What's the harm in higher taxes? [originally "Tax Evasion"]

The New Republic ^ | January 26, 2004 | Jonathan Cohn

[artemiss]

Everybody knew Howard Dean's proposal to repeal the Bush tax cuts would prove controversial in the general election. But during the Democratic nomination fight, too? Over the last few weeks, rivals have attacked Dean for saying that, as president, he would rescind even those parts of the Bush tax cut that are not directed at the very rich. "Some in my party want to balance the budget on the backs of the middle class," John Kerry declared recently, in a typical broadside. "Too many middle-class people are getting pummeled everywhere they turn." Several polls suggest that most Democrats agree: The middle-class tax cuts should stay. Indeed, the political backlash against Dean is becoming so intense that, last week, Dean started talking about introducing his own tax-reform plan, an idea he first floated months ago but seemed to have dropped. ...

[artemiss]

On Sunday's MCLAUGHLIN GROUP, LAWRENCE O'DONNELL, a liberal who hates Dean, said that Dean's candidacy was doomed from the very beginning not because of any gaffes or screams, but because Dean advocates tax increases not only for the rich, but for the lower and middle class as well. He claimed that no candidate has ever won running on increasing taxes across the board.

I have three questions:

(1) Is what O'Donnell claims really true (was Dean's candidacy doomed from the beginning for this reason)?

(2) What are the best arguments against taxes?

(3) What are the best writings (articles and books) that give specific reasons why tax increases, by increasing the size and control of government, harm society and are not only unproductive but positively harmful, evil, destructive of society's institutions?

I know many freepers are well-read and would know the best books and articles for a thorough understanding of this issue (include LINKS if possible).

[.cnI redruM]

(1) Is what O'Donnell claims really true (was Dean's candidacy doomed from the beginning for this reason)?

I would say yes. No one trusts the ability of government to spend the money well. When you hand someone money, you hand them power. No one gives power to someone they do not trust.

(2) What are the best arguments against taxes?

a) The individual taxpayer will not receive a viable benefit from the money they spend. The taxpayer has to receive a minimum of $1 in benefit for every $1 they are taxed, or the taxes become an economic penalty.

b)(related to a) People who are taxed the most heavily are encouraged to behave in unethical, dishonest ways to keep their money from being heavily taxed.

c) Laffer demonstrates that tax avoidance becomes so effective that higher tax rates actually reduce the amount of revenue a government receives. The hated Laffer Curve portrays the revenue generated by taxation as a parabolic curve with a global revenue maximum well below the approximately 40% rate that Howard Dean would like to enforce on high income tax payers.

d) On a personal level, rich taxpayers get offended when John Deadwards argues that they live in some other America and need to be punished. Deadwards seems to be forgetting that The Caymen Islands are having much better weather right now than the Great State of Carolina.

When you cut to the chase and get past the Parson Weems horse-hockey, the very rich, who drive our economy, will go drive someone else's economy if our government becomes too large of a pain in the rear.

[jslade]

Isn't it ironic that Russia, Ukraine, and other former members of the Soviet Union have adopted Steve Forbes flat tax on income and yet the United States is still saddled with Karl Marx's progressive income tax.

[MegaSilver]

I'm just getting into classic political philosophy, and I'm starting off with The Conscience of a Conservative by Barry Goldwater. It's an excellent book, written in 1960 about how the government had overstepped its constitutional boundaries and why we were having a conservative movement at all: namely, to preserve the authority of the constitution.

A couple of the issues are a bit archaic (farm subsidies, "The Soviet Menace"), but it's still good to look back on them and take advice for future endeavors. Interestingly, though, almost everything he charged about the government and the two political parties in 1960 is relevant today. (My favorite is his charge that the Republican Party had failed to translate its rhetoric of less government into action and thus was hardly being the effective counterbalance to the Democratic Party that it could have been.)

[mabelkitty]

Being a Gen'Xer, I will never see my social security - should I wait and sue in a class-action lawsuit and wait until I die?

Or should I sue for my money and the right to invest it now?

Isn't this basically what all taxes are - disguised as helpful programs that benefit all? Well, I take what I pay out and subtract what I get from government - I lose each and every year, as I don't use. My roads haven't been updated in decades, I don't have children in school (yet I pay for the education of the children of others) etc.

