Dangers of No Tax Liability

by | Sep 15, 2004 | POLITICS

In last week’s column, I reported on the Washington, D.C.-based Tax Foundation’s study that estimated that 44 percent of income earners will legally have no 2004 federal income tax liability. The study concluded, “When all of the dependents of these income-producing households are counted, there are roughly 122 million Americans — 44 percent of the […]

In last week’s column, I reported on the Washington, D.C.-based Tax Foundation’s study that estimated that 44 percent of income earners will legally have no 2004 federal income tax liability. The study concluded, “When all of the dependents of these income-producing households are counted, there are roughly 122 million Americans — 44 percent of the U.S. population — outside of the federal income tax system.”

The Bush administration sees removing the income tax burden on Americans at the lower end of the earnings spectrum — families earning less than $50,000 a year — as desirable. When President Reagan successfully got Congress to remove 6 million Americans from the tax rolls, he described his tax reform initiative as one of the proudest achievements of his administration. At the time, I argued that doing so was nothing to be proud about, and I extend that same criticism to President Bush.

You might ask, “Why?” In general, I’ve always held that a tax cut for anybody, at any time, for any reason is a good thing because it keeps more of our earnings in our pockets and out of Washington. But there’s a problem. Removing so many Americans from federal income tax liability contributes to the political problem we’re witnessing this election: class warfare and the politics of envy.

When 122 million Americans are outside of the federal income tax system, it’s like throwing chum to our political sharks. These Americans become a natural spending constituency for big-government politicians. After all, if you have no income tax liability, how much do you care about how much Congress spends and the level of taxation? Political calls for tax cuts fall upon deaf ears. Survey polls reveal this. According to a Harris Poll taken in June 2003, 51 percent of Democrats thought the tax cuts enacted by Congress were a bad thing, while 16 percent of Republicans thought so. Among Democrats, 67 percent thought the tax cuts were unfair, while 32 percent of Republicans thought so. When asked whether the $350 billion tax-cut package will help your family finances, 59 percent of those surveyed said no and 35 percent said yes. Tax cuts to many Americans mean just one thing: They threaten the handouts they receive.

There might be a correction for the political problems caused by large numbers of Americans with zero income-tax liability. But it might be politically incorrect to even mention it. I do not own stock, and hence have no financial stake, in Ford Motor Co. Do you think I should have voting rights, or any say-so, in the matters of the company? I’m guessing that your answer is no.

So here’s my idea. Every American regardless of any other consideration should have one vote in any federal election. Then, every American should get one additional vote for every $10,000 he pays in federal income tax. With such a system, there’d be a modicum of linkage between one’s financial stake in our country and his decision-making capacity.

This is not a far-out idea. The founders of our country worried about it. James Madison’s concern about class warfare between the rich and the poor led him to favor the House of Representatives being elected by the people at large and the Senate elected by property owners. He said, “It is nevertheless certain, that there are various ways in which the rich may oppress the poor; in which property may oppress liberty; and that the world is filled with examples. It is necessary that the poor should have a defense against the danger. On the other hand, the danger to the holders of property cannot be disguised, if they be undefended against a majority without property.”

Walter Williams (March 31, 1936 – December 1, 2020) was an American economist, commentator, academic, and columnist at Capitalism Magazine.He was the John M. Olin Distinguished Professor of Economics at George Mason University, and a syndicated editorialist for Creator's Syndicate. He is author of Race and Economics: How Much Can Be Blamed on Discrimination?, and numerous other works.

The views expressed represent those of the author and do not necessarily represent the views of the editors & publishers of Capitalism Magazine.

Capitalism Magazine often publishes articles we disagree with because we believe the article provides information, or a contrasting point of view, that may be of value to our readers.

Related articles

No Good Reason to Revoke Birthright Citizenship

No Good Reason to Revoke Birthright Citizenship

“All persons born or naturalized in the United States, and subject to the jurisdiction thereof, are citizens of the United States and of the State wherein they reside.” – Fourteenth Amendment to the Constitution

No spam. Unsubscribe anytime.

Pin It on Pinterest