"Progressive" Taxation

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27 Jun 2008 09:33 am

Okay, let's go there. John Schwenkler writes:

...the realities of day-to-day life for many poorer rural Americans, who rely especially heavily on automobile travel and lack real public transportation options, mean that taxes on gasoline are straightforwardly regressive. The wealthy have alternatives: they can, if they live in higher-density areas, take the train or the bus, or they can buy more fuel-efficient cars, or they can switch jobs or telecommute. But those living in tiny houses in rural Alabama and driving tens of miles to low-paying factory jobs have no such options, which means that it is likely that they will end up paying the lion’s share of a gasoline tax in terms of both relative and - perhaps - absolute income as well. If progressive taxation is “immoral” (and does Andrew really think that??), levying especially high taxes on purchases that are disproportionately inescapable parts of the lives of the rural poor is downright evil.

For the record, I was talking about higher gas prices not taxes in the post John mentions. But he does get to a core philosophical disagreement here, one that puts me, I know, far out in right-field. To put it as plainly as I can: I don't believe in a governmental attempt to engineer a substantively "fair" society through taxation. I see taxation as a necessary evil to pay for those few social goods that private individuals cannot provide for themselves. And the mode of taxation, in my view, should be as simple and as market-friendly as possible and should treat citizens equally, irrespective of their incomes. I believe in formal equality and a very limited state, not substantive equality and the welfare state. I know this is pie-in-the-sky, given our current Byzantine tax code and the entrenchment of certain socialistic assumptions in our political culture. I don't expect any radical change any time soon. But I'm not going to enable this kind of thinking without a challenge to it.

So yes: a flat tax so far as possible for as many as possible and no deductions. That's my goal. How that differentially impacts the lives of citizens should not be government's primary concern.

Government's primary concern is to raise money as efficiently and as leanly and as equally as possible. I'm happy with the government then setting up programs to assist the poor, to provide better education for those at the bottom, safety-net healthcare and better policing. i.e. to gear spending toward social ends that might help the poor the most. These are measurable, practical goods. What I'm not happy with is the assumption that tax policy should really be about redistributing wealth, and engineering substantive economic outcomes. Yes, of course, at lower income levels, a 20 percent flat income tax will be more onerous proportionally than at higher incomes. So what? Why should that even concern a government that is not aiming to socially engineer more substantive equality? and the alternative - skewing taxes to target success - is an absurd set of incentives to put into a growing society.

Am I heartless? I hope not. I just don't believe that having a heart is what government should be about. It's what the rest of us should be about. This, of course, is my core disagreement with Obama who does indeed have a notion that government has a right and a duty to take money away from those whom he believes can "afford" it and give it to those who "deserve" it. I don't believe in a government with that much power and that lofty a social goal. It's also in part a disagreement with my friends, Ross and Reihan, who see government as integral to guiding the behavior and lives of the working poor.

Look: I may be perpared to give Obama a shot after the last eight years, which combined the worst parts of the left - "compassionate conservatism" - with the worst parts of the moralistic, authoritarian right. I may even think that many of Ross's and Reihan's initiatives have merit for a political party that wants to build a majority. But my heart lies with Ron Paul. Always will.

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