Free Markets, Free People


Tax system is all about redistribution of income

Far be it from me to defend taxation, and I certainly am not one to tout government as the chosen tool to ensure fairness except in treatment by the law, but this is a bit ridiculous wouldn’t you say?

About 47 percent [of US housholds] will pay no federal income taxes at all for 2009. Either their incomes were too low, or they qualified for enough credits, deductions and exemptions to eliminate their liability. That’s according to projections by the Tax Policy Center, a Washington research organization.

Liberals like to go on and on about a “progressive tax system” (so do Marxists, but that’s another story).  But my understanding of a progressive system is that everyone pays, just that those on the bottom end of the income scale pay less than those on the top.  But in reality, in this “progressive system” most of the bottom end of the income scale are paying nothing.

So that explains all the calls to insurance agents, doctors and human resources offices asking “where can I get me some of that free Obamacare?”  We’ve established a defacto welfare class through the “progressive tax system”:

The bottom 40 percent, on average, make a profit from the federal income tax, meaning they get more money in tax credits than they would otherwise owe in taxes. For those people, the government sends them a payment.

“We have 50 percent of people who are getting something for nothing,” said Curtis Dubay, senior tax policy analyst at the Heritage Foundation.

Ironically, when it comes to health care, the “fairness” argument from the Democrats and “progressives” requires an individual mandate since they claim that without everyone paying into the system costs can’t come down (even though that won’t cut costs either, that’s their argument).

But this goes to a bigger problem – a mindset of entitlement.  And that is a mindset that favors the status quo (or its expansion) since it is to the advantage of those who benefit and, one would assume, they find no reason to challenge any program which may expand it.  ObamaCare is simply the latest.

Since they have no skin in the game, it costs them nothing to be complacent and they’re not likely to stir themselves to save that portion of Americans paying taxes from having to pay more to fund the redistribution of income from which they benefit via the “progressive” tax code.  Loot the rich is good where they’re sitting.

Taxes, at best, are a necessary evil with which we fund the necessities of government.  What taxation isn’t, or certainly what our founders never intended it to be, was a vast system of redistribution of income.  The tax system we have is an abomination -  it isn’t “fair”, it’s isn’t “progressive” and it violates the function of taxation as described by our founders.

But it is certainly a handy tool for big government progressives with which to grow their constituency and pad their vote counts.  It must surprise them somewhat that some of those on this plantation they’ve been building for years are, for some unknown reason, attending Tea Parties and protesting the direction of the country.  Even some of those who benefit from the redistributionist status quo understand that it’s just not right and certainly not a principle upon which this nation was founded.

~McQ

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21 Responses to Tax system is all about redistribution of income

  • Well, the FICA tax is an income tax both because of how it’s structured and how the money is used, so everyone is paying something.  Nevertheless, it’s all grossly out of whack.

    • The poor may pay into FICA, but many will end up getting more out than they paid in.

      Where they do pay taxes is in the state and local sales tax. Also, if we go to a VAT, they would pay even more, and not realize it (but then they could bitch about how much everything costs, and the evil corporations who are gouging them).

      Much like VAT is the federal 18 cents / gallon we all pay at the pump–while slamming evil big oil.

  • What part of buying Democrat votes with your money is unclear?

  • These are now two basic groups in America: those who work for a living and those who vote for a living.

    Surely one red flag on that is government workers passing private sector workers in income. Now, government workers do work, but their jobs are not subject to real market forces, so they definitely have at least one foot in the vote-for-a-living camp.

    • These are now two basic groups in America: those who work for a living and those who vote for a living.

      I gotta keep that one, if you don’t mind?

      Now, government workers do work, but their jobs are not subject to real market forces, so they definitely have at least one foot in the vote-for-a-living camp.

      Well, they “work” but it does nothing to increase wealth or our standard of living beyond a VERY few – the remainder only usurp value and destroy wealth (i.e., redistribute it)
       



      • Help yourself to the “some work…some vote” line. I did. Got it from someone else a while back. Best summary of the new arranged class warfare that the Marxist-Democrats have set up. It should keep us busy until the country falls apart.

  • The fact that half the country pays no income tax really doesn’t bother me; After all, as I understand it, the original income tax was only supposed to hit less then 10%, and yet that system was, I think, clearly superior to todays mess. I think you hit the real issue when you talk about how the money is used – when it’s just a transfer from the top half to the bottom half – that’s an issue. When the system is so complex that literally no one understands it – that’s an issue. When anyone feels entitled to a personal handout from the federal government – that’s an issue.
    Personally, I’d be happy if the government cut spending in half and didn’t touch the tax system until the debt was substantially paid down  (… as if that could ever happen).

