WWJD (What Would Jesus Do)?

  • ToR

    valentinus

    Really? Which of my “facts” are inaccurate. There were only 3 so you should have no problems identifying the inaccuracies.

    I’ll also stand by the whole basis of my post. There is no basis for using morals in cutting or changing or eliminating taxes. In case you couldn’t figure it out-that’s my opinion.

    Jerry,

    Without taxes, what road do you plan to drive your car on, where’s your running water, electricity, phone coming from? I can go on and on. Taxes provide services. You were born in the US, I presume, but if you don’t like paying taxes why haven’t you moved to a US State or country that doesn’t have taxes? Probably because you like your standard of living here and I’d say the taxes you pay probably have something to do with that.

    Steve,

    Thanks for clearing that up. I’m not sure why we couldn’t just say “taxes are theft” before. I disagree 100% but at least I’d know what morals they’re taking about.

    The Tea Party/Republicans seem to be against taxes in any way shape or form but don’t give credit to the services those taxes provide. People are always willing to cut taxes but then complain when the chickens come home to roost.

  • HisRoc

    I think that Leslie is on the right tack. But the discussion should not be limited to Federal income taxes.

    Taxes, in of themselves, are necessary. It is the means of equitably resourcing the common needs of society–defense, infrastructure, public safety, etc. The morality issue arises when taxes are misspent. I want to have the best public schools we can afford, even thought I do not have children. Education is as important to society as a whole as public safety. But it is immoral to take my tax dollars and use them to educate children whose parents broke the law and entered this country illegally. Same with health care. The government should ensure affordable housing is available for public service employees. But it is immoral to take my tax dollars and spend them on subsidized housing for people who won’t work and won’t get an education that qualifies them for a living wage. A strong national defense is an imperative for a open society that lives in a dangerous world with evil tyrants. But it is immoral to squander my tax dollars on unnecessary, redundant weapon systems–not to mention initiating open-ended military operations with no end-state objectives. On this last point I blame not the Pentagon but the Congress. Members of Congress, on both sides of the aisle, waste defense dollars with abandon when the money is being spent in their state or district. And a majority of the so-called liberals in Congress voted FOR the Iraq War Resolution. Look it up.

    The morality of taxes is a matter of degree, like most things. Taxes in moderation are generally good. Excessive taxation is always bad. Unfortunately, our elected representatives can’t seem to control their spending impulses. The current debate over the budget deficit is a case in point. “Reduce the deficit, but don’t do it in my state or my district. And for God’s sake don’t take a single dollar away from my pet program or I will accuse you of being soft on defense or of trying to kill off the elderly.” To solve the budget deficit, everything must be on the table, from entitlements to all discretionary spending. But apparently nothing is in play and Congress is using cheap accounting tricks to pretend that they are reducing spending.

    I can think of only one sure cure for this problem: eliminate incumbency in all elected offices at Federal, state, and local levels. After 12 years of President-For-Life Franklin Roosevelt and his being elected to a fourth term, the country woke up and realized that having a single administration that spanned multiple decades was not necessarily good for the country and we ratified the 22nd Amendment. It has worked quite well now for over 65 years. However, in the Congress, in our state legislatures, in our local governments, we have career politicians who routinely serve a lifetime in the same elected office or a succession of offices. They become intoxicated with the power of elected office and addicted to the power of taxation and the incumbency it ensures. End it. Term limits now.

  • Steve Vaughan

    H.R.-generally I find you a fountain of good sense, even if I disagree with your specific proposal.
    I sure disagree with this one.
    Term limits are a bad idea.
    They will just make the special interests and the lobbyists more powerful.
    And they take rights away from the people.
    You’re denying my right to vote for the guy I think will do the best job because you’ve decided that he’s served long enough.
    We have term limits. They’re called elections.
    If you want to eliminate some of the advantages incumbents have in elections, perhaps by cutting off any money from lobbyists or corporations or unions or any other special interest group and requiring that they fund their elections with contributions from people in their own districts, I’ve got no problem with that.
    Although I expect that some Republicans who agree with George Will and the Supreme Court that spending money = free speech might have a problem with that.

  • CAPT Freedom

    It is patriotic to pay taxes – it is the vast majority of Americans one and only way of demonstrating fidelity and loyalty towards our nation. The only other real way to demonstate your love for our great nation is to volunteer to serve – and possibly die – in her defense.

    It is ironic that you quote Jefferson, who was unquestionably in FAVOR of progressive taxation. In his own words:

    Another means of silently lessening the inequality of property is to exempt all from taxation below a certain point, and to tax the higher portions of property in geometric progression as they rise

    The goal of Jefferson, Adams, Franklin and others was never the peverse taxation system that the GOP would impose on American wherein the poor and the middle class pay a higher percentage of their income in the form of taxes than those at the higher levels, moreover, they all would have agreed that the levels of income inequality favored by the GOP is dangerous for the future of our, or any, democracy.

  • HisRoc

    Steve,

    I appreciate the compliment and return it in kind. However, your position on term limits reminds me of a story.

