* Some taxing fantasies
Topics: Democracy
22 Mar 2006
From: Ervan Darnell
[ written for the local LP newsletter ]
"The fundamental class division in any society is not between rich
and poor, or between farmers and city dwellers, but between taxpayers and
tax consumers." -- David Boaz
Taxes should be lower. Whether or not that happens, there is still the
question of how the burden should be distributed. Let me share my
fantasies about how this relates to voting.
The tax system is too progressive. I say this not out of some abstract
sense of fairness or some brutish desire to abuse the poor. Rather, it is
to make sure everyone has some stake in the game. The top 34% of filers
(47.8M tax returns representing 72% of AGI) paid 92.5% of the income
tax[1]. The bottom 50% of adults (15M non-filers + 63M filers under $30K)
paid -0.3% (yes, they are net recipients after "earned" income
tax credits) [2]. That means that about half of the voting population
pays essentially no federal income tax and a firm super majority pays
very little tax. They represent a bloc who can forever vote themselves a
larger handout, perhaps directly in the form of welfare or indirectly in
the form of ever more expensive schools, roads, etc. without any direct
consequences.
My first fantasy is that the poor pay some tax and that the rules of the
game are such that increases in spending affect every bracket. If the
poor want more government, they should "share the pain". This
is not to rig the outcome of the election to see that government programs
are abolished (even though I am often in favor of that), but rather to
make sure that all of the players in the voting game have an incentive
system that drives them toward sensible voting behavior.
My second fantasy is that net tax consumers do not get to vote on how tax
money is spent. The conflict of interest is obvious. Here is my
principle: how the government spends its money should be decided by the
people who pay the bill. This means that, for instance, welfare
recipients and retirees living off social security would not get to vote.
They would not be prevented from voting, they would merely have to forego
their government subsidy to do so. Once they have no conflict of interest
in the outcome, and are voting how their own money is spent, rather than
mine, then they are welcome to vote again. Nor is this to say we should
abolish all welfare. Whether or not that is a good idea is independent of
what I propose: the people giving the charity should have some control
over how much they give instead of the recipients getting to grab however
much they want (or however much their political coalition wants).
Liberals often argue that certain kinds of welfare are an investment. If
that is true, then nothing changes. I would not include government
employees in this as their conflict of interest is diluted by the labor
market setting rates. Though I confess to being tempted by the idea of
the NEA not voting.
My third fantasy is we take this a step further and say that everyone
gets a number votes equal to one + their net tax burden / $10000. That
is, no one gets disenfranchised completely as there are non-economic
issues at stake as well. But for the people footing the bill, the more of
it they pay, the more of it they get to decide upon, rather like
stockholders having votes equal to their investment in the company.
But what about the right to vote? Hayek said "we should not
make a fetish of democracy." I say: vote for what? For self
determination, then there should be a right to vote. But if it is a right
to vote on how much of my property you confiscate and how much of my
labor you demand, as is most of what we vote on these days, then I am no
longer a believer in the right to vote.
I know these are 95%, 99%, & 100% fantasies because the tax consumers
are never going to surrender their control. And, there is a real
political risk in making the vote conditional upon anything, that it will
become conditional upon the wrong thing. But I offer these simply as my
fantasies of how a process change based on the tax code, rather than a
direct policy change, could produce saner government in the long run by
bringing us closer to a willing-participant model.
---------------
[1]
www.house.gov/jct/x-45-00.pdf.
This is for 2000, the most recent data I could find.
[2] In 2000, there were 140M tax returns[1] and 15M adult non-filers
(http://www.taxfoundation.org/publications/show/542.html),
but the final number of voters versus taxpayers depends on the
correlation between joint returns and income, which I could not easily
find.
====================================================
Ervan
Darnell
ervan@kelvinist.com
http://www.kelvinist.com
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