The Tax Man Cometh

Blackadder reminds us that it's tax day (I'll confess, I'd forgotten, having filed back in February) with a quote from the first book of Samuel warning the Israelites that if they choose to have a king they can expect him to confiscate a whole tenth of their income in taxes. As of this year's tax bill, ancient Isrealite tax rates are sounding pretty good to me!

In honor of the day, Blackadder also quotes a range of tax reform proposals.

There I things I like about many of these approaches to reform, simplification and reduction, but for the moment, I'd like to throw out something which might sound odd coming from an avowed conservative: I'm concerned many Americans don't pay enough taxes.

It's not that I want government spending to go up, or that I want to see tax rates raised. I'd much rather see spending down and rates lowered and simplified.

But it does worry me a bit how progressive the tax system has got. That's not progressive as in "liberal", but progressive as in taxing the rich more than the poor and the middle class.

It does seem quite fair for the rich to pay higher tax rates than those with less. After all, someone who makes 1 million dollars a year will experience considerably less diminution in living standards by giving up 30% of his income than someone who makes 25k per year.

However, our current system is so progressive that the top forty percent of tax payers pay 85% of all income taxes, and the bottom forty percent of tax payers pay less than 5%. Now, that's a great help if you're hard up. Three out of the first four years we were married, we actually got more money back from the feds than they'd originally witheld in the first place (due to child tax credits.)

But there are two opposite things that bother me about this situation:

1) Generally, people are much less careful with other people's money than their own. If fifty percent of the American people can vote to fund this, that, or the other thing while knowing that they'll only have to pay ten percent of the cost (and many of them won't pay any) what real sense of responsibility will that foster?

2) Generally, if you pay for something, you own it. If ten percent of the population pays more than half of all income taxes, you can bet that one way or another, that ten percent will end up being the tail that's able to wag the dog. So all populist pretensions aside, I can't help imagining that our "soak the rich" tendencies simply end up putting the rich more firmly in charge than they were before.

It's all very well to worry, but what to do? On that I'm less sure. There are a lot of problems with the current system -- one of them being that unless you spend a fair amount of time staring at your check stub it seems like taxes are all about getting money back every April rather than paying out every time you get paid. (Indeed, most of my coworkers intentionally have extra withheld because "then you get more back".) Witholding makes tax paying comparatively painless.

And there is a certain oddity in collecting taxes from someone so low on the income ladder that you're simply going to have to turn around and give him some sort of payout of equal or greater value in order to keep him off the streets.

But we are a democratic republic, and as such all citizens are expected to share in responsibility for how our government is run. It strikes me as hard to have that if most people do not have much of an experience of what our government costs.