    A man on a business trip walks into the hotel lounge to find a very attractive woman sitting at the bar alone. He takes the seat next to her and they strike up a conversation. As they seem to be warming up, he asks her a hypothetical question, “would you be willing to have sex with me for one million dollars?” She thinks about it for a moment and answers, “yes, I would.” “Fine,” he replies, “how about spending the night with me for $500?” “What kind of a girl do you think I am?” she responds indignantly.

    “I think that we have already established that. Now we’re just haggling over the price.”

    We already have term limits for the most powerful elected official in the republic. Your philosophical argument that term limits don’t allow you to vote for the candidate that you think is best qualified is, therefore, void in practicality since term limits have been in effect before either one of us was born. It is now just a matter of determining how far to extend them.

    Elections are not term limits. In a typical Congressional election year, over 80% of the incumbents run either unopposed or against a token challenger. Over 95% of the incumbents are reelected, except for watershed years like 1994, 2006, and 2010. And, most telling, the incumbent in a contested election typically spends anywhere from 80 to 95% of the total money spent by all candidates in that race, getting over 65% of the total vote. Where does all that money come from that the incumbent spends? Special interests who are buying Federal spending that favors them and special tax treatment. It is hard to imagine how term limits could give special interests any more influence than they already have. You might be voting for the candidate you believe is best qualified, but the vast majority of the voters are casting their ballots for the biggest campaign spender.

    If you haven’t already, you should read the book “Who Will Tell the People?” by William Greider. While I don’t agree with some of his more populist opinions of corporations, it is a very compelling tutorial on the role money plays in politics when the first rule of the game is to get reelected. The only way to break that cycle is to take reelection off the table for those who have reached their term limits.

  • Jay D

    Here’s an alternate reform plan for critique.
    Term limits: No limits, but mandatory retirement age for senators (i.e. SS full-benefit age + 4 yrs) and representatives (SS full-benefit age + 2 yrs).
    Campaign Finance Reform:
    - Federal coffers underwrite all campaigns for national office (pres., sen., rep.); state government funds state office campaigns (gov., legislature); city funds … etc.
    - Candidates may contribute $x personal funds to own campaign – maximum limit.
    - Revise current FCC regulations to include: Any entity holding FCC license, which allows station to utilize & profit from the public’s airways, is mandated to offer $x amount of time (value) to air each political party’s primary debates and $x advertising time for political party’s general election candidate.
    - Accepting private money (or in-kind donations over x amount) would be illegal under new election laws.

    If your first impression is, “We can’t afford this plan.”, I would counter that transparent, above-the-table government funding would cost taxpayers significantly less than special deals made w/ lobby groups, interests and campaign contributors.

    Fund w/ government tax dollars, put clear limits & rules on all contributions outside of direct government funding and … how much have you reduced the power of unions, corporate lobbyists, company funds, industry groups, etc. to influence election results? How much have you impacted incumbent re-election rates? How much have you evened the field for great candidates to actually be competitive with rich candidates?

    This is anything but a new idea, but perhaps an idea whose time has come?

  • http://www.littledavidobermark.blogspot.com/ LittleDavid

    OK guys, focus. The topic is the tax code, not term limits.

    Leslie provided one side of the argument and I tried to provide the other side. Do you not have an opinion on this specific subject?

  • ToR

    You’re right LD but I’m rather impressed by both Steve and HisRoc and these are underlying issues. Both of you make good cases for and against term limits/campaign finance reform. HisRoc, the hypocrisy you mentioned is what is most frustrating for me.

    Jay D that’s an excellent idea as well. Some of those ideas are new to me and I like them. Why do you propose SS+4 or SS+2 as the retirement cutoff and not just SS?

    Just follow the money. It talks.

  • HisRoc

    LD,

    That is the problem with politics today. There are no yes or no answers to simple questions, despite what the liberals and the conservative would want us to believe.

    You can’t talk rationally about the tax code without addressing over taxation. And you can’t talk about over taxation without addressing over spending. And your can’t address over spending without addressing the motives of career politicians. And you can’t address career politicians without addressing how to remedy their career incumbency.

    Let me put it this way: you can’t put your foot on the brake and know what is going to happen next unless you understand all the connections between your foot and the brake linings in the wheel. Otherwise, you wind up jack knifing the entire rig.

  • Jay D

    Sorry LD– sidetrack was interesting. I heartily agree w/ Leslie Carbone. Read carefully, her article is pretty clear – it is progressive taxation COMBINED w/ redistributionary spending that differentiates today’s tax code from anything remotely close to Abe’s Civil War tax, for which, BTW, you left out a few fairly pertinent details:
    -Lincoln’s tax (3% of income) was imposed on <b<ALL citizens earning $600/year (about $13,000 in 2010 dollars).
    - Individuals earning over $10,000/ year (about $250K today) paid 5%.

    Although the federal income tax is the government’s largest source of revenue, nearly one-half of all US households pay ZERO or ‘earn’ a tax net profit.

