The “iron law of taxation” is that the government will tax as much as voters will tolerate![i] There is no other limit to the acquisitiveness of politicians. So why do voters tolerate such high taxes? Clever politicians know voters are very tolerant of higher taxes—just so long as the higher taxes are imposed on others. The “rich” can be taxed without limit, just so long as I am not classified as “rich.” Cigarette taxes can be astronomical, because I don’t smoke. Estate taxes can be confiscatory as long as they are not applied to the estate of my parents. That is why we have unequal taxes—voters are very willing that others should suffer just so long as they don’t.
What should taxes be spent for? One obvious answer: national defense. But freedom from foreign invaders is as valuable to a poor person as it is to a rich one. Should one be taxed more than the other to maintain it? Similarly, being protected from criminals, having air controllers prevent plane crashes, or providing inoculations to prevent epidemics—these government services benefit us all equally regardless of how much income we make. The government would easily have enough income from moderate taxes to pay for such services—which benefit everyone equally. Government programs become expensive and taxes increase tremendously, however, when the goal is not to provide basic government programs, but rather to redistribute wealth.
The blatantly announced purpose of higher tax rates for the rich coupled with a demand that the money be spent to provide tuition grants to the poor, subsidized housing, food stamps, Medicaid, etc. is the very foundation of President Obama’s re-election campaign. His platform is that these high taxes should be spent on programs that citizens who are better off are disqualified from receiving—simply because they have higher incomes. This is based on a belief that it is wrong for some people to have more than others, that wealth should be forcibly redistributed from those who have more to those who have less. This presidential campaign, perhaps more than others, focuses on that one question: Is it the proper role of the federal government to redistribute income from the rich to the poor. Each voter will have to answer that in determining who to vote for.
What is the right federal income tax policy? There are three options: (1) have everyone pay the same specific amount in taxes—say $2,000/year, regardless of how wealthy they are; (2) have everyone pay the same tax rate—say ten percent of income, regardless of how wealthy they are; or (3) do what we do now—intentionally require no income taxes from almost half the voters and high tax rates for the wealthy. Coupled to this last option are demands for more federal grants, subsidies, exemptions from regulations and fees, etc.—almost anything that transfers wealth to those who have less.
Charity for the needy, care for the unfortunate, is an essential characteristic for any person and any society. The question is, should that care be provided by forcibly taking the property of some and giving it to others—as is done through unequal federal taxation? Property rights and freedom from such confiscation are among the fundamental principles upon which this nation was established. The Fifth Amendment of the Constitution states that no person shall “be deprived of life, liberty, or property, without due process of law; nor shall private property be taken for public use, without just compensation.” So important was this principal that it was specifically extended to the states in the Fourteenth Amendment: “nor shall any State deprive any person of life, liberty, or property, without due process of law.” This is a powerful Constitutional declaration of an overarching respect for property. If the government takes your property for a federal purpose it must pay you “just compensation”—the fair market value of what it has taken. If your house is condemned because the land is needed for a federal highway, the government must pay you the fair market value of your house. There was no parenthetical clause in the Fifth Amendment that fair compensation should go only to those who weren’t rich or could not afford to have their property taken because of their lack of wealth. It applied to all citizens equally because there was a bed rock belief that government should treat all citizens equally, regardless of their wealth. The government didn’t have the right to take anyone’s property simply because a majority in Congress voted to do it.
Our Constitution forbids Congress from passing bills of attainder. A bill of attainder is a legislative act whereby the property, even the life, of the unfortunate victim could be taken simply by legislative decree. It was a normal weapon used by winning parties against losers in battles for the monarchy in England. “The Americans themselves used bills of attainder to confiscate the property of British loyalists (called Tories) during the revolution.”[ii] Having used it, and realizing how antithetical it was to freedom, those same Americans prohibited our Congress from passing such bills. Yet now, with income taxes, Congress once again by legislative decree routinely takes the property of classes of citizens. Instead of just compensation, we again have bills of attainder.
So where did the idea come from that property—through income taxes—should be taken from just the wealthy without compensation? Certainly the poor value their lives and their liberty as much as the rich, so the government isn’t providing the rich with any special favors as compensation for their enormously higher taxes. Is the fact that some have gained more wealth than others “just compensation” for demanding more from them? Does their “excess” wealth mean there is no Constitutional limit on what we should be allowed to take from them? If we really believed that, we could easily do away with our labyrinthine income tax system and simply allow the IRS to enter homes and confiscate all property exceeding, let’s say, $250,000. Extra cars, large screen LCDs, jewelry, baseball card collections, etc. could be grabbed and redistributed to those who have less than the $250,000 maximum in total wealth. Is that the real end-game of the redistributionist? It was of Maoist China.
If all voters wanted fairness, if being fair were the real goal of our tax system, then all would demand that everyone pay the same tax. Just as in sports, if one team gets three strikes before their batter is out, so the other team should get the same three strikes. We don’t demand that the Yankees’ batters should only get two strikes because they win so many more games than the Astros. The accusation is that the wealthy are selfish for not supporting tax policies that confiscate their wealth. The truth is, it is selfishness that underlies the demand for redistribution. If the Takers in schemes for redistribution were “Fair” they would insist that everyone get three strikes and that no one else be required to pay more for government services than anyone else. They want the property of others to be taken—without just compensation or due process—but not their own. Is that fair?