Trampling the Rules of Justice

by: James D Best

“The apportionment of taxes … is an act which seems to require the most exact impartiality; yet there is, perhaps, no legislative act in which greater opportunity and temptation are given to a predominant party to trample on the rules of justice.”

James Madison, The Federalist Papers, No. 10


The progressive mantra seems to be that “the rich can afford to pay a little more.” They might as well blurt out, “No matter how hard you work, we set your allowance.” Statists believe it all belongs to the state anyway, so if they need it, they’ll take it. They need it because we’re in an era of massive spending. Democrats point at Republican excesses to justify their unbridled extravagance, but if the difference is a matter of degree, then degree matters. The 2010 deficit is forecasted at $1.58 trillion. This is $900 billion more than 2009. These are huge, unfathomable numbers. Before Obama, only a couple of people in Cambridge used the word trillion in everyday language.
We’re spending big, and big spending can be financed three ways: you can borrow money, print money, or take money away from people who have it. There are no other choices. The government has already tapped out its worldwide credit line, and in the process, impoverished our children, grandchildren, and probably their offspring. Printing money won’t work because the presses are already running full tilt. That leaves confiscating the earnings of American citizens.
That’s where taxing the wealthy comes in … except that it doesn’t work. Whether top rates are high, low, or in the middle, government receipts as a percentage of the economy remain relatively constant. The average government rake-off from our earnings has hovered between 17-19% since WWIIwhen top marginal tax rates have ranged all the way from 35 to 91%. The rich know how to avoid taxes when they become confiscatory, and those that believe the District of Columbia can suck up more of the nation’s wealth are either stupid, uninformed, or have another agenda in mind.
The bottom line, not so figuratively speaking, is that the best way for the government to increase receipts is to grow the economy so that Uncle Sam’s relatively fixed share is sliced off of a bigger pieand the unshakable evidence shows that cutting taxes is the best way to spur economic growth. All of this is understood by even the densest economist, and the Obama administration has more than a few of those on its payroll. So the government is not uninformed. If we assume that everybody inside the beltway isn’t stupid, then the only remaining option is that they have another agenda in mind.
Democrats say their agenda is about fairness. They claim the rich aren’t paying their fair share because Bush cut taxes for the wealthy. Not exactly a lie, but certainly not the whole truth. Bush cut tax rates across the boardfor every income level. There’s another problem with this narrative: the year before the Bush tax cuts, the top 1% of earners paid 37.4% of all income tax. In 2007, the last year of reported IRS data, the top 1% paid 40.4% of all income tax. More scandalous, the bottom 50% of earners now collectively pay less than 3% of income taxes. So, half the nation pays almost the entire tab for the other half of the nation. If fairness is the issue, the administration has it backwards.
Since neither revenue nor fairness fit, there must be another reason. There is: Demagoguery that advances an unspoken agenda. The Dems are maneuvering toward a value added tax. A VAT is the biggest rip-off of the little guy since we rubbed rocks together to make fire. The bottom 50% of earners spend nearly every cent for food, clothing, and shelter. Yet a VAT increases the price of every necessity. So … to get a VAT, the Dems need to pretend they’re behind the little guy by appearing to soak the rich, all the while giving a broad wink, and multiple loopholes, to their campaign donors.
A VAT is perfect. It changes the game, so the government can gather up more than 18% of the economy. It’s invisible, so most people won’t understand what’s happening to them. A VAT looks like inflation, so blame can be shifted to those nasty corporate types. Last, and most important, the VAT can start low and be raised with ease. A VAT is insidious, ubiquitous, and cancerous. And if the Democrats get their way, it will become part of your everyday life.


 James D. Best is the author of Tempest at Dawn, a novel about the 1787 Constitutional Convention.

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