    We tolerate a tax system …
    - That gives half our citizens a free pass; they have absolutely no responsibility to help pay for and support the programs & services (roads & bridges, national defense, public education, national parks, etc.) that benefit all.
    - In which the top 10 percent of earners (w/ average earnings of $366,400 in 2006) pay 73% of ALL income tax revenue collected by the federal government. What’s the magic number for progressives – 100%?
    - And where the bottom 40% actually make a profit during tax season. Um … isn’t that called income redistribution?

    50% of the people get something (and a whole lotta something!) for nothing. Tell me, WTH is progressive or equitable or healthy –or moral– about that stat?

  • HisRoc

    What JayD said.

    This crapola of “let the wealthy pay their fair share” makes me want to puke. We already have a taxation system that confiscates middle class income and redistributes it to the undeserving. Why are people allowed to drop out of school before they are even 14 years old, make babies out of wedlock, and then get support from middle class taxpayers? Why are families of four in Virginia with a household income of $45,000 eligible for CHIPS insurance? That is 50% more than the median income in more than two-thirds of the counties in the state and twice the Federal poverty level. Why are the fathers of illegitimate children allowed to walk away and dump the mother and her brood onto the public welfare?

    I don’t mind paying taxes. I just object to politicians taking my money to give it to slugs who contribute nothing to society except to suck up oxygen and turn food into feces.

  • http://www.littledavidobermark.blogspot.com/ LittleDavid

    Jay D,

    Actually, I really love the EITC (Earned Income Tax Credit) because the poor are expected to do as much as they can for themselves before they are given assistance. It goes most heavily to those with children and who have extremely low income.

    One need not be a progressive to be in favor of a progressive tax code.

    In my opinion, under a progressive tax code, it is not only the wealthy who should be paying more, it is the middle class as well. However the Wizard of Wall Street, Warren Buffet recently observed that his secretary pays a higher RATE of taxes then he does on his income. I am sure his total tax bill dwarfed hers, but he pays a lower percentage.

    All of the Dubyah Bush tax cuts should have been allowed to expire. I recently noted that, due to these tax cuts, I pay ZERO taxes on long term capital gains from the stock market. Why should I be taxed on income that comes from sweat, but not on that which comes from the stock market?

  • J.M. Ripley

    “It is patriotic to pay taxes – it is the vast majority of Americans one and only way of demonstrating fidelity and loyalty towards our nation”

    fidelity and loyalty should be freely given, not coerced by threat of fines and incarceration for not participating.

  • Jay D

    LD, we’re already taxed under a progressive tax system and Buffet pays not a “lower rate”, but a smaller % of income because he legally shelters income & takes advantage of more deductions (all courtesy of the US tax code). Tax cuts in the last decade have been generous to everyone, not JUST the rich. According to Tax Policy Center, about 38% of households paid no fed tax in 2007 – in 2008 the percentage jumped to 49%.

    ~ “Dubya Bush’s” 2008 economic stimulus & tax rebate gave most families an extra rebate check ($600 for unmarried / $1,200 for married /plus $300 per qualifying child/ incomes above $3000 qualified).
    ~ Obama followed up w/ his economic recovery law which expanded some Bush tax credits & added new ones – most targeted at low to middle-income households. Obama’s Making Work Pay credit + Expanded Tax Credit + Earned Income Tax Credit again reduced the number of households contributing to the public good.
    ~ Other new tax credits allow deductions for college expenses; buying a new home; buying energy-efficient doors, windows, furnaces, appliances – many of these fully refundable (if the credit exceeds amount of taxes owned, the government sends you a check for the difference).
    ~ ALL of the above, are in addition to the existing tax credits that collectively, as Carbone notes, insert [the government] into [personal] decision-making … steer behavior away from virtue… and encourage debt.”

    You argue ‘the rich’ should pay more. The highest income brackets did get a tax break under Bush (top marginal rate dropped 39.6 % to 35% ; 2nd highest dropped 36% to 33%); he reduced tax rates at EVERY income level – and it was primarily those changes (plus the new Obama breaks) that now make it easy for families of 4 making $50,000/year to completely ELIMINATE paying any federal income tax.

    1) Forget class warfare rote thinking and rhetoric for a moment … considering that state and city tax collectors also take a big chunk (through taxes & fees), is the federal government really entitled to 40% of anyone’s earnings?
    2) Isn’t it much more desirable and beneficial to society if EVERYONE has at least some skin in the game’?

    Set tax rates at a reasonable level, dump EVERY tax break (except charitable contributions) … and we are really, REALLY close to the Abe Lincoln plan that, as you noted, funded a long and expensive war, ran the country, and rebuilt a nation decimated by war. Unfortunately, in order to consider THAT (or any other) solution – with current congress – we have to FIRST take care of each item HisRoc addresses in his earlier post.

