Sorry Sen. Hatch... Taxes Are Not Charity

April 18, 2011

Senator Orin Hatch (R-UT) just doesn’t get it – taxes are not charity. His idea that rich people who recognize that their taxes must go up should "write a check to the IRS” is just plain nonsense… nonsense that we’ve heard before.

Eric Shoenberg, a member of our Responsible Wealth project, was quoted in an AP article this weekend. As a high-income American benefitting from the preferential treatment of income from wealth, Schoenberg recognizes that his taxes are absurdly low. Schoenberg, as part of the Tax Wealth Like Work campaign, called for Congress to raise his taxes and that of other high-wealth Americans to restore fairness to our tax system and avert damaging budget cuts. Senator Hatch was quoted in the same article with a much dumber idea:

Sen. Orrin Hatch of Utah, the top Republican on the Senate Finance Committee, said he has a solution for rich people who want to pay more in taxes: Write a check to the IRS. There's nothing stopping you.

"There's still time before the filing deadline for them to give Uncle Sam some more money," Hatch said.

Schoenberg said Hatch's suggestion misses the point.

"This voluntary idea clearly represents a mindset that basically pretends there's no such things as collective goods that we produce," Schoenberg said. "Are you going to let people volunteer to build the road system? Are you going to let them volunteer to pay for education?"

Schoenberg’s response hit the nail right on the head. But this isn’t the first time we’ve heard this argument. It came up last year when our 2010 Tax Fairness Pledge garnered national attention. Back then, after columnist Dana Milbank of the Washington Post made a comment to the same effect, The Economist fired back with a great rebuttal.

…Here's the thing: taxes are not charity. It would be a bad idea for wealthy people who feel they should be paying more taxes to instead contribute large amounts of money voluntarily to reduce the national debt. The first, less important reason for this is that any individual's contributions would be meaninglessly small; they can make far more difference by using the same amount of money to advocate for higher taxes, as these millionaires are doing. But the second, more important reason is that even if a million millionaires got together and voluntarily donated money in such quantities that it made a measurable dent in the deficit, it would be even worse, because they would be giving license to other people to continue pay less than their fair share of taxes. It's an invitation to free-riding, with the public-minded rich subsidizing the irresponsible and selfish.

…even if America had a balanced budget, this kind of argument would be illegitimate. At a pragmatic level, you can't run government functions on voluntary donations because voluntary donations aren't sustainable. You can't count on them. …strong modern states need to be able to tax their populations to pay for public goods.

At a more principled level, this kind of argument is asocial and irresponsible. It's the argument of a free-rider. …Government spending is collective spending, and the taxes we pay for it are collective taxes. Like it or not, this is collective action, and the arguments we have about it have to be collective as well…

Click here to read the full response to this argument from The Economist. Now, if only we could get Sen. Hatch to read it.

Share:

White the dam check

If you feel the need, write a check to the govmernt. 

Write the dam check

Did you mean "dam" or "damn"?  There is a huge difference.  What are you trying to say?

 

Write the dam check

Did you mean "govmernt" or "government".  If you did mean government, the assumption could be made that you meant the government of the USA.  If that is the case the check would be made out to the Internal Revenue Service.

Balanced Budgets

All the balanced budgets since WWII have one thing in common.  The spending was less then 19% of the GDP.

 

 

Look at it differently

The question shouldn't be how to we raise more taxes to give our Congress more more money to spend as they please. The question should be "What is our government really supposed to do?" Is it supposed to try to be everything to everyone? Is it supposed to absolve each person of being personally responsible for their own life and life choices?

Are we supposed to support someone who sits around, doing nothing, except partying and procreating? Where does it all end?

There has to be a recognition in this country that we (the government by the people for the people) cannot and should not try to be everything for everyone.

The more we grow and spend on infrastructure, the more we have to maintain.  The more we spend on social programs for the poor the more poor we beget. The more we try to be the peacekeeper of the world the more the peoples of those countries we are in grow to hate us. The costs of maintaining all these programs and outreaches are fast becoming more than we can cope with.