Give me my money, and I can do more for less.

[MegaSilver]

Isn't it ironic that Russia, Ukraine, and other former members of the Soviet Union have adopted Steve Forbes flat tax on income and yet the United States is still saddled with Karl Marx's progressive income tax.

It makes a lot of sense. The U.S. hasn't had to deal with flat-out Communism. If we had, maybe people today wouldn't have their heads so far up their cracks that they were voting Democrat.

[mabelkitty]

Germany is in the process of cutting social programs and following a budget agenda similar to what Bush did last year.

[Glenn]

If you can throw a rock, you can have an opinion on taxes. The enormous body of evidence 'fer and 'agin taxes only leads to more arguing about it.

What needs focus is where that money goes. I heard on 60 Minutes last night that state government pension funds, alone, control $7 trillion dollars in assets. One can only imagine what it is for localities, the federal government and the freaking post office.

A cop from around here can retire pretty comfortably at 50 with 20 on the job. And the argument for increasing taxes at the local and state level was centered on "pension funding obligations" for the police, firefighters and sundry other government employees.

[meadsjn]

Whatever you're going to do, do it before you die.

[jimkress]

Dean's tax 'reform' plan:

1) The Government will take all your money from your paycheck via tax deductions.

2) Upon request, the government will decide how much they will send you back for your personal use.

3) You will get your check 3 months later, give or take a year.

[artemiss]

Where I live we have volunteer firefighters. Do government employees, full-time and paid do a better job?

Also: Is it possible to privatize the police functions? has this been tried and if so has it worked?

[artemiss]

Aren't there reasons to oppose tax increases/taxes beyond the fact that the government skims money off the top? It seems to me that the more you feed government, the more control it gets over your life. Those who are not rich want to soak the rich to get what the rich have. Since the wealthy are always vastly outnumbered, won't they always fall victim to the majority? If that is ok, then it would make it ok in their minds to steal from the rich, not just tax the rich. So is there anything inherently wrong about unevenly taxing the rich; anything inherently wrong just as there is with stealing?

[goodnesswins]

Isn't it funny that some people would seek out the BEST DEAL in the world, by reading ads, going to sales, etc, but would NOT blink at paying the gov't taxes, instead of keeping the money themselves. (But, then, shopping for medical care is a little more cerebral than shopping for the next Barbie Doll.)

[MegaSilver]

Is it possible to privatize the police functions? Has this been tried and if so has it worked?

Vigilanteism?

[MegaSilver]

Aren't there reasons to oppose tax increases/taxes beyond the fact that the government skims money off the top? It seems to me that the more you feed government, the more control it gets over your life.

If I'm not mistaken, Goldwater's book touches on this sort of thing. Again, I highly recommend The Conscience of a Conservative. :)

[artemiss]

Your answer (if I interpret the colorful language) seems to reduce to the idea that tax laws inconvenience the rich to find ways to avoid paying them, and that they end-up producing less revenue for the gov. Is that it?

[artemiss]

Thanks for the pointer on this; it's been a while!

[Little Ray]

1) Is what O'Donnell claims really true (was Dean's candidacy doomed from the beginning for this reason)?

No. The top 50% of income earners pay 95% of the taxes. Dean can propose increasing taxes "across the board" and get most of the bottom 50% (who still won't be paying taxes) and some guilt ridden liberals to boot.

(2) What are the best arguments against taxes?
It ain't their money.
What they take is largely squandered.

(3) What are the best writings (articles and books) that give specific reasons why tax increases, by increasing the size and control of government, harm society and are not only unproductive but positively harmful, evil, destructive of society's institutions?

Anything by Milton Friedman. The Wealth of Nations by Adam Smith.

[wayoverontheright]

What are the best arguments against taxes?

Increasing taxes HELPS the economy the same way in which WITHDRAWALS help your bank account.

The graduated income tax punishes those who sign your checks, and discourages the purchase of your labor and/or your products, thereby CREATING more poor people.

[Little Ray]

San Francisco had a plan with private police: they were paid by property owners to patrol and watch their properties, shops, etc.