  • HisRoc

    Little David,

    Warren Buffet pays a lower tax percentage than his secretary for the same reason that GE paid no taxes at all last year. Speaking of which, I find it interesting that liberals think that corporations should be taxed like individuals but that they believe that corporations should not have the same First Amendment rights as individuals. Which is it? Can you please make up your mind?

  • Jay D

    ToR, Term Limits is radical & polarizing. If it could pass, we would have done so long ago. So instead of fighting battles that can’t be won, why not figure out another approach to accomplish similar… mandatory retirement attached to SSR age seemed like a reasonable benchmark and one that could be sold to voters, regardless of party affiliation.

    I guesstimated (no stats) the average first-termer typically takes office between age 40 and 50. Full SSR benefit age is 65 -67. If elected at age 40, a senator could serve maximum 23 years (3+ terms) – compared to this list of 94 lifetime legislators serving 35 – 57 years. [http://en.wikipedia.org/wiki/List_of_members_of_the_United_States_Congress_by_longevity_of_service]

    Charles Rangel is now 80; John Dingell -85; Daniel Inouye -86. Bryd was 93, Hayden -93, Whitten -85, and Strom Thurmond was chairman of Armed Services Committee until age 97 and 100! when he FINALLY left office (boots up). Our laws set arbitrary minimum age requirements for elected officials – why not set maximum?

    Unfortunately, while completely non-partisan and likely acceptable to a vast majority of Americans, even this change would be a tough fight. Political parties need the Rangels and Thurmonds; they are, FTMP, election shoo-ins and safe seats. Nonetheless, with John Boehner still relatively young at 61, Cantor -47; McCarthy -46, and Paul Ryan only 41… if ever there was an opportune window to get republicans on board to push this change, it’s now.

    [PS – Apologies for confusing typo on earlier post; 4 should have been 6. Senators retire at SSRA + 6. The plan adds one additional term (6 yrs - Senate/ 2 yrs – House) to SSRA benchmark]

  • NHCopperhead

    I would support the federal income tax if those who do not pay it are excluded from voting. It’s goddamn ridiculous that people who are career clients of the social welfare state are allowed to voter for politicians whose campaign pledges include expanding the social welfare state.

  • HisRoc

    NHCopperhead,

    I could not agree with you more. To me, it is the height of absurdity for the liberals to be clamoring for “the wealthy to pay their fair share” when half of the population of the country pays no income tax at all. And before some meathead comes back at me with a laundry list of all the taxes the working poor pay, my response is, don’t the middle class and the wealthy pay those taxes, too?

    The following has been attributed to Alexander Tytler, a British lawyer, although that sourcing may be wrong. It is nevertheless telling:

    “A democracy cannot exist as a permanent form of government. It can only exist until the majority discovers it can vote itself largess out of the public treasury. After that, the majority always votes for the candidate promising the most benefits with the result the democracy collapses because of the loose fiscal policy ensuing, always to be followed by a dictatorship, then a monarchy.”

  • http://www.littledavidobermark.blogspot.com/ LittleDavid

    HisRoc,

    I am not a liberal, I am a moderate. Liberals call me a conservative and conservatives call me a liberal; as a result I self describe myself as a moderate. In specific reply to your comment/question, I am in favor of reducing taxes on businesses and putting more of the tax burden on individuals in a progressive tax system.

    Jay D,

    Yes I argued the rich should pay more but if you go back and read my previous comment you will see I also said the middle class should pay more.

    I am in favor of returning tax rates to what they were during the Clinton Administration.

  • Jay D

    Another pissed off taxpayer offering not much more than a rant, which is certainly your right, but about as helpful as spit.

    NHCopperhead, a simple change in the tax code will fix your beef – make ALL income above $XX,XXX.00, regardless of source, subject to federal income tax. I believe that was the model in Abe’s day; it worked just fine & is completely in line with other codes that tax private disability and SS incomes.

  • Jay D

    LittleDavid, how ’bout we try something new and ask Congress to spend less? Or are you saying the government needs more than a third of my income to function. If so … again, what’s your number. Let’s talk in specifics please. What, exactly, does “more” mean?

  • http://www.littledavidobermark.blogspot.com/ LittleDavid

    Jay D,

    How about this? You’re going to have to do some research because I can not explain it with comments alone. I am in favor of the “Fair Tax” as long as those who earn above and beyond about $250k still have to pay a graduated income tax on earnings beyond that threshold (indexed to inflation).

  • Jay D

    Little David, no research required as I’m somewhat familiar with the Fair Tax proposal, which essentially does away with loopholes, the IRS, and personal & corporate taxes and replaces federal tax revenue w/ a consumption tax on goods and services. So …you want one tax system for ‘the rich’ and one for – the rest of us? Class warfare at its very finest! What is it about rich folk that you would even speculate treating them in ways you would NEVER regard as fair or equitable … for any other group/class of Americans?

  • http://www.littledavidobermark.blogspot.com/ LittleDavid

    Jay D,

    Didn’t even Abraham Lincoln include a higher tax rate for the wealthy in his income tax?

    I am going to defend a progressive tax code which I personally describe as being part of the American Way. Anything but a progressive tax code is un-American.

