The Less-Than-Great Tax Debate

President Obama and most Democrats are arguing that extending the Bush tax cuts to those who make over $250,000 per year will cost the country $70 billion dollars per year and $700 billion over the next decade. This is an excellent example to highlight how words are used to be misleading and divisive.

First off, a tax cut is not spending and therefore it costs the government nothing. What will cost the government $70 billion per year and $700 billion over the next decade is government programs.  The low estimate for the cost of health care reform, for example, is greater than $1 trillion–that’s one thousand billion dollars–over the next decade.

Extending tax cuts will cost nothing, government spending on the other hand will. So what is the Democratic Party position all about? It is about causing division and class warfare prior to an election so Democrats in office can deflect debate from the real issue at hand, which is their reckless spending that makes the reckless spending of the previous administration pale in comparison.

The genuine debate should be the following: Do we try to raise revenue to pay for current unfunded government spending, or do we cut spending? If we choose the former, then raising revenue should entail increasing taxes proportionally on all Americans (this would still mean the rich pay more as a five percent increase on 300K is 5x more money than a five percent increase on 60K).

This would be the only solution to satisfy the ideal of equality under the law. However, for the majority (those making less than $250,000 per year) to raise taxes on the minority (those making greater than $250,000 per year) is to trample on the rules of justice. For someone else to decide that because someone makes above a certain amount of money they should have their taxes raised is completely arbitrary, and arbitrariness is the enemy of individual freedom.

The famous Scottish political economist John Ramsey McCulloch summarized this objection as follows: “The moment you abandon the cardinal principle of exacting from all individuals the same proportion of their income or of their property, you are at sea without rudder or compass, and there is no amount of injustice and folly you may not commit.”

Contemporary conservative-libertarian economist and political philosopher Thomas Sowell leveled an even sharper attack on the policy: “Once you buy the argument that some segment of the citizenry should lose their rights, just because they are envied or resented, you are putting your own rights in jeopardy — quite aside from undermining any moral basis for respecting anybody’s rights. You are opening the floodgates to arbitrary power. And once you open the floodgates, you can’t tell the water where to go.”

The truth is that it is easier to go the above route – of taxing a minority to pay for programs that benefit the majority – than to make the majority decide whether or not they really support such programs in the first place. At this time, it is likely that the majority of Americans would forsake many government programs that have no Constitutional basis in favor of keeping their current tax rate where it is at. Democrats know this and therefore, they want to stay as far away as possible from the genuine debate.

Unfortunately, the Republican position on this issue is weak at best. They argue that increasing taxes on anybody at this time could slow recovery efforts and ultimately, cause less revenue to be collected than actually expected. This is true enough as higher levels of taxation decrease the incentive for individuals and businesses to earn more income and to undertake entrepreneurial risk. Furthermore, this aversion to risk would likely be heightened due to the present level of economic uncertainty. However, Republicans should argue on principles first, by making the point that raising taxes on only those making $250,000 per year violates the ideal of equality under the law, and throw in the “wonkish” stuff second.

—————

Andrew Foy is a third year internal medicine resident who will be starting his cardiology fellowship next summer. He will be featured in Jonah Goldberg’s new book Proud to be Right: Voices of the Next Conservative Generation coming out October 5, 2010 from HarperCollins LLC. His new book You’ve Got to Stand for Something: Understanding & Restoring America’s Founding Principles will be available on September 30, 2010. To learn more about the book visit www.standupnow.net. He can be contacted at Andrew.Foy@gmail.com.

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Comments

  1. whats_up says:

    Mr. Foy,

    For the GOP or conservatives to try and run on a program of “equality under the law” would be a joke. They are the party that wants to deny a minority of citizens thier rights. Sowell’s quote works both ways. You have a party that still wants to deny gay and lesbian Americans their rights and yet you claim that the GOP should run on “equality under the law”. Seriously have you thought this line of reasoning out. The GOP and Conservatives would have to defend their hypocrisy on a daily basis.

  2. Randy Wills says:

    Thanks, Dr.Foy. Great insight. I love it whan common sense and intellectual integrity pierce the fog of political double-speak.