    • After all, as I understand it, the original income tax was only supposed to hit less then 10%, and yet that system was, I think, clearly superior to todays mess.

      Legend has it some representatives proposed  a 10% cap but Congress said that it would NEVER go higher than that. In less than 17 years it had gone from a 8% tax on 10% of the people to a 75% tax on the top 10%, and have a look at it today. The majority of people pay more in taxes at all levels than they do for housing, cars and food.
      What is Tax Freedom Day this year?

  • Tax payers should be able to slap non-taxpayers at will.  I’m paying for this s*it, I’d like a modicum of respect from these mooches.

  • No taxation without representation…doesn’t that also mean No representation without Taxation is also true?
    The poor do pay other taxes, payroll, for instance, but the problem is a valid one.

    • The poor do pay other taxes, payroll, for instance, but the problem is a valid one.

      Indeed, they get back FAR MORE than they pay in those payroll taxes and they realize the benefits much sooner.

  • Why is it that if I have to pay deadbeats mortgages, health insurance…that I don’t have a lien on their property and a right to their future earnings?

  • You guys are all on point.  Problem is;  you went for the head fake!  I read the article;  agreed with most of it; then it dawned on me. This article is in the AP!  For years they have avoided shining the spotlight into this particular corner in support of the Liberal Narrative principle that our tax system is regressive.  Why all of a sudden are they telling the truth?
    The answer is obvious.  And quite interesting.  How does one generate a move toward getting some legislation passed, but without generating such a strong movement that action is taken on the point that they are stressing in order to get the new legislation passed?
    Game:  Guess what I think the AP is up to by printing this article.  What legislative action are they supporting by presenting it at this time?
    Hint:  I believe that the AP is one of the prime spreaders of the LN.  And, yes, maybe guessing this is too easy.

  • Everybody gets one vote just like today. Then for every $10,000 in Fed taxes, that taxpayer (plus spouse) gets another vote in fed elections. For State elections, every $5,000 in State taxes gets the taxpayer (plus spouse) another vote.

    The dimwits who claims that the wealthy do not pay taxes will be happy because in their bizarro world, the wealthy would not get any extra votes. The rest of us who reside in reality will be happy because we can pull back on the reins.

    I know, I know, this would be a mess^^2 to implement but a fellow can dream.

  • Drat!  I have to do something and therefore cannot wait to see if someone guesses the answer as to what the AP, Reuters, et al are up to.  The following is a quote from McQ’s post on April 7th entitled “Laying the Groundwork for New Taxes”:

    “Given some choices  -cut spending, cut the size and cost of government or increase taxes – it appears it will choose the taxation route.  And Paul Volker is just one of many who will be making the case.  Reuters [my emphasis] reports:

    The United States should consider raising taxes to help bring deficits under control and may need to consider a European-style value-added tax, White House adviser Paul Volcker said on Tuesday.”

    Here is the Democratic agenda as I see it:

    1. Have the usual news sources pump up the VAT while arousing the Right on the unfairness of the current income tax in that it allows the bottom half to avoid paying taxes altogether and to get a $5-7000 annual gift from other (higher earning) taxpayers.
    2. Pass the VAT, but leave the income tax just as it is.  “First, let’s solve our current economic problems by passing the VAT.  We will get to income tax reform later.”
    3. Pass income tax “reform”  legislation like the BFD was passed which quietly raises the limits in the income tax law so that 60% or 70% of the population pays no income tax and gets a nice “refund” every year.
    4. Use the LN at election time to trumpet that the Right is threatening to repeal the  (income-redistributionalized) income tax and take away the annual goodies.
    5. People voting their pocketbooks keep Democrats in power in perpetuity.  It’s awfully tough to give up $5-7,000 a year.  Especially when it is “for the children” or whatever other platitude the LN will offer as the excuse for voting Democrat and preserving the annual gift.
    You say this could never happen in the USA?  See the BFD.

  • Took a spin through “Real Clear Politics” blog before giving up for the day and I see this from the well-known Democratic think tank:

    http://www.brookings.edu/opinions/2010/0407_VAT_sawhill.aspx

    Isabel V. Sawhill, Senior Fellow, Economic Studies
    The Brookings Institution


    “The big challenge, of course, is making all of this politically palatable. What might it take? In my view, the key to success is to greatly simplify the system. Most people hate the current system not just because we all like to keep more of what we earn but also because filing income tax returns makes cleaning out the basement seem like fun. Michael Graetz, a professor at the Yale Law School, has proposed a VAT [PDF] that would replace income taxes for everyone with an income of less than $100,000 a year and would eliminate 100 million tax returns. As April 15 draws nearer, almost everyone can appreciate why this would be a popular step…”
    QED [my emphasis]