Taxes are a good thing. “Every tax,” said Adam Smith, “is to the person who pays it a badge, not of slavery, but of liberty. It denotes that he is subject to government, indeed, but that, as he has some property, he cannot himself be the property of a master.”
We’re tempted to answer Smith with the “We don’t need no stinking badges” quote from the movie Treasure of the Sierra Madre, but the sage of economic freedom has a point. We cannot be expected to surrender rights in our property—that is, pay taxes—unless we are understood to have property rights, and chief among property rights is our right to the property of ourselves. We’re free. Even when taxes are levied by force, first they have to catch us.
Also, taxes caused democracy. When England’s Charles I had to go, crown in hand, to beg Parliament for tax revenues, an elected body was able to claim sovereignty and dispatch with the divine right of kings (and King Charles’s head).
Our own Revolutionary War was precipitated by taxes. “No taxation without representation” was a slogan among the American patriots, a crowd of whom would protest such taxes at the Boston Tea Party in 1773. (And the original Tea Partiers, like their later-day namesakes, were regarded with contempt by well-placed know-it-alls. Peter Oliver, chief justice of Massachusetts, said of Samuel Adams, “He never failed of employing his Abilities to the vilest Purposes.”)
The French Revolution, too, was a result of taxes. Louis XVI needed to raise them and, looking to do so, convened the states-general, a group of delegates from the nobility, the clergy, and the commoners. A cutthroat bunch they proved to be.
We owe a lot to our taxes. But we owe a lot on our taxes too. That is why the most surprisingly good thing about taxes is that they are a good deal.
The American government will spend $4 trillion this year. There are an estimated 308.6 million Americans. We each get $12,956. Sure we mostly get it in the form of Sacramento light rail projects that don’t go anywhere except Sacramento, sugar beet price supports, contributions to the charity known as GM, Afghanistan troop surges, and interest payments on Chinese-owned T bills. We’d rather have cash. But, still, $12,956 isn’t bad.
Let’s say you’re a family of five: a dad, a mom, and three lovely kids. You’re the kind of family we conservatives endorse. You’re getting $64,781 from the government. Even Republicans are on the dole. Dad (conservative women are proud to be stay-at-home moms) will have to make a pile of money to pay $65K in taxes.
Although it is unclear just how big a pile dad will have to make to ensure that he’s feeding, sheltering, and grooming the America of the future rather than sucking her teat.
Democrats in Congress may lower taxes, for fear that more Republicans will be elected. Or Democrats in Congress may raise taxes for fear more Republicans will be elected before Democrats have a chance to enact a tax hike. The president may make all Wall Street profits greater than the 2009 Madoff-investor average return subject to punitive capitation. Or the president may give another squillion-jillion dollars in bailout funds to all Wall Street firms. The tax code is so confusing that every time a federal appointment is made the appointee has to go before a congressional committee to explain how he got so confused that he didn’t pay his taxes. And taxes—and loans to government that will have to be repaid with taxes—come in a variety of types and kinds. Personal income tax receipts fund less than a quarter of federal outlays. Corporate taxes provide a whopping 3.8 percent. Borrowed money accounts for nearly half of what Washington will spend this year. The deficit gap will be closed by revenue from that $9 pack of cigarettes you just bought because thinking about taxes stresses you out.
Natasha Altamirano of the National Taxpayers Union did some complicated mathematics and said, “By my reckoning, somewhere between 85 and 95 million households out of 115 million total have a smaller tax liability than the per capita spending burden.” This means that the breadwinners for between one-fifth and one-quarter of American households are shoveling coal in the engine rooms of the ship of state while everybody else is a stowaway, necking with Kate Winslet like Leonardo DiCaprio in Titanic.
Ms. Altamirano went on to note that those breadwinners doing all the work are also less likely to be receiving any kind of government monetary assistance and are more likely to have their Social Security benefits taxed.
“If we were to compensate for this,” she said, “I imagine that more like 100 million households have a smaller liability than the per capita spending burden.” One hundred out of 115 is 87 percent. Our nation is 87 percent mooch, 87 percent leach, 87 percent “Spare (hope and) change, man?”
It may be worse than that or, depending on how greedily liberal you are, better. Let’s abandon the complicated mathematics of taxation. We don’t understand complicated mathematics. We were liberal arts majors. If we understood complicated mathematics we’d be wealthy hedge fund managers in prison. Let’s go to arithmetic. The U.S. gross domestic product for 2009 has been calculated by the Department of Commerce’s Bureau of Economic Analysis as $14.2 trillion. The Federal Budget, being $4 trillion, is (divide 4 by 14.2, move the decimal point two places to the right, add the thingy over the numeral 5 on your keyboard) 28.2 percent of the gross domestic product. Let’s round down and call it one-fourth. This is our real rate of national taxation. The government makes off with one-fourth of our goods and services. Then the government gives those goods and services back to us. (In a slightly altered form, the way a horse gives the hay we feed it back to us in a slightly altered form.) We each get our $12,956, which is our per-person share of one-fourth of the gross domestic product. But, since the real tax rate on that GDP is 25 percent, each of us has to make $51,824 a year—our per person share of the GDP—to be entitled to call ourselves a taxpayer, not a tax vampire. And we have to make $259,120 a year if we’re supporting a family of five.
Slightly confused by this? Democrats always have been.
How many American households make a quarter of a million bucks? The president’s does, and with only two kids. The president is taxing himself. Good. But the rest of the U.S. government’s operating expenses are being funded by paycheck withholding on Conan O’Brien’s NBC settlement. Plus there’s all the money the government has borrowed by taking out a second mortgage on North America, which will soon have the Treasury Department calling the toll-free number for the “debt restructuring services” advertised on late night TV.
The gross unfairness of America’s tax system won’t lead to class war. Or, if it does, the war will be brief. There are 300 million of us Sponge Bobs and hardly any of the sucker fish we’re soaking. On the other hand, young people—with no dependents except their Twitter pals—have to earn only double their age to be ladling gravy to Uncle Sam. They could turn on the government if they started thinking about this (or anything).
The rest of us? We’re in the clover. True, we have to “give” 25 percent of our workweek to the IRS. That’s ten hours—all of Wednesday and half of Thursday morning. But it’s still a good deal and doesn’t really leave us overburdened on the job. Nothing gets done on Monday and Friday anyway. Tuesday we had to go pick up our kid from school because a peanut was discovered in the food dish belonging to the fifth grade’s gerbil and the whole building had to be hypoallergized. On Thursday, after an early lunch, we left a full cup of coffee in our cubicle and draped our suit jacket over the back of our chair, so it would look like we were around the office someplace, and caught a Nationals game. We don’t have to worry that out-of-control federal spending or an insane tax structure will wreck our lives. We’ve all got government jobs.