By Yaël Ossowski | Florida Watchdog
ST. PETERSBURG — Renewed by the efforts of Democratic activists and a leading progressive publication, the national discourse has turned once more to the essential philosophical issue of taxation, a citizen’s most direct, albeit unpleasant, interaction with the government.
At issue is the dividing line between Americans who actively contribute to the federal government in income taxes, and those who do not.
Mathematically speaking, there is a quantifiable portion of the population that does not end up contributing money to the federal government at the end of the year, which GOP presidential hopeful Mitt Romney has rightfully pointed out to be 47 percent.
Washington Post columnist Ezra Klein, playing the role of progressive “wonk,” framed the debate by recently writing that admitting Romney’s assertion would necessarily lead to the “ridiculous myth that 47 percent of Americans are tax-evading moochers.”
Regretfully, Klein and the rest of the punditocracy do not understand this schematic presentation of government finance, of dividing groups into tax payers and tax takers, and have succeeded in using the issue as a wedge to further add flames to the already-evolved animosity between socioeconomic groups in this country.
Plainly speaking, the entire history of the United States of America is riddled with balancing acts between so-called “makers” and “takers.”
One of the largest debates at the founding of the republic was on whether larger states were to take on the debts of smaller states incurred during the Revolutionary War, causing riffs between states such as Virginia and Pennsylvania, which had already paid their debts.
The final compromise, however, was to assume all debts by the federal government, providing a mechanism for establishing future credit and forging a more centralized union of states.
In the decades before the Civil War, many Southern plantation owners and slave holders began to grow wary of the more industrialized north, profiting immensely from heavy tax contributions from Southern states.
“It must necessarily follow, that some one portion of the community must pay in taxes more than it receives back in disbursements; while another receives in disbursements more than it pays in taxes,” wrote John C. Calhoun in 1850, a political theorist and states’ rights advocate who later became vice president under John Quincy Adams and Andrew Jackson.
“The necessary result, then, of the unequal fiscal action of the government is, to divide the community into two great classes; one consisting of those who, in reality, pay the taxes, and, of course, bear exclusively the burthen of supporting the government; and the other, of those who are the recipients of their proceeds, through disbursements, and who are, in fact, supported by the government,” wrote Calhoun.
He classified this distinction as the struggle between tax payers and tax consumers.
Even today, a layout of the American states demonstrates that places such as California, Minnesota and New Jersey contribute much more money to the federal government than they receive compared to states such as New Mexico, Mississippi and West Virginia, which are wholly dependent upon federal spending taken through taxation.
The paradox often stated by progressives is that more conservative “red” states actually receive much more in federal spending than they contribute in taxes.
The core issue remains, however, that a federal income tax is levied upon individuals who earn a bigger salary. That money is essentially used to provide services to those individuals and to the rest who do not pay those same taxes. Or is it?
In 1982, President Ronald Regan tasked the Private Sector Survey on Cost Control, commonly known as the Grace Commission, to identify and pinpoint waste, fraud and abuse in the federal government. The goal of the commission was to recommend remedies that would save taxpayers billions of dollars.
What the commission found quickly, however, is not only was the government inefficient, but it also quickly ate up revenue from federal income taxes on servicing debt and paying states.
The report found that, “100 percent of what is collected is absorbed solely by interest on the Federal debt and by Federal Government contributions to transfer payments. In other words, all individual income tax revenues are gone before one nickel is spent on the services which taxpayers expect from their Government.”
If this was the case 28 years ago, it is more than likely that the problem has only exacerbated today, with a debt that has engulfed the market value of all goods and services produced in one year alone.
At its core, this is enforced inequality at the hands of the government, putting more of a burden upon those who have more resources.
Once progressive taxation is implemented, changing rates based up level of income, it is inevitable that a tax-payer class and a tax-consumer class will emerge.
If either side wishes to calm this debate and extinguish the issue, it’s time to look at alternatives to progressive taxation that subjugate certain groups based upon income.
Wouldn’t that be more of a “fair share”?
Yaël Ossowski is Florida Bureau Chief for Watchdog.org. Contact him at [email protected]
— Yaël (@YaelOss) September 10, 2012