  • Jay D

    LittleDavid, yes. Abe imposed a higher rate for higher income earners – that’s not the tax plan you suggest. You support replacing our current tax system w/ a consumption tax system (FAIR TAX PLAN)… and then hitting the rich (who will pay much more than you/I under the Fair Tax proposal because they typically: a)purchase MORE goods/services and b)purchase more expensive goods/services) with an ADDITIONAL tax (INCOME) reserved ONLY for their class.

    That isn’t a progressive tax (graduated tax rates rise w/ earnings); it isn’t remotely close to Lincoln’s plan; it IS unconstitutional. Perhaps you should hit the books again?

  • John Jackson

    Great Article Leslie!

    I believe the true question is whether you’re a Collectivist or an Individualist. If you’re a full-blooded Collectivist, you’re in the likes of Lenin, Stalin, Mao and Hitler. They sacrifice a few for the greater good of the whole, whether it was race, class or affiliation (or maybe the elite, wealth & educated). It’s all a matter of how much government, but it is also a slippery slope in which we see spiraling out of control.

    Individualists believe government’s role is to protect an individual’s rights, against the lynch mob. They create an environment that allows for the free market to prosper.

    So, where do you stand in this debate? It looks like a lot of people here stand with Mao, Stalin and Hitler? Me, I stand for a court system that rewards fairness through the eyes of the law (a Republic) and political class that creates an environment where my businesses can grow.

    Milton Friedman says it best:

  • http://www.littledavidobermark.blogspot.com/ LittleDavid

    Jay D,

    It is not unconstitutional about a progressive income tax. Go read the 16th amendment. If I am not mistaken, right after 16th amendment was ratified, an income tax that ONLY the wealthiest paid was passed. Under my plan, this would once again be fact.

    There is nothing graduated about Warren Buffet paying the same rate of consumption tax as I do. He might pay more in taxes, but he would pay the same percentage. Your logic has flaws.

  • http://www.littledavidobermark.blogspot.com/ LittleDavid

    John Jackson,

    I guess I am in the middle on this in that I stand for the American Way.

    The American Way is where hard work pays off like it should but snot nosed rich kids are not allowed to grind the lower class under their boot.

  • Jay D

    LittleDavid, you are completely all over the map but I understand where you want to get to … “We favor an income tax as part of our revenue system, and we urge … Congress to levy and collect a tax upon individual and corporate incomes, to the end that wealth may bear its proportionate share of the burdens of the Federal Government.” –Democrat Presidential Platform, 1908.
    The 16th Amendment authorizes AND ALSO requires “…all Duties, Imposts and Excises shall be uniform…”. A special rich-only tax is as constitutional as a whites-only or women-only tax. You may legally tax activities specific to one group (e.g. only drivers pay gas tax; owners – but not renters – pay property taxes), but you cannot tax based solely upon condition of being white, female – or rich.
    Our current tax system IS a progressive system. Higher incomes do pay higher RATES. Unfortunately the bazillion loopholes, credits, and deductions in the tax code dilute the 16th’s original intentions. Of course the wealthy should bear its proportionate share – and the suggestion to return to Abe Lincoln’s plan [originally a flat tax, replaced the following year with a graduated – a.k.a. progressive – tax] offered in my previous post accomplishes that goal.

    “I guess I am in the middle on this in that I stand for the American Way. The American Way is where hard work pays off like it should but snot nosed rich kids are not allowed to grind the lower class under their boot.” LD, your concept of the American Way is grossly disfigured by your bitterness.
    The next time you walk historic Williamsburg, visit a CW battlefield or college campus, use library or small-town hospital services, attend church, enjoy access to great art, music, public television, public concerts, etc., remember – NONE of these – and more! – can or would exist (nor would the jobs and community prosperity they support) WITHOUT those snot nose rich kids you detest. On this topic, my friend, you are simply another bigoted, small-minded, uninformed, angry and dissatisfied man. American Way? Not even close.

    BTW – You might want to check out the facts before you toss out that Warren Buffett tax rate nonsense again. http://plancksconstant.org/blog1/2007/11/warren_buffet_is_an_idiot.html

  • http://www.littledavidobermark.blogspot.com/ LittleDavid

    Jay D,

    I believe the 16th amendment states:

    “The Congress shall have power to lay and collect taxes on incomes, from whatever source derived, without apportionment among the several States, and without regard to any census or enumeration.”

    I do not understand where you come up with the additional requirements you claim that are not included in the text.

  • Jay D

    Apologies for the typo LD, meant to write …
    “The 16th Amendment authorizes AND [the Constitution] ALSO requires” See Article 1; Section 8; Para 1.
    Sure miss the old site format’s edit feature!

  • Steve Vaughan

    Sorry I was away from the computer yesterday, this developed into a pretty interesting conversation.

    Both Democrats and Republicans have part of the answer on what needs to be done with taxes.

