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The American Revolution had one inspirational lament that echoed through the pages of our national history: “No taxation without representation.” For our Founding Fathers, these poignant words meant that the British imposition of taxes was unacceptable without the expressed will of the people. It was an idea that was built into a republican form of government and was as much a British idea as an American one.
In 2009 a new, arguably perverse, view of this proclamation is in vogue: “No taxation with representation.” It is increasingly clear that at least 45 percent of the American people do not pay income tax, yet are key to the election of many representatives. Their votes count as much as the 55 percent who do pay taxes. Moreover, if one relies on the quasi Marxist rhetoric that emanates from Washington, the nontaxpayer has a claim on the assets of others.
In The Republic, Plato argued against democracy because he feared the power of the mob, those free-riders who expect others to care for and attend to them. When their numbers increase to some tipping point, democracy is imperiled.
At the moment one percent of the population pays about 40 percent of the tax revenue for the country. When President Obama talks about “spreading the wealth,” what does he mean? Should one percent pay 50 or 60 percent and, if so, what are the disincentives to wealth creation that will emerge? As it stands, ten percent of the population generates over 90 percent of the revenue.
The influence of high taxation on a minority invariably breeds resentment. But the effect on the large majority is just as significant. For those who obtain benefits without payments, an entitlement psychology unfolds. "It’s my due" say the less wealthy as if wealth itself is a sin. Although it is hard to generalize from a sample of one, I can recall that during the Obama campaign an adherent said she favored the Democratic nominee because he would assist with her mortgage, her car payments and her accumulated debt.
That, in a nutshell, is the spirit of national welfarism, something for nothing. Is this woman concerned at all about the tax burden on others? Is she aware of the disincentives for productive activity? Are the politicians who pander to those who crave a hand-out sensitive to the effect of their policies?
What conceivable interest can this woman have in national tax policy? As far as she is concerned a 100 percent tax is desirable as long as she gets her due.
From my perspective everyone should be taxed. If progressivity is the standard, invert the rate for the poor. Those who have little should pay little, but they should pay something, anything that displays a commitment to the nation and its goals. The negative tax doesn’t demand that sentiment and, as I see it, the nation requires this understanding.
Some have said that there should be a property requirement for voting, a demonstrated stake in the society and a standard that existed before 1820. I don’t think that idea has any chance of acceptance, but I do contend that everyone should pay taxes, whether it's $5 or less – a sum that suggests the individual is a party to the national interest, not merely a free-rider.
In a sense, this gesture is symbolic. It certainly won’t generate revenue sufficient to deal with unfunded liabilities. However, it does send a message that we are in this national mission together. It is time to overcome the belief that a small minority is obliged to address the concerns of a large majority. And it is time as well to suggest that no one is entitled to the fruits of someone else’s labor.
A tax must be perceived as fair and universal. And if the populace wants the benefits of representation, it should display an interest in taxation. Wasn’t that once the American way?
Merle E Ackeret Adds:
Taxes must be kept pleasing to the populace in order to maintain a contented payment motivation. In respect to present-day taxes the populace would like a "soak the rich" program and steps to that effect would appease them, until they learn the price of negative economic growth. Taxes must not be too heavy. Solomon extracted heavy taxes in order to raise Israel to its highest pinnacle of prominence. However, when his successor Rehoboam chose to continue this practice at an accelerated pace, the revolt of the ten northern tribes was the subsequent result. Also, taxes must be adequate, as the Sumerian says, "The city that is weak in armaments, the enemy will not be driven from its gates." Without taxes Solomon would not have had the money to but the cedars f, gold and silver from Hiram with which to build the temple, palace, and other architectural ornations for the land and more, especially the pride of Israel. Herod the Great (circa 6 b.c.) in later times would never have rebuilt the temple or the amphitheaters and the other cultural retreats for the Israeli populace that his reign was noted for, without tax money, but he kept the Israeli populace satisfied enough to forestall revolt for half a century. TAX GROWTH, NOT CAPITAL! This would obviate any counter inflation actions by the Federal Reserve.
It has been said that the fall of every historical democracy has begun with the discovery by the populace that it could vote itself benefits from the public trough.
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