Tax rates set to make a social point

Below see a  commentby JE Dyer on a piece by Victor Davis Hansen

I think it might be a way to develop some common ground between liberals and conservatives.

Here’s the deal, and it’s been the deal since we agreed, as a nation, to the percentage-basis income tax. Our very basis for taxing ourselves satisfies not fiscal responsibility but social ideology. WE DO NOT TAX OURSELVES TO PAY FOR GOVERNMENT. WE TAX OURSELVES TO MAKE A SOCIAL POINT.

If we taxed ourselves to pay for government, we would tie taxes to expenditures. We would pay our taxes as we pay utility bills, and we would pay down national debt on an amortization schedule.

But we don’t. Regardless of what we plan to spend — even, in theory, if we planned to spend nothing — we tax people and businesses AS A PERCENTAGE OF INCOME. Think about the implications of this. We act, a priori, as if we owe government a percentage of what we earn and create. The focus is not on whether we need to spend, and what we need to spend on — the poltical focus of our fiscal policy is on the PERCENTAGE by which we tax ourselves.

Imagine a different system. Imagine we paid for what we actually spent, instead of paying a set percentage of our incomes. Imagine if citizens had to remit their taxes by check each month, and the amount depended on Congress’ most recent activities. (Instead, we have payroll withholding, and most people don’t even pay attention to what their federal income taxes come to in each pay period.)

That the individual citizen makes no connection between his tax obligations, and the course of the federal budget, is the biggest reason we have been unable to maintain any sort of fiscal accountability for the last 60+ years.

Since percentage-basis income tax and payroll withholding became our federal tax policies, we have increasingly been heaving our tax dollars, in boxcar lots, into a maelstrom. This will never change as long as we tax ourselves on a social policy, not a fiscal policy, basis.


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