    The GOP is right about cutting the corporate tax rate. Having a corporate tax rate as high as ours just incentivizes mutli-nationals, like GE, to move profits offshore and report them in countries with lower rates. The corporate tax rate should probably be cut in half.

    In conjunction with that, however, we should do something that the GOP does not favor. We should tax dividend income and realized capital gains at the same rate as income. There’s really little justification for treating them differently. Income is income, whether it’s earned through investing or from working for a paycheck.

    We should also probably roll back the Bush tax cuts for those making over a certain amount, whether it’s $250k or $500k or $1 million. There’s really no justification for those cuts, which only drive up the deficit. This would bring the top rates back to what they were during Clinton’s term. As I recall, the economy did alright then. The idea that the top tax cuts generate jobs is just proven to be false. Our economy went through the greatest boom in its history — the greatest boom in all history — between the end of WW II and the mid-1960s when top tax rates were much, much higher. And we created more jobs in the ten years before we adopted the Bush cuts than we have since.

    We should maintain the Bush cuts for those making under $250K. Those are stimulative in that they put money into the hands of people who will spend it.

    Because, although HR may be tired of hearing it, it’s a fact that the portion of the nation’s wealth held by the very wealthiest Americans has steadily increased over the last 30 years and that income disparity has reached levels typically seen in third-world banana republics.

    Class warfare has traditionally had little appeal to Americans because the American dream was that you too could be wealthy. And if not wealthy, you could at least provide your family with a comfortable life if you worked hard and followed the rules.

    That’s the case for fewer and fewer Americans.

    The pendulum of political power in the country has moved too far in the direction of the rich. We’re in danger of losing our “classless” society to an ogliarchy.

  • Jay D

    Welcome back Steve. Related to the tax topic, the historical back-story on 16th is interesting and, IMO, a cautionary tale of American’s first class war. Here’s the short story version:

    Before income tax, the U.S. government derives most of its revenue from tariffs. Congress tries to tax income in 1894 but the Court’s Pollack Decision strikes down most of the law the following year.
    Fast-forward about 15 years. Protective tariffs (50% avg. duty on imports) now keep foreign competition out (only 5% of goods sold are foreign) and trusts allow folks like the Rockefellers & Carnegies to monopolize one industry. Since most of our government’s revenue comes from tariffs, such a low import %age means it’s tougher to support a $1 billion budget. The people realize the purpose of the tariffs isn’t to maximize government revenue (as was promised), but rather to make the Republicans’ friends rich(er). America is in a major class struggle between capital and labor and labor hopes to level the playing field by 1) directly electing Senators and 2) pushing for an income tax that will tax ONLY the nation’s accumulated wealth. The only way to accomplish #2 is to overturn the Pollack Ruling with a constitutional amendment.
    At this time only a minority of Americans have an “income” ; most work for wages. [Note: “income” means unearned income, gains & profits – not our modern definition of salaries and wages.]
    The American people understand that to gain access to the wealthy businessmen’s gains, profits and unearned income –both amendments must pass (and are part of the 1908 Democratic Party Platform).
    The ratified version is written by politicians in terms so ambiguous that 98 years later the American people are ruled by a 65,000–70,000 page tax code -– AND now pay taxes on wages.

  • Steve Vaughan

    JayD: Well, you can take that even further, not only are wages now taxed but they are taxed at a HIGHER RATE than unearned income, profits and capital gains.

  • Jay D

    Steve: Yes, but the tax rate that actually feeds the federal coffers is the EFFECTIVE TAX RATE, which tells a different story than Mr. Buffet’s fairy tale. He actually paid 19% on his 2006 $46.1 million personal taxable income ~ about $9 million and change. If his employees averaged out in the 30% tax bracket as he says, well … the EFFECTIVE federal tax rate for those folks in ‘06 was about 8 – 9%. Mr. Buffet paid 19%.
    According to the CBO [http://www.cbo.gov/doc.cfm?index=5746&type=0&sequence=1], NONE of us pay our tax bracket rate. The rate debate coming from both parties is a red herring; it serves only to pit one American against another.
    The actual facts on investment income tax (source irs.gov/taxtopics):
    -Short term gains: same rate as income.
    -Long term gains: 0% for lower tax brackets/ 15% for everyone else.
    -Gain from sale of Section 1202 qualified small business stock: maximum 28%.
    -Gain from sale collectibles (coins or art): maximum 28%.
    -Gain from sale of 1250 real property: maximum 25%.
    You do the math; looks like Warren’s secretary would pay a higher effective rate on her Berkshire Hathaway dividends that she would have paid on her salary earnings?? Here’s my beef ~ just as in 1910, the American people THINK soaking the rich is the solution. It isn’t. The wealthy (AND the rest of us) will find ways to reduce our tax burdens – regardless of tax system – motivated by nothing more sinister than wanting to keep as much of our wealth as possible.

