Is the Tax System Fair?

In 2009 the top 1% of earners (those earning more than $343,927) paid 36.7% of all federal income taxes. The top 10% of earners (those earning more than $112,124) paid 70.5% of all federal income taxes. That leaves only 29.5% of the tax burden for 90% of the tax payers to pay.¹ Is that unfair?

If this was a ten member bowling club that had to pay a $1,000 lane rental fee, it would be as if one guy paid $700, the next four guys in line paid $275 and the other five split the $25. This might be desirable based on their income or ability to pay – that is, from each according to his ability, to each according to his need – or some other concept of spreading the wealth around, but is it fair?

Let’s look at it a different way. Let’s say you and a coworker are paid the same. But what if your boss decided that he was going to take $300 out of your paycheck and give it to your coworker because he had children and therefore had greater needs. Would you be satisfied with your boss telling you that you just need to pay your fair share? And that if you don’t, you are selfish or mean spirited? Giving this charity may be a moral thing to do, but should it be coerced? By a government?

It might be a nice thing to do. It might be charity. It might be giving to one person based on his need while taking from another based on what he has. But it is hard to argue that it is fair.

The different visions of the role of government are at the root of this contention over the “pay your fair share” stuff. The left hates inequity in results more than it loves liberty. It views the role of government as the gatekeeper that should make sure outcomes are the same. And when the left uses the word fair, they often mean equalized.

Obama has said many times that he is not interested in whether things like the Buffet Rule actually increase revenues or help to reduce deficits. As he told Joe the Plumber, he – and by extension government since Obama was running for the top government position in the nation – needs to “spread the wealth around.”

Where this becomes demagogic is when Obama says things like the Buffet the rule "could raise enough money" so that we "stabilize our debt and deficits for the next decade." As has been demonstrated, and as is confirmed by Obama’s Treasury Department’s own numbers, it does little to nothing to stabilize anything. Obama is trying to have it both ways. He wants to make it seem like this is some sort of fiscally responsible thing to do when he knows that it won’t do anything to stabilize deficits. It seems more likely that it is intended to be part of the fundamental change to the American fabric that was promised during the ’08 election.

This was confirmed by White House aide Jason Furman when he clarified the President’s comments by saying that that the tax was never intended "to bring the deficit down and the debt under control." It is “a basic issue of tax fairness.” Well, if having the upper 10% of income earners pay almost 3/4 of the taxes collected isn’t “fair”, what is? Could this be a euphemism for egalitarianism? For political, economic and social equality?

This notion of “fairness” proffered by the left makes no sense in any other venue. But if we understand it to be what Obama himself has said he desires, a fundamental change, then it makes sense. Americanism, in large part, places liberty higher on the list of values than other things such as equality of outcomes. Those that established America valued liberty above other things and they said as much in the Declaration of Independence by identifying life, liberty and the pursuit of happiness. They also identified individualism and small government as important values.

Unless one thinks that the authors of the American founding documents were a bunch of uninformed, ignorant dunderheads, surely they understood the tradeoffs inherent in valuing individualism, small government and liberty above other things with respect to the role of government. And we know they did by their writings. They leaned heavily on a religious people who were elevated by decent moral codes to handle the areas of life not handled by a lean government.

Much of the fundamental change being discussed and implemented today, however, seems to seek to have the government take on the role of churches and charity. Why this isn’t seen as the ultimate breaking down of the wall of separation between church and state might be a mystery until one understands the different visions that motivate the left and right.

The left appears to see its role as that of church and state: the work of the Good Samaritan is the work of the state; charity is to be fulfilled by the state; ensuring that nobody does too well or too badly is the work of the state. It is not that these endeavors are to be shunned or left undone, but one must ask whether charity should be the role of a secular government?

As a recent example of this inclination, Justice Ginsburg, a SCOTUS Justice of the left, told an Egyptian interviewer that she likes South African Constitution (SAC) better than the US Constitution (USC). The SAC claims numerous “positive rights” such as housing, healthcare, food, water, and Social Security. In contrast, the USC has a concept of rights which takes the form that government and individuals will not prevent anyone from taking various actions. That is, the USC defines rights as things that are not an imposition upon others and do not limit the rights of others whereas the SAC defines rights that necessarily must be monitored and provided by the government, that infringe upon the rights of others and require taxation for the provision of certain goods and services. It is a clear example of the differing visions of the left and right; of collectivism and individualism; of dependence and liberty.

So just because the right sees limits to the role of government does not therefore mean that they are craven, hateful and mean-spirited. They just have a different vision about what the role of government is. That it should be limited. That it should honor individuals. That it should champion liberty. They share this vision with many of those who established America in the first place. And that is pretty good company to keep.


¹ http://www.ntu.org/tax-basics/who-pays-income-taxes.html