Representation Without Taxation
Amity Shlaes tells NPR’s Kai Ryssdal that the current tax system reverses the problem that the founders faced.
Taxation without representation. That’s what our nation’s founders rebelled against. Subjects in the colonies were sending money home to the crown without getting say in their own government. The course of U.S. history can be seen as progress by those who are taxed to get representation. Think of women with the 19th Amendment.
Along the way we began to pay out money to groups that paid no income tax at all. There’s Medicare, of course, for senior citizens, even if they never worked; welfare for the poor and struggling, at least through the 90s. And, more recently, there’s the earned income tax credit, a break for low income workers. The credit was designed to make people want to work and to offset their heavy pension payments for Social Security. The result of expanding it, however, is that many people who work don’t pay income tax. Instead, they get money back.
Do we want to help weaker citizens, especially in downturns? Totally. In fact, both parties have plans that relieve yet more taxpayers of their burden. Republicans like payroll tax holidays. And the Obama administration is zeroing out the income tax obligations of yet more citizens.
But a tipping point does come when too many are paying out and too few are paying in. Maybe that tipping point is now. Today, households in the bottom half of earners pay only 4 percent of the income taxes. One tiny group, the top 1 percent, pays close to 40 percent.
There’s an argument to be made here but, sadly, Shlaes doesn’t make it well aside from the catchy turn of phrase. It makes no sense to talk about the percentage of taxes paid by various income brackets without comparing their relative earnings. And it’s unfair to talk about the tax burden while excluding the taxes that hit lower income folks hardest, like the payroll tax and sales taxes.
The better argument for ensuring that everyone pays their fair share of taxes is one that predates the founding of the United States, namely that of stake-in-society. Essentially, what we now term skin in the game. Everyone who gets the right to vote should have some measure of the burdens of society, including payment of taxes, service on juries, answering the call to arms during wartime, and so forth. Under that principle, all adults living in the United States should pay some taxes to the federal government.
Everyone who buys things pays something to state and local governments because of sales taxes. Everyone who draws a paycheck pays into the federal Social Security “trust fund,” of course, but that’s at least theoretically a retirement fund rather than a contribution to the general welfare. Since we fund the federal government primarily through income taxes, we should ask even those of very modest income to pay something, even if it’s essentially a token amount.