    The truth will set us free, but one must be willing to accept the truth, and, unfortunately, too much of the public would prefer to remain in willful ignorance by making the battle about ideology (i.e.economic class warfare) rather than reality and conformity to Constitutional principles.

    Randy

  3. Big govt stinks says:

    2nd paragraph

    STANDING OVATION

  4. Anonymous says:

    Can we all just agree,

    The tax code sucks, and those who write it (and ignore it themselves), do also.

  5. Andrew Foy says:

    “What’s_up” asked the following question?

    “You have a party that still wants to deny gay and lesbian Americans their rights and yet you claim that the GOP should run on “equality under the law”. Seriously have you thought this line of reasoning out?”

    No, never gave it a thought, too busy clinging to my gun and bible…

    The Constitution defends negative rights (life, liberty, property). The right to marriage is a positive right or legal right authorized by the state, therefore, the voters (at the state level) get to decide who it can be extended to. Denying homosexuals the right to marriage is not denying a negative right – that would require outlawing homosexuality in general (homosexual acts, relationships, etc…) which would fall under the negative right of liberty and free association – as far as I know, there is no right wing movement under way to outlaw homosexuality.

    Personally, I believe the state should get out of the marriage business all together and leave it exclusively to churches to decide who they allow to marry within their church. However, if a state votes to legalize gay marriage I am okay with that too and I strongly believe there should be no laws passed regarding marriage at the federal level.

    That’s about as principled and consistent a Constitutional argument as one can make.

  6. whats_up says:

    @ Andrew

    “…as far as I know, there is no right wing movement under way to outlaw homosexuality. ”

    You should check out the Montana GOP Platform, it calls for making homosexuality illegal.

    As for negative and positive rights. Most lay people wont understand what you are saying, unless they are active in some kind of governmental class. But by all means spend all your time trying to explain “equality under the law” for only negative rights and not positive ones and see how far that gets you.

  7. Chuck Harrison says:

    The top 25 hedge fund managers each made over a billion dollars last year. They only paid 15% in taxes. Dr foy is totally clueless when it comes to “equality”. I pay a higher percentage in taxes just for SS and Medicare.

  8. Andrew Foy says:

    I am surprised to see the Montana GOP platform…”What’s_up” you are correct. However, I don’t know any conservatives who support that position and it is certainly not the national platform. Despite that, it is irrelevant to the current topic unless your position is: “Because the GOP platform in one state supports a position that violates individual rights, the national GOP or national conservative movement cannot make an argument for anything in support of individual rights without being hypocritical” I think that argument would be invalid.

    Now on to your point about negative rights v. positive rights. It is not too difficult a concept.

    Negative rights define what somebody, including government, cannot do to you.

    The rights to “life, liberty, and the pursuit of happiness” enumerated in the Declaration of Independence and reasserted in the Constitution are negative rights. They protect us from others (including the government) without obliging us to do anything for others, except of course to recognize that others possess the same rights as we and to not violate them.

    Negative rights are both limited and reciprocal. One has, by right, the expectation that one’s life and liberty will be respected, that one will be treated equally under the law, and the right to live as one pleases so long as he does not infringe on the equally protected rights of others. This is more than an arbitrary philosophy; it is thoroughly rational, and is indeed the very bedrock on which civil society and law itself rests.

    In contrast to natural law and negative rights, a positive right can generally be considered legitimate only when it has been created by one’s own actions. State voters ultimately get to decide contracts authorized by state governments so long as they don’t infringe on anybodys’ negative rights.

    Chuck Harrison, please inform me on equality by providing the evidence showing that the top 25, billionaire, hedgefund managers paid only 15% in taxes. You could only know this if you have access to their tax returns – I’m not sure who would have this unless the IRS released this report.

  9. John Buyon says:

    STOP this BS
    about the poor unlucky overtaxed multimillionaires being overtaxed by the oppressive federal government.

    the top 5% own 46% of all wealth in the US
    they pay 47% of all income taxes
    when you factor in sales tax SS tax etc…
    you see that the working people as a percentage of their income pay more then the richest people.
    ie.. clerk making 50k paying 15 k in various taxes amounts to 30%
    “fatcat” banker/speculator/investor making 10 Million in 2006 would pay 15% in taxes because his income would be subject to capital gains tax only even though he would pay alot more in absolute terms than the clerk as a percentage of his income he would pay half as much.