    The solution, IMO, is so simple:
    -Burn the individual federal income tax code; kill every deduction & every loophole.
    -Replace w/ a progressive flat tax. EVERYONE contributes some %age of income – regardless of income source. The lowest quintiles pay a small %age, which rises w/ income level. NO individual is taxed higher than 18-19% and every household will contribute to the community pot.
    Unfortunately, neither political party will ever push for this (or any other similar model) on behalf of the American public because both parties use the tax code to win support, campaign cash, and votes. [This is why I’m so damn hard on Karen Hurd & Jaime Radtke; the TP is the only group on the near horizon w/ potentially enough clout to demand both parties do right, but only if it ferociously protects its integrity and holds to the Founding TP Principles that promise NON-partisan public education.]

  • Steve Vaughan

    I’ll certainly agree with you that nobody pays the tax bracket rate. I always wonder about that when I see those Tax Day blasts from the GOP about what percentage of our income goes to taxes. If you do your own taxes and you know some elementary school math, it’s pretty clear that those preposterous rates they quote are garbage.

  • Jay D

    BOTH sides are playing loose with the truth – the donkeys play the same games.
    If you really want to know who-pays-what, check out the charts on the CBO link – ‘the rich’(as individual and corporate taxpayers) really do carry MOST of the rest of us in this country.
    This conversation only dealt with personal federal income taxes … one piece of the pie. In 2008, Buffet’s Berkshire Hathaway paid $1.9 billion in federal corporate income taxes on $7.5 billion in earnings – more than 26% in federal taxes alone.
    Don’t take my word on it; find the truth yourself. No excuse today for anyone with a computer to ‘wonder’ about anything.

  • Steve Vaughan

    JayD: I addressed the corporate tax rate above.

  • http://www.littledavidobermark.blogspot.com/ LittleDavid

    Jay D,

    According to Warren Buffett himself, he paid 17.7% of his income in federal taxes while 17 people who volunteered to participate in a survey of his paid an average of 32.9%. These figures include payroll (Social Security and Medicare Taxes) paid by them.

    As for his employees having an effective tax rate of 8 or 9% if their top marginal tax rate is 30%? Well, I am looking at my 2010 tax returns and I note that while my top marginal tax rate is 15% my effective tax rate is 12.15% so I do not understand how you think a 30% top marginal shrinks to an 8 or 9% effective rate. My effective rate does not include payroll taxes (although in my case self employment taxes which are double) either.

    Sounds to me that it is not just donkeys who play loose with the truth.

  • http://www.littledavidobermark.blogspot.com/ LittleDavid

    Oh, and I think this is worth a double post.

    Warren Buffet challenged any of the Forbes 400 richest people to show they pay a higher average tax rate then their secretaries. He has offered 1 million dollars to charity if any of them can prove this and thus far he has not had any takers.

  • Jay D

    LD – I add sources for a reason. If you don’t like the numbers, I’ve spoon fed you the source. Here it is again; it will take you straight to the Congressional Budget Office effective tax rate page – the charts are at the bottom. The IRS site was my other source. And yes, the CBO and IRS are operating under a donkey administration at the moment but still credible sources I think?
    http://www.cbo.gov/doc.cfm?index=5746&type=0&sequence=1

    On your double post, Happy to re-engage on this topic when can bring some meat to the table. Until then, here’s a quick link as a response to your double post and have a nice nite. http://www.cnbc.com/id/21708265/

  • http://www.littledavidobermark.blogspot.com/ LittleDavid

    From your last link, I got that the biggest complaint from the Forbes 400 was about the estate tax.

    From my perspective, the estate tax is non-negotiable. It is the most beautiful tax our nation has.

  • John Jackson

    David – Why do you advocate additional taxes? As the Democrats go toward globalization, you do realize that you are the evil rich? And small businesses is who the Democrats are targeting.

    In addition, why do you have so much faith in politicians? How has that worked out for you so far? Obama is running around Wall Street getting $1.5M, San Francisco yesterday for $3M and Los Angeles tonight for campaign contributions. Glad you feel they are doing such a great job while they spend two of their four years telling you what you want to hear.

    Why is that? What makes you think that our $3.7T federal government is solving our problems? Why do you put so much faith in that government?

  • http://www.littledavidobermark.blogspot.com/ LittleDavid

    John Jackson,

    It is because I believe in America. It is also because I believe in the American Way.

    I trust in a system where hard work pays off like it should, we do not grind the less fortunate under our boots and we love Jesus.

  • John Jackson

    Hard work pays off? So, if a man works hard his entire life, provides a better life for his fellow man and builds up a wealth, you believe that it’s “beautiful” to have a government bureaucrat come in and steal it.

    Actually, why is the Government entitled to the money that man worked hard for?

    You keep throwing around this American Way, what does that mean to you? Does it mean something like Hope and Change? Rather ambiguous.

  • http://www.littledavidobermark.blogspot.com/ LittleDavid

    This thread has already matched the 50 comment limit. Your time has expired and the conversation is over.

