March 18, 2006

What is a Fair Tax?

Carroll Andrew Morse

An unsigned editorial in today's Projo explains how high-tax advocacy is often driven more by ideology than by considerations of what makes good policy...

Some folks say that taxes should always go up and/or stay up to pay for new or expanded public programs. After all, human needs and/or wants are infinite. And many people consider the very existence of rich people a moral and aesthetic affront, and would like to do away with them -- to make everything perfectly "fair," at least economically. Better to have everyone poor. That was tried in communist states. The effect, besides the deaths of millions, was economic paralysis, which wasn't very fair even to poor people, and the creation of the new sole class of rich and privileged people: the ones running the government.
One group that states their ideological approach to taxation is the Institute for Taxation and Economic Policy, cited yesterday in the Projo by the Rhode Island Poverty Institute's Ellen Frank in a letter to the editor arguing that high taxes are not stopping people from settling in Rhode Island. The ITEP's introduction to "Tax Fairness Fundamentals" declares that fair taxation is based on one simple principle...
A fair tax system asks citizens to contribute to the cost of government services based on their ability to pay.
Is ITEP saying that the ideal government operates on the principle of "From each according to their ability, to each according to their need"? I won't go there just yet, but I will point out that, under the ITEP definition, the following system would be considered "fair"...
Everyone gets to keep $1,000 of their own income to spend.

Citizens making $20,000 per annum must pay $19,000 to the government each year.

And citizens making $200,000 per annum must pay $199,000 to the government each year.

Do the supporters of strongly progressive taxation agree that this system meets the definition of fair? Or would they like to offer a few qualifiers and concede that "fair" taxation cannot be defined without also taking into consideration the size and scope of government, and what it is exactly that tax-money is being used to paid for?

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The one truly "fair" tax would be a per capita tax - every (adult) citizen bearing an equal burden in return for the benefits of government. While we shouldn't hold our breath for this one, it would certainly reform government into its proper (and Constitutional) size and scope.

Even the so-called "flat tax" is actually a "progressive tax" - "higher income" citizens pay than "lower income" citizens.

But even this "progressivity" is not enough for the Democrats / Socialists (but I repeat myself).

Though they profess that "the rich" (an level now encompassing the middle class) should pay their "fair share" to fund "essential government programs" - it is clear that to them those programs serve as "cover" as much as anything else, that the use of compulsory taxation to take from one group (even if they worked for and earned it) and give it do another group (no matter how undeserving) is an end in and of itself. After all, this is the intellectual essence of collectivism.

The inherent vice of capitalism is the unequal sharing of blessings; the inherent virtue of socialism is the equal sharing of miseries. Sir Winston Churchill

Posted by: Tom W at March 19, 2006 12:58 PM

The only fair tax is what Laffey says it is!!! He is really the man!!

Posted by: JimboJimbo at March 19, 2006 5:45 PM

There is no fair tax! Fair itself only works in an entitlement environment and anybody who espouses a 'fair' tax identifies himself to me as a socialist.

Posted by: Laxpat at March 19, 2006 5:58 PM