  10. Chuck Harrison says:

    Dr. Foy,

    I really don’t need copies of tax returns

    In November of 2008, 5 major hedge fund managers, George Soros, Kenneth Griffin, Philip Falcone, Jim Simons and John Paulson, appeared before House oversight committee. They testified that they only paid 15% in long term capital gains.

    The managers are allowed to roll back their performance fees into their funds without paying any income tax. After 12 months, they can withdraw those fees and only be subject to a 15% long term capital gains tax. There was an attempt to change the law in 2009, however, it was blocked by the Republicans.

    I do not see any eqaulity in the current tax system. The wealthiest pay a smaller % than the middle class.

  11. whats_up says:

    @ Andrew

    I understand where you are coming from and didnt mean to sound so flippant in my last posting. However how do you square this philosophy: One has, by right, the expectation that one’s life and liberty will be respected, that one will be treated equally under the law, and the right to live as one pleases so long as he does not infringe on the equally protected rights of others.

    If the Republican Party truly believed this we would have no argument over gay marriage. Unless of course you can explain to me how two lesbians getting married infringes on the equally protected rights of others? Otherwise your statment is not true, since you (Conservatives) are not respecting the equally protected rights of others.

  12. Randy Wills says:

    Chuck:

    Sorry, but your comment reeks of class envy. “Equality”, in terms of taxation, can only be achieved by replacing the existing progressive tax policy with a “no deduction” flat tax.

    The only legitimate role that the government has, relative to “equality”, is to be the guarantor of an equal opportunity for each individual to choose their own path to “life, liberty, and the pursuit of happiness” and, in return, require that all individuals share equally in the burden of safety, security, and public services. From that point on, it is up to the individual to determine the outcome of their opportunities and to enjoy the fruits of their own labor.

    All of the other rules of “caring for the least among us” come from within the heart of those who choose to align their actions with God’s plan for mankind as embodied in the Golden Rule.

    Randy

  13. Jeff Schreiber says:

    when you factor in sales tax SS tax etc…
    you see that the working people as a percentage of their income pay more then the richest people.

    Uh, no. Not a chance, chief.

    Will someone please enlighten John about the way our tax brackets work? And how sales tax and SS tax, et al. would be figured in for everyone? I *really* don’t have the time.

  14. Gail B. says:

    Dr. Foy, thank you for beautifully expressing the other subject in my craw! I thought I was going to be able to “unload,” but I saw very quickly that you had a bead on the problem, the lies, the horse apples, and the — well, as Randy Wills put it: “Thanks, Dr.Foy. Great insight. I love it whan common sense and intellectual integrity pierce the fog of political double-speak.” I feel better, and I didn’t even have to write an epistle about it.

    This was simply outstanding–exemplary of the regular, ordinary, day-to-day EXCELLENCE of America’s Right’s writers!

  15. Randy Wills says:

    To “whats_up” @ 10:15 PM:

    I have a question for you, now that you have injected the case of homosexual marriage into the discussion of taxation. Is the relationship of a man and a woman, joined together primarily for procreation and the coninuation of the human race – at least in terms of Nature’s and Nature’s God’s laws – “equal” to, or the same as, two homosexuals, genitally incompatible and incapable by definition, joined together for mutual pleasure?

    I think not, by any means of reasoning that you might choose to employ.

    That being the case, why is it so difficult to cede the term “marriage” to the heterosexual couple and, at the same time, provide all of the economic and societal benefits to homosexuals in the form of a civil ceremony?

    I believe that the unacceptablity of this line of reasoning to homosexuals is that their goal is to establish moral equivalency, not civil equality, which neither nature nor God countenances.

    Randy

  16. whats_up says:

    @ Randy,

    What part of equality under the law did you not understand? We arent talking natural law or gods law, we are dealing in the realm of mans law. That is my argument. If you want equality under the law and are advocating that you are the party that believes this you cant contiue to support inequality under the law when it comes to marriage. I dont make my argument for marriage under any relegious arguments as those will vary as much as Chrisitanity and it’s various relegions do. As long as government is involved with marriage I will continue this fight. Now if you take government out of the equation all together and make us all equal under the law, then relegion is free to do what every each one dictates, however until that time I will continue the fight.