  • Jay D

    JohnJackson, again LD is off track – post away.
    If you’ve accumulated nothing to pass forward, the estate tax is ‘beautiful’ cause Uncle Sam can’t take it from you – just those “snotty nose rich kids”.
    It will be interesting to watch if/when the democrats soften on this tax. The Hispanic community – and now the black community -– is building wealth in significant numbers and not at all happy w/ 50% of hard earned life’s earnings exposed to government confiscation upon death.

  • John Jackson

    Thanx Jay D,
    I just wanted that to be the first post people saw when they came to the thread.

    These people have so much faith on the government to help them get jobs. Maybe they’ll receive a Cape when they loose their job. Here’s an example of a government jobs program:

    http://www.hrmorning.com/what-were-they-thinking-superhero-capes-for-the-unemployed

    Unlike those evil business men who actually create a product or service that benefits their fellow man.

  • Jay D

    JohnJ, Ha! Yes, let’s DO spend $73K of our federal funding on a ridiculous AND insensitive program; folks should feel just GREAT about being unemployed. A scarlet letter would have been much cheaper ~ what were those folks smoking!? :)

    And hopefully, access to ‘previous comments’ will come back as BD works out all the bugs on the new site format.

  • Steve Vaughan

    Eh, “land of opportunity” remember? Where everyone can rich if they work hard enough and pull themselves up by their bootstraps?

    So, if Mark Warner’s kids and Paris Hilton can’t make it with a $5 million headstart, screw ‘em.

  • John Jackson

    SV,
    Interesting? Do you consider yourself a liberal? If so, what do you see when you see Mark Warner’s kids or Paris Hilton?

    What I see is a young lady who has been provided a grand life by a grandfather who earned his money, just as I have been given for being born in America. I also see a man named Conrad Hilton who’d never stolen a dollar in his life. Meanwhile, he should be allowed to do with his money as he sees fit. So, he passed it off to his offspring, whether they wish to squander or not is entirely up to them.

    As for Mark Warner’s kids, I’m not familiar with who they are but the same applies. Doesn’t matter who the kids are…it still applies.

    But it seems that you’re OK with the government to come in and confiscate money. Why is that, to make things fair? While politicians are just as rich as Conrad Hilton, Sam Walton or any other (b)millionaire, but they got their money through the conflict of their constituents, on the backs of lobbyists, laundering and so forth. How come you give them a pass? What makes politicians the angels of social engineering? Out-of-Control governments have committed some of the most evil acts in human history.

    So, what do you see government’s role in fixing these problems? Is it to make things fair?

  • John Jackson

    Steve or David,
    What is the role of government?

    If I am paying a government to teach my children and my children aren’t being taught. Should I pay more or should I look at the structure of the company (i.e. Department of Education)?

    If the government is in the business to deliver stamps but the costs increase each year, whether it’s through the stamp or subsidies to the Postal System, for that same exact service, should I evaluate the management of the company?

    In a fair society, these cumbersome, inefficient companies would dissolve but we are forced to fund these monstrosities of processes and cronyism by force of our government?

    So, where is fair in that?

  • http://www.littledavidobermark.blogspot.com/ LittleDavid

    OK John, I’ll bite.

    On the post office, this is one of the specific enumerated powers granted to the federal government in the Article 1, section 8 of the Constitution. The reason postal rates are going up is because of the decreasing amount of snail mail going through the post office due to the internet. As the amount of snail mail decreases, due to the loss of economy of scale, the price to deliver each remaining piece goes up.

    If you are paying to have your children educated and they are not being taught, the first place you need to look at when assigning blame is the local School Board.

  • John Jackson

    David,
    I’ll give you the mandated by the Constitution for the Postal Service. They have monopolized that position in the world of service for a long time because of that. In the real world, when a service becomes obsolete, they either cut jobs, cut services or their services need to evolve. FedEx and UPS don’t seem to have these issues but they have the flexibility to change as demand is needed. So, the reason the Postal Service is under is because I’m not mailing enough packages.

    As for the education system, I keep hearing politicians talk about investing in our future (education). So, when it comes to investing (spending money) the federal government can do it without the need to show results and if I don’t get satisfactory results, it’s the fault of my school board.

    Funny how my so called investments flow through Washington DC, but the results appears to be my fault. Either I’m not mailing enough packages or my incompetent school board is screwing up the education system. If that’s the case…then maybe it would be best if my $$ stayed here.

    What’s going to happen when ObamaCare arrives…damn me for getting sick.

    If I’m going to pay these incompetent bureaucrats to do something, then they should prove that they can do it. Otherwise, they need to get out of the way.

  • http://www.littledavidobermark.blogspot.com/ LittleDavid

    UPS and FedEx have been allowed to compete and cherry pick.

    Can UPS or FedEx provide that if I drop a letter in the mailbox in Miami, Florida they will get it delivered within four days, with rare exceptions, to Tacoma, Washington for a charge of only $0.44? Or how about getting that same letter delivered to the extremely remote areas of the same state for no additional charge?

    The competition to the US Postal service is allowed to cherry pick amongst which services they will provide and which areas they will service.

  • Pingback: FRC Blog » The Social Conservative Review: April 28, 2011