It's time to start living within our means with what we have, not what we can borrow or tax. Our forefathers never intended to tax peoples incentive to strive to do well. They never wanted a tax imposed on income. Excise on goods, yes, tax on income, no.

If you have guilt about inheriting money or livng on your investments, give it all to a charity of your choice that you derive no benefit from and live like the rest of us who are struggling, and striving to get where you are sp privileged to be.

Don't work so hard to drag our country in the abyss of socialism where all of us are supposedly more equal because of you're misplaced feelings of guilt over what you have that others do not.

Want have fairer tax? Work instead toward toward a flat tax where all are taxed equally with incentives for those of lower income to strive and do better. Encourage our law makers to quit playing the tax and spend "giveaway game."

Taxes: mandated by the Constitution.

@Look at it differently, you have a very narrow minded view.

Article 1

Section 8 - Powers of Congress

The Congress shall have Power To lay and collect Taxes, Duties, Imposts and Excises, to pay the Debts and provide for the common Defence and general Welfare of the United States; but all Duties, Imposts and Excises shall be uniform throughout the United States.

Amendment 16 - Status of Income Tax Clarified. Ratified 2/3/1913. Note History

The Congress shall have power to lay and collect taxes on incomes, from whatever source derived, without apportionment among the several States, and without regard to any census or enumeration.

A flat tax is the most regressive plan there is and is grossly unfair to most of the population.

Treading Plato, Aristotle, Adam Smith, David Ricardo, Jeremy Bentham and even John Locke (and GWBush) will enlighten you on the reason that every classic worldly philosopher supports progressive taxation.

 Did you know that Mr., Bush and his team said they were proud of making the tax system more progressive, meaning those who make more pay more. Sadly, the also admitted in 2005 that at the very top the system becomes regressive.  The notion at the time and still radical in 1776 – grows from the recognition that there is no legitimate wealth without civilization.  The ancient Athenians reasoned that we are all equal politically and even chose their leaders by lot excerpt for the strategoi (generals and admirals) and they had very strict accountability for office holders.

They also realized that without civilization – without rules to define and protect property, demarcate what is yours and what is mine, without a legal system to adjudicate disputes and enforce decisions and a military to protect that there is no wealth. In his natural state, the jungle, wealth is not created and any wealth obtained can be taken by the next band of thugs.

 Thus, the Athenians reasoned the greater the wealthy you are able to accumulate or build because you are in Athens the greater the burden you should bear so that Athens will endure.

 The richer you are the more benefits you get. Conrad Hilton wrote about this in his will and other writings, understanding that he did not get rich alone, but relied on the whole society to make his riches possible. But he benefitted more from the roads and airports that brought his guests, the courts that protected his property and the military and diplomatic spending that made for peace and he tried to explain this to others.

The fair tax would be a disaster. It would foster black markets to avoid the tax. It would suppress consumption.  It shifts the burden of government down the income ladder. It does nothing to reduce enforcement -- and would make it much more intrusive and ultimately would encourage banning cash and making all transactions digital, giving the government, your spouse and anyone suing you a record of where you were and what you were buying. Hello, Big Brother.

No serious tax economist would go for this silly idea promoted by a radio talk show host whose writings display his lack of thought in crafting his superficially appealing idea.

"It's an invitation to

"It's an invitation to free-riding, with the public-minded rich subsidizing the irresponsible and selfish."

So we are trying to legislate morality now?

On legislating morality...

For the record, our government has always engaged in "legislating morality." We've as a nation recognized that not all things that the free market generates are good for society. We've prohibited child pornography and prostitution even though the free market demands it. The same can be said for meth, crack, and other hard drugs.

That said, I hardly consider the "free-riding" argument a form of "legislating morality." It's more a simple rule of fairness. Taxes don't work if it's a voluntary system where those who feel like it pay, and those who don't... don't, but still get to drive on the roads, use the parks, get police protection, etc. As Oliver Wendell Holmes famously wrote, "Taxes are the price we pay for civilization."