    On a different note but related to your post, why should those bearing children deserve special consideration? Do heterosexual couples who have no wish to have children have the right to be married in your scenario. Why would their marriage be any different than a childless homosexual marriage?

  17. chuck harrison says:

    Randy,

    “Equality” is Dr. Foy’s term not mine. Perhaps you should direct your comment to Dr. Foy.

    In Dr. Foy’s comment above (see Andrew Foy… 7:53PM) he ask me a direct question.

  18. Andrew Foy says:

    @ What’s_up

    Homosexuals can get married if they set up their own church and have someone “marry” them, it just won’t be recognized by the state unless state voters authorize their state government to recognize it. Again, since “state authorized marriage” is not a negative right it does not apply to those “equally protected rights” I mentioned. It is really not a difficult argument. You may disagree with it but you cannot deny the consistency of it.

    Personally, I am inclined to allow gay marriage however, I respect the position of people like Randy who wish to protect traditional marriage and I don’t consider their position biggoted or homophobic. In addition, he makes an excellent point regarding the desire for moral equivalency v. civil equality.

    @Chuck Harrison

    You do need tax returns if you want to extend the argument you’re making to include all taxpayers in the >250K/year bracket.

    Do you think the situation of these 5 individuals you mentioned (one of whom is the biggest financier of the Democrat party and the liberal movement in general) reflects the situation of almost everyone else who falls into the category of making >250K/year? The answer would be definitively NO!

    One more thing, how could Republicans have blogged anything in 2009 when the Dems had a filibuster proof majority??? Something doesn’t add up…

  19. David G says:

    Homosexuals have the exact same rights of marrage as heterosexuals. they can marry a member of the oppisate sex. and a hetro can’t marry a member of the same sex. So where is the difference in rights?

  20. whats_up says:

    @ andrew

    Okay now you have confused me, you say that the rights that are to be protected are life, liberty and the pursuit of happiness. Please explain to me how being able to marry the one you choose doesnt fall under both liberty and the pursuit of happiness?

  21. chuck harrison says:

    Dr. Foy,

    My argument was only with your concept of “equality”. There is no need for me to include the people making $250,000.00. As a matter of fact, if they are paying more than 15% in taxes, that simply validates my argument that there currently is no “equality”.

  22. chuck harrison says:

    Dr. Foy,

    You are correct about the tax issue. The measure I was referring to was actually in 2010, not 2009. Here is a summary from Bloomberg:

    June 11 (Bloomberg) — Legislation to raise taxes on managers of private equity firms such as Blackstone Group LP would also impose higher levies on their shareholders, a move that’s sparking protests from the buyout funds.

    Under the measure, shareholders of publicly traded partnerships would pay ordinary tax rates on a portion of any profits when they sell shares, rather than the lower capital gains rates they pay now. If passed, the bill would take effect in 2011, when top ordinary rates are scheduled to be 39.6 percent and capital gains rates 20 percent.

  23. Andrew Foy says:

    @ What’s_up

    You seem to clearly understand this and are being difficult. You ask:

    “Please explain to me how being able to marry the one you choose doesnt fall under both liberty and the pursuit of happiness?”

    As far as liberty and the pursuit of happiness goes; you can do whatever you want with whomever you choose but you can’t enter into a contract (positive right) authorized by the state unless state voters allow.

    Let’s say I want to receive food stamps but I can’t because my income doesn’t qualify…I can’t enter into that contract (positive right) authorized by state voters. Am I being discriminated against b/c I want to receive food stamps and am barred from receiving them?

  24. Randy Wills says:

    Many, many, years ago, I made the observation, based on the drift of our society resulting in the constant errosion of any moral prohibitions, that “There will come a time when the only thing that one will be allowed to be against is being against something.” I think that we’re there.

    Now, we are all “racists” , “homophobes”, Islamophobes”, “haters”, “nativists”, etc, etc. simply because we would dare to say the racism is not exclusive to the white race, that marriage is between one man and one woman, that historically, Islamism has proven to be incompatible with democracy, and that we believe that a country that cannot enforce its borders is no country at all but rather the “polyglot boarding house” that Teddy Roosevelt objected to. We talk past each other because we will not commit ourselves to the truth and cannot agree on simple word definitions.

