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Make the poