Early on in the 2000 presidential race, President Bush unveiled his plan for a $1.6 trillion tax cut. Back then, the justification was that the economy was in great shape, and the designated beneficiaries were, as Bush put it, “those who paid the bill,” i.e., the better off parts of the population. In the latest round of tax cuts, the justification for another huge tax cut was that the economy is in awful shape, and the White House insists that it will benefit the poor immensely. That is to say, the official justification today is the exact opposite of that from 2000.
Whether the intended tax cut will benefit the poor is a complex question that depends on technical issues pertaining to so-called supply-side economics. There is, however, a more straightforward justification for another huge tax cut, and it is, believe it or not, philosophical. It is that the very institution of taxation is unjust. Perhaps taxation is to some degree a necessary evil, but whenever it is used to effect a top-down redistribution of wealth, it becomes an unnecessary evil.
Taxation is a disguised form of forced labor. If 25% of your income goes to the government, this means that for every 3 hours you work of your own free will, the government sees itself entitled to put you to work for an extra hour, and show up only to collect.
It cannot be stressed enough that in opposing the institution of taxation, nobody means to oppose giving your own money to the poor. But taking someone else’s money and giving it to the poor isn’t. In utopia, there is no taxation, only charity.
So the Bush administration was quite right to seek another huge tax cut, and eagerly so. Where it went wrong was in dancing around these simple points and conjuring up far-fetched rationales for the tax cut, piling up evident lies on the way, and making the whole tax-cut effort look like a greedy scheme of mean-hearted people who are all about getting even richer.
In doing so, the Bush administration is depriving us of an honest and rational public debate on the scope and limits of governmental control of society — e.g., through vast redistribution schemes — and the role of citizenship in an individual’s life; the sort of debate that elevates civic awareness and edifies civil society.
What an honest and rational public debate might have brought out is that by cutting taxes, the government is not stopping people from giving their money away. It only offers them the opportunity of doing so on their own terms. Someone who pays 30% income tax and opposes cutting it to 25% is welcome to set aside 5% of their income and donate it to whatever cause they see fit — education, welfare, whatever. Nobody is telling him or her to give away less than 30% of his or her income. What these people are not welcome to do, however, is coerce their neighbor to fork out the same amount, and moreover for the same causes.
One of the recurrent themes of the tax-cut debate has been the question of how much money will go to the much vilified “wealthiest 1%.” House Democrats have calculated that under Bush’s plan the wealthiest 1% will receive “up to a third” of the giveaway. This strikes many as backward: why should the wealthiest 1%, who need the money least, get a third of it?
One figure is always left out of all these heated discussions: how much of the taxes did the wealthiest 1% pay in the first place? According to a study by the Heritage Foundation, the figure stands at around 35%. If they paid 35%, it only makes sense that this is the share of any tax cut they ought to get back. This, too, is something an honest and rational debate might have brought out.
Democrats also charge that a tax cut is irresponsible at a time of deficit. But for those among us who appreciate limited government, there is nothing healthier to a society than a permanent little deficit. The surplus of the nineties was great to have around, of course, but it also posed a danger. When the government has all this money on its hands, it is bound to feed itself up and expand. The first Bush tax cut, which created the current deficit, was the best dietary regime the central government could have had.
The Bush administration wants a tax cut for all the right reasons, then, but it misrepresents its motivation as wanting it for wrong ones. What it seeks is, in effect, public support based on the right combination of misinformation. This is deplorable, but the tax cut itself should be applauded.
