A dangerous circumstance

Tax Day And The Future Tyranny Of The Non-Taxed

Ah, April 15th! I want you to consider that the date means absolutely nothing to 47% of US households as they will pay zero in federal income tax. Yes, state, property and sin taxes still get them, but we are seeing a disturbing trend towards a tipping point where fewer than half of us pay any sort of income tax. Five years ago it was 40% who paid no income tax. By 2012 this could be the first election in which the majority of voters will be able to vote themselves more government largess paid for by a minority of taxpayers. We may soon have to re-jigger the American Revolution’s familiar rallying cry into: “Representation Without Taxation!”

Statistics vary slightly but it can be argued that the top five percent of US households pay 60% of federal income tax. Ten percent account for over 75%. Another two-fifths make up the rest. And half are exempt. And yet…twenty percent of US households get 75% of their income from the federal government. Another one-fifth receives 40% of their financial support from Uncle Sam. Think about what this means in terms of fiscal responsibility down the road. How receptive to cutting taxes which they do not pay, or cutting government spending, from which they benefit, is a majority voting block going to be in the future? Indeed, what does this say about our prospects for economic growth or curbing the size and scope of an ever growing government colossus in the face of a crushing $20 trillion deficit looming on the horizon?

Very soon we may not be merely de-incentivizing economic activity but actively waging war on it.

Obamacare is but the most recent and fiscally insane manifestation of this myopia that now holds sway in the capitol and white house—and has for over a decade regardless of the party in power (in case one thinks this overtly partisan). I am coming to fear that this administration is not about mere “spreading the wealth” as 2008 candidate Obama let slip in a revealing off-teleprompter moment. Rather its aim is to increase dependency upon the state based upon an illogical faith in the judgment of detached federal bureaucrats over the parochial citizenry. It is also about cynically creating a permanent voting block addicted to government hand-outs which will in turn reward politicians with life-time tenure so long as they keep the gravy train of our confiscated wealth flowing. Democracy’s most insidious enemy is the gradual devolution into the tyranny of the majority where 51% of the populace can vote again and again to empty the pockets of the other 49%. Not only is this dynamic morally wrong, this is the death knell for a free and vibrant republic as wealth will inevitably flee to safer havens (or to the black market) taking future prosperity and stability with it. How many of us ever got a job from a poor man?

A lot of harm in the world has been done by intellectuals who started off with noble intentions but little understanding of how the real world operates. Consider the on-going Eurozone’s massive bail-outs of financially distressed states like Greece because, at the risk of oversimplifying, the ballooning costs of its overly-generous state entitlement apparatus eventually overwhelmed its tax base—25% of which has been driven underground. It should be a stark lesson in the mathematical limits of trying to financially engineer social justice…one Washington should watch very closely. Unless, of course, the aim is just the accumulation of raw power through expanding government and manifesting life-time tenures in Congress by robbing productive Peters to pay suckling Pauls in exchange for votes. Then the lessons screaming at us from across the pond are irrelevant.

In the meantime, Happy Tax Day! I’m sure our money is being well spent.