“Question: “I understand that Congress is considering a so-called ‘flat’ tax system. How would this work?” Answer: “If Congress were to pass a ‘flat’ tax, you'd simply pay a fixed percentage of your income, and you wouldn’t have to fill out any complicated forms, and there would be no loopholes for politically connected groups, and normal people would actually understand the tax laws, and giant talking broccoli stalks would come around and mow your lawn for free, because Congress is NOT going to pass a flat tax, you pathetic fool.”- Dave Barry
One of our most distinguished citizens here in Emporia is at it again. I think it has something to do with his age and municipal seniority. Also, it doesn’t hurt that he’s been proclaimed and anointed as a professor emeritus at Emporia State University.
Last Thursday he wrote an op-ed piece in our local rag titled “Taxes are a Must.” Upon reading it I realized that the only thing I needed to read was the title. He made two points in the piece, first that “we would all agree that taxes are a must, if I had my way,” and second that we should have a flat tax accompanied by surcharges on those he deemed to be wealthy. For those making $500,000 per year, an additional five percent would be added to their tax bills. Those making a million would pay an additional ten percent. For those making two million, the good professor advocated a fifteen percent tax surcharge in addition the other income taxes that would be taken in what he called “routine fashion.”
The “routine fashion” comment was especially clever, don’t you think?
In a town like Emporia, where there are lots of folks living on fixed incomes and poverty rates are very high, it’s a very popular idea. For someone like me, a retiree, it should seem eminently fair, but I can’t bring myself into a state of ecstasy over the idea.
Last night I decided to send a response to Mr. Peterson’s proposal, risking the wrath of one of Emporia’s finest. I just couldn’t help myself. My response follows for your edification and enlightenment:
At first blush, John Peterson’s populist ideas on taxes published on August 9th seem quite appealing, especially for folks like me who are retired and living on fixed incomes. Why not add a tax surcharge on the wealthy. After all, “it is our magnificent cultural and economic system which gives them the opportunity to be rich. They should give back.”
The problem with first blushes, though, is that they are much like puppy love, where emotion overwhelms good sense. The first blush says that it’s love. Given time and reflection, the emotions of the moment give way to the truth that it was nothing more than raging hormones.
Must we all pay taxes? Unfortunately, yes. We’re taxed on every hand. The federal government taxes us; the states tax us, municipalities tax us. They tax our income, our purchases, and our homes. They tax gasoline, food, and clothing. They tax the books we read and things that seem sinful like cigarettes or a glass of Zinfandel. If we occasionally eat at a restaurant, they tax the meal. Our check stubs reveal that government withholds additional taxes for government programs like Social Security, Medicare, and Medicaid. They even tax us when we die. By the time they’re done with us they’ve taken 50% or more of the money we’ve earned by the sweat of our brows.
Will Mr. Peterson’s ideas work? No! They won’t, first of all, because they’re not as fair as he would have us believe. It’s easy to say that income and wealth of others should be surcharged. It’s not Mr. Peterson’s ox that’s going to be gored, nor will it be mine. I suppose it might not mean much to some these days, but as it was once observed, the eighth commandment expressly prohibits theft (taking something that belongs to someone else and using it for another’s purpose, agenda, or pleasure) and the tenth commandment also prohibits coveting our neighbor’s house, his goods, or anything that is his or hers.[1] I don’t know how long Mr. Peterson has been hatching his plan, but I do know that the eighth and tenth commandments have been around a lot longer than his notions of fairness, and came from a far more credible source.
Second, it won’t work because it encourages government at all levels to find ever more creative ways to redistribute our wealth. The last thing we need here is more creative ways for government to mug us. And, lest you think they won’t, I’ll remind you of a California case some years ago. The state was plagued by drought and the answer to the problem was conservation. The tool used to conserve was an increase in the water use tax. The more water people used, the higher the tax rates went. It worked so well that it created another problem when the rains came. Lower water usage meant shrinking government revenues. Another creative solution was implemented to solve the problem government had created. A non-use tax on water was proposed. As Orwellian as it seemed, government bureaucrats were going to tax people for something they weren’t using because they were trying to conserve the resource and reduce the tax load government had imposed on them for using too much of it to begin with. Mr. Peterson might think it quite clever to give government ideas on how to tax us more. I don’t. Our representatives are clever enough without his help or anyone else’s.
Third, it won’t get the desired result. Here in Emporia our city’s leaders are seeing that truth painfully played out in the current budget processes. The people of this city are tapped out and many who can afford to leave are voting with their feet. Few people, other than Mr. Peterson, are in any mood to encourage increases in taxes. The recent messages from the public have been “Hold the line.” Hopefully the various entities have gotten the message and taken the pledge.
Fourth, and most important, the power to tax is becoming increasingly the power to control. In 1999, historian Daniel Pipes sent an ominous warning:
“Such immense concentration of citizens’ wealth in the hands of the government carries with it obvious dangers to individual liberty, because the government, by dispensing or withholding its largesse, is able to influence the behavior (and secure the conformity) of a large segment of the population. It is not fortuitous that the foundations of Western liberty were laid when governments controlled but a small fraction of the nation’s assets.”
Prior to the ratification of the Sixteenth Amendment government controlled about seven percent of our gross domestic product and employed about four percent of the total workforce. By 1995, our federal bureaucracy employed nearly twenty million Americans and controlled one-third of gross domestic product. That’s as staggering as it is sobering.
In about a year and a half the page of history will turn and in all likelihood there will be a complete shift of political power in America. I can only imagine how much more of our property and wealth will redistributed when that day dawns.
How could we ever survive without taxes? I suppose we might ask our founding fathers, who funded a revolution without levying taxes. In fact, wasn’t one of the principle reasons we shook off the tyranny of George III the matter of taxation without representation. How did we ever manage to secure our liberty without so much as a hint of an Internal Revenue Service?
If I had my way, unlike Mr. Peterson, I would require him and government leaders at all levels read Laffer curves into the wee hours of the morning, much like sleepless people count sheep. I’d also require them to read the works of economists like F.A. Hayek, Hernando DeSoto, or Thomas Sowell until the ideas sank in. Maybe if that were to happen they’d see that tax reductions actually produce increased government revenues or that our freedoms shrink as government’s share of what is ours is increases.
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