Many years ago, when my sister and brother-in-law opened their training and consulting firm, I asked her what was their goal. “I hope to pay more than $1 million in taxes,” she answered. I thought it was the oddest answer.
If the only things we can be sure of are death and taxes, why welcome either? It took me some years to appreciate her wisdom.
Still, though, many do not and continue to loathe paying taxes.
Why do we hate paying taxes so much?
There are three main arguments used by militant groups, such as the Tea Party or Americans for Tax Reform, and other, run-of-the-mill libertarians, to answer this question.
The first suggests that it’s a question of justice: I deserve to retain what I earn. Any tax whatsoever infringes on my individual rights. The government is taking away something I own.
Though there are Constitutional provisions, such as war, to raise money for government needs, a uniform individual tax is a much later addition to the line of reason that remains questionable.
Those making the justice argument also refer to the 16th Amendment (1913), and suggest that not all states ratified it.
A variant of this argument is aimed at inheritance tax, for example, as an outright theft: I already paid once with income tax, why must my heirs pay again for the same earnings when I die?
Nine states have no income tax — illustrating that income tax isn’t necessary to run state government — but charge fees for particular services and have sales taxes.
The second argument says state and federal governments are wasteful. And, so, if taxes are reduced, government size and waste will be reduced. When starved, they will die.
The third, applied, set of arguments concedes that taxes are needed for public goods and services, but solutions about what the simplest and fairest taxation system are few.
Progressive taxation — our current system that relies on the rich to pay more on added increments of their income — is contrasted with a flat tax system — where everyone pays the same percentage, say 10 percent, of their income regardless of how much money they make.
No matter which set of arguments appeals to you, think about the social contract: are you getting more benefits out of paying taxes? What if you paid none? What services can you do without?
Should only use-taxes be paid, as Milton Friedman suggested decades ago? If you use the road, pay a toll. If you go into a park, pay a fee. If you call the fire department, pay a protection fee.
Perhaps this is what the Mafia understood all along, personalizing protection fees, and providing safety nets only for its members.
The focus on reducing government expenditures is always warranted, unless we want to continually be at war.
Will government agencies necessarily become more efficient if their funding declined? From Reagan to Obama, with or without tax breaks, Republican and Democratic administrations alike have routinely failed to shrink the government payroll: about 22 million currently work for the government (about 16 percent of the total workforce).
The U.S. Postal Service — a federal agency, lest we forget — is trying to reduce its $14 billion deficit by $3 billion by closing facilities and not replacing retirees. But as a federally-mandated public service, it has less flexibility than competitors FedEx or UPS.
Will its size shrink? Will service be compromised? What if it were eliminated? Who’d suffer? Should we care about the few rural residents when the many urban dwellers have alternative options?
Instead of focusing on taxes as the root of all evil, let’s focus on government waste, locally and all the way to the federal level: When you see waste, call your representatives, send them an e-mail, or suggest alternatives.
Think about what services you can do without: garbage collection, potholes repair, clean air, parks? What are you willing to pay for individually and take away from government control: sidewalks, street lights, health care, food inspection, burglary alarm?
There are those whose defiance of the social contract is more extreme. They belong to the underground economy or black market. Their unreported income is estimated at around $2 trillion annually with an effect of tax revenue loss of about $500 billion, representing about 10 percent of GDP (of course in other countries, such as Greece and Italy, it accounts for as much as a third of GDP). Would you like to join their ranks?
While you ponder this question, I’ll stay in the social contract, pay taxes and enjoy government services.
I still dream of paying $1 million in taxes and consulting the best tax lawyers in town. Would you care to join my dream?
Raphael Sassower is professor of philosophy at UCCS. He can be reached at firstname.lastname@example.org See previous articles at sassower.blogspot.com