A Divided Society
Carolyn Day
The media consistently tells us how divided we are as a nation and how the divisions among is are increasing. If this is the case, it would serve us well to ask a few questions as to why and how this happened.
If we are more divided than ever, and I would submit that we are – why? One of the reasons can be found in the the latest news about who pays taxes in this country. Just last week, we were told that for 2009, 47% of Americans will pay no federal income tax. According to the non-partisan Tax Policy Center, original estimates for 2009 were that 38% of Americans would be exempt from federal taxes, but the “$787 billion economic recovery package . . . included a host of new or expanded tax breaks.”
While the burden on some in society was increasing exponentially as a result of skyrocketing government spending, the burden on others was removed completely. Exempting nearly half the population from any liability to support government spending and increasing government dependence, while demonizing those paying the bills, isn’t going to bring us together as a nation.
According to Aristotle, the duty of a mature legislator and statesman is to pull against the natural human tendency to want to undermine the wealthy and preach the redistribution of their wealth. “Demagogues are always dividing the city into two, and waging war against the rich. Their proper policy is the very reverse: they should always profess to be speaking in defense of the rich.” This conclusion came to him as he studied nearly 160 types of constitutions in dozens of Greek city-states, and observed and recorded their successes and failures.
It works to the benefit of a demagogue to have a deeply divided society, to pit the 47% of non-taxpayers against the 53% who labor for their support and their benefit in society. Equalization of outcome leads to a place where eventually, no one can be (or is willing to be) successful enough to foot the bill. After all, it is the 53% from whom the federal services flow, as well as the welfare benefits and “tax refunds,” often EITCs (Earned Income Tax Credits) that aren’t really refunds at all, but cash transfers. We wouldn’t want to explain that to the non-payers, let them just believe it’s all coming from the “government.”
According to economist Milton Friedman, the use of political channels, as opposed to the market, for the provision of resources leads to the straining of social cohesion. The reason for this is that markets allow diversity, while government policies require conformity. In Capitalism and Freedom, he states that the more extensive the range of issues we attempt to solve through political means, the greater the strain on the “delicate threads that hold society together.” He goes on to say,
The wider the range of activities covered by the market, the fewer are the issues on which explicitly political decisions are required and hence on which it is necessary to achieve agreement. In turn, the fewer the issues on which agreement is necessary, the greater is the likelihood of getting agreement while maintaining a free society.
Thus, the more extensive the range of issues attempting to be resolved through coercion (force of law) as opposed to individual choice and market forces, the greater the conflict in society between those who desire conformity to their ideas and those who desire freedom.
Pretty straightforward to me.
April 14th, 2010 at 10:01 pm
If only we could get to a flat tax system where everybody pays their fair share. That’s one thing about lawyer politicians, they love to create complicated bureacracies like the IRS to make sense of their laws. Also, it’s worth mentioning that 1/2 of corporations pay no tax either.
April 19th, 2010 at 7:14 pm
Art Laffer, the man behind the Laffer curve, recently stated that an 11% tax on gross individual income and 11% net tax on corporations would replace every dime in federal tax revenue currently being collected from EVERY source.
That doesn’t take into account the increased business that would flow into the US as a result of competitive corporate tax rates (finally!), which would bring in even more money and help us pay down our debt.
May 5th, 2010 at 1:53 pm
Ezra Klein addressed the canard that 47% of Americans pay no taxes here:
http://voices.washingtonpost.com/ezra-klein/2010/04/do_the_poor_really_pay_no_taxe.html
The gist of it is: if you don’t make much money, you don’t pay much federal tax and it just happens that a lot of people don’t make much money. It’s just a lie to say that they pay no taxes though. Low-income earners still pay:
“”about three-quarters of all American households pay more in payroll taxes, which go toward Medicare and Social Security, than in income taxes.” And that doesn’t even mention state and local income taxes.”
Attempting to raise the tax burden on the lowest income people (who currently pay little or no taxes) as you suggest seems pointless and harmful. I’m not sure why conservatives would advocate something like this.
Higher income people can bear the burden of higher taxes without worrying about being driven into poverty because, well, they have higher incomes. Low income people (again, the 47% of people who pay little or no FEDERAL taxes) are already teetering on the brink of poverty, so why turn to them for more taxes?
Seems pretty straightforward to me.
May 7th, 2010 at 8:12 pm
Hull, I was very clear in the post to state that the 47% number was based on “federal income tax.” Never once did I state that they don’t pay taxes of any sort.
The reason this matters is that the more people who are detached from the means of paying the bill, the more irresponsible the expectations become. When it’s always the “other guy,” it becomes much easier to feel no responsibility for the consequences of the spending. The consequences can easily be seen in Greece, where people have died and millions of dollars of personal property has been destroyed by those who feel entitled to money that isn’t, and never was, there; promised to them by a government that has no resources other than those it taxes from the productive citizens (who, by the way, aren’t the ones rioting while footing the bill).
Fewer people are paying taxes for two reasons: the first being that incomes have decreased for many in this economy (mine is down over 1/2 and I’m still paying a ridiculous amount) but the other reason, as stated in the post, is that the stimulus bill was full of new or expanded tax breaks. That is simply a fact. Over time, the responsibility for paying has fallen more heavily on the higher income-earners, while those at the bottom are relieved of the responsibility of contributing at all, and that is dangerous territory when nearly half the population feels entitled to the services and entitlements without even contributing the widow’s mite.
Medicare and Social Security are completely different because those were set up as retirement-type benefits; every worker pays in, every worker receives benefits proportionally (with SSI). That’s far different than contributing to the government we all share responsibility for.