OSSOWSKI: ‘Makers’ and ‘takers’ are what America is all about

By   /   September 20, 2012  /   2 Comments

Yaël Ossowski

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.

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 Yael@FloridaWatchdog.org.

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Yaël has worked as a multimedia journalist in Philadelphia, Charlotte, Tampa, and Vienna, and his writings have appeared in the Washington Examiner, The Gaston Gazette, Reason Magazine, Sunshine State News, Wisconsin Reporter, and PanAmerican Post. He speaks four languages and his hometown is Saint-Hyainthe, Québec. His personal website is Yael.ca and his PGP key is available here.

  • http://www.facebook.com/people/Bob-Leavitt/1044467377 Bob Leavitt

    and yet the progressive income tax only provides 24 percent of federal revenue. If you were to make it 100 percent of federal reenue then moe to flatten it I would applaud you but, that isn;t the case. Payroll taxes contribute 22 percent of federal revenue and when combined weith the number of the 47 percent in the military earning low pay and the elderly retired that 47 percent becomes less than 7 percent. What is odd in this debate is no one mentions the 24000 households making between 533k to 2 million and 3000 households making over 2 million who pay no income taxes nor payroll taxes. Oh the argument that payroll taxes are different is heard but Ronald Reagan chganged that by rolling them into the federal budget and they hae currently paid 2 trillion dollars more than the costs of social security and medicare. That number is no small thing it represents close to 10 percent of all other spending. The fact is a large part of our crisis is we have been undertaxed on the fica scale because we were so overtaxed on payroll taxes and now we have that repayment looming. In actualitity it is the class of dolks with family incomes today of 100-200k who are the overtaxed. Even after deductions they still pay a net payroll and income tax rate of 40 percent. Meanwhile those at the low end like a family of 5 making 60k pay just a payrtoll tax of 15 percent and at the high end as eidenced by Gov. Romney we see a fica rate of 14 percent but no payroll taxes
    Unless payroll taxes are included in the argument your argument is specious, Once it is we can start haing a real discussion of creating a flatter progressive rate but those who support a flat tax now would probably hate that idea because it would mean the end of their mythical thinking that the working poor dont pay taxes and they pay a higher rate than the middle class. Myself I am all for an honest discussion on all taxes that pay for goverment not a quarter of them as well as all spending by goerment not the 2 percent spent on welfare. The ignorance that misrepresented facts like that 47 percent number or the numbers thrown out that include social security and the working poor on food stamps as “welfare” under the guise of entitlements are equally damaging to the discussion as pretending raising rates on those making over 250k is a fix gien the role payroll taxes play in the overall federal revenue.
    Of note and never mentioned is the percentage of revenue from corporate taxes which far more reflects corporate America’s contribution to the goerment after the myriad of write offs, subsidies, deductions and depreciation tools they have to reach their real corporate taxrate not the pretend one posted
    A real discussion on tax policy not a partial discussion thta serves to further the interests of one economic group at the expense of the Nation

  • http://www.facebook.com/people/Bob-Leavitt/1044467377 Bob Leavitt

    dieing battery keyboard sorry for the typo fest the V goes first