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The Left and Progressively Higher Taxes, and generations of debt

June 8, 2010
The Left and Progressively Higher Taxes

You can learn a lot from what the left say. And even more from what they don’t. Take taxes for instance.

Liberals have a very amorphous definition of fairness, and a very ambiguous definition of who should pay them. That is something that should leave us all very nervous.

How much, for how long, and to what end should taxes be paid? The left can not answer these questions. If they were to be honest, they would admit they have never even considered them. Still they are unshaken in their certitude of “fairness:” a progressive tax system.

// <![CDATA[
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// ]]> According to liberals, a progressive tax system is simply one in which those making more money pay more in taxes. On its face, this would seem an acceptable standard—one few could dispute. Strangely enough though, the left themselves do not accept it.

The problem is that the standard of making more income and paying more in taxes is a very loose definition of a progressive tax system. And it certainly does not define the tax system that the left seeks.

Even under a flat-tax system, those making more in income pay more in taxes. In fact, under a pure flat tax system, people pay taxes in direct proportion to their income.
Take for example a system taxing income at a flat rate of 10%. An individual making $100,000 annually would pay $10,000 in taxes; an individual making $10,000 annually would pay $1,000 in taxes. The ratios of both income earned and taxes paid are 10-1.

This perfectly meets the left’s shorthand definition of a progressive tax system. It should make liberals very happy. However, the left despise the concept of a flat tax, despite its fitting the definition of fairness they profess.

The fact is that simply having those who make more, pay more is not what the left want at all. They want more, a lot more.

Now it is hardly unusual for the left to say other than what they mean. What they really mean is generally unpopular outside their own circles and would sound unfair by too many not of their ilk.

A truly progressive tax system is one in which those making more pay progressively higher rates—not simply paying progressively more in taxes. That’s a very big and important distinction from what the left blithely say about their tax fairness goals.

The results of such a system can be plainly seen in the U.S. tax system. According to Congress’ official and nonpartisan tax estimator, the Joint Committee on Taxation, the top 3.7% of filers earn 27.1% of the nation’s income. Yet they pay 54.8% of the total income taxes—more than double their income share. In contrast, the bottom two-fifths of earners (39.9%) earn 7.7% of the income and pay negative 2.1% of the income tax (due to government spending in the form of refundable credits).

And even this disproportionate burden, is insufficient. Liberals readily admit to wanting both higher taxes and those taxes to be focused on those earning more. Not only is this audacity of mendicancy enough to take one’s breath away, it also should take us back to the left’s fairness equation.

By defining fairness as a relation between earning and paying, it begs the question of the limits to this linkage. Is there a point at which rates, amounts, and total share in taxes could be increased to a level that liberals would deem unfair? What is the optimal point of taxation for the left?

While the left worries much about the fairness of earners not paying enough, they have apparently not given any thought at all about what too much would be.

For liberals, the system evidently just gets progressively fairer the more earners pay. Their definition of fairness is no definition at all; it is a continuum. Fairness in liberals’ terminology is not simply the definition for a progressive tax system. It is a definition for a system that progressively increases the level of taxation on everyone.

Of course, the left will never explicitly say this. Saying so would be too much of a shock—and too much of a threat—to anyone but themselves. And they really do not need to say it, their actions state it all too clearly.

J.T. Young served in the Department of Treasury and the Office of Management and Budget from 2001 -2004 and as a Congressional staff member from 1987-2000.


Generations of Debt

by J.T. Young
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