    Randy

  25. whats_up says:

    @ Andrew,

    Thanks for the clarification, however we are going to have to disagree. Thanks for the insight however. I did enjoy the article.

  26. whats_up says:

    @ Randy,

    Thats why moral prohibitions are good for running your life, but not so good for running a country, after all who’s morals are we going to use. I am sure that you would want yours and I of course would want mine.

  27. John Buyon says:

    @ whats_up

    I’m sorry to say but in legal terms there is a difference in gay marriage and homosexual activity. and the conservatives are ( if you look at it in only legal,not moral terms ) correct
    marriage is not a private affair it is important to society and thus society should have a say in what defines a marriage. BTW I support gay marriage, and want to legalize it through democratic rather than judicial paths.

    @ Randy

    ” The only legitimate role that the government has, relative to “equality”, is to be the guarantor of an equal opportunity for each individual to choose their own path to “life, liberty, and the pursuit of happiness” and, in return, require that all individuals share equally in the burden of safety, security, and public services. ”

    wait you want equal opportunity?
    why are you against inheritance taxes?
    how is it equal opportunity when a girl born in 1981 in new york to a billionaire hotel operator gets to inherit a vast fortune while being totally uneducated, unskilled, socially useless, and never having worked a full day in her whole life allowed to have a higher standard of living than the Midwestern farmer who has a sick child and now has his family business foreclosed on by the very same big banks that were bailed out by his tax dollars?

    all citizens need to share equally in the societal burdens?
    why?
    those who succeed the most under a liberal free market capitalist system should pay most if not all of the upkeep for running the society that rewards them so handsomely. that is moral.
    if all citizens had to share the burden equally than all citizens deserve the exact same resources… ie the dreaded COMMUNISM you people hate so much.

  28. Gail B. says:

    Whats_up @ 3:20 pm: “I am sure that you would want yours and I of course would want mine.”

    I think–no, I’m certain: Given a choice based upon the intellectual level of your comments and those of Randy’s, I would have to choose Randy’s.

  29. Randy Wills says:

    “whats_up” @ 3:20:

    I’d be surprised if your values are that much differnt from mine. Our methods and means might differ, but I think that we both want the best for everyone.

    As for morals and government, I’m reminded of John Adams, who said “Our Constitution was made only for a moral and religious people. It is wholly inadequate to the government of any other.”

    A “moral and religious people” would not ask nor require that the government enact “moral prohibitions”.

    Randy

  30. Randy Wills says:

    Thanks for the “moral” support, Gail.

    Randy

  31. whats_up says:

    @ Gail,

    Please you have no place to lecture on intelligent discourse. My mother once told me if you have nothing nice to say dont open your mouth. Good advice that.

  32. whats_up says:

    @ Randy,

    You are probably right. If you are ever up Idaho way drop me a line, I will show you the most beautiful state you ever saw.

  33. Harpo Marx says:

    7:26 said “how is it equal opportunity when a girl born in 1981 in new york to a billionaire hotel operator gets to inherit a vast fortune while being totally uneducated, unskilled, socially useless, and never having worked a full day in her whole life allowed to have a higher standard of living than the Midwestern farmer who has a sick child and now has his family business foreclosed on by the very same big banks that were bailed out by his tax dollars”

    Cry me a river. Are you a Hollywood screenwriter? That is blatant Marxism.

  34. Randy Wills says:

    Thanks for the invite, “whats_up”. I’d like to be able to take you up on that sometime, but I already know how beautiful Idaho is, especially up on “the bench” above the Clearwater.

    Randy

  35. Randy Wills says:

    I’m afraid that “Harpo Marx” @ 8:00 AM is right.

    Randy

  36. Gail B. says:

    Whats_up, I WAS being nice. I read what you are arguing for and arguing against. A good friend is teaching me to “be soft.” Jeff can tell you that he can see a change in my comments from when I first came to AR. You didn’t hear what went through my head before I made my comment. In the comment, I was being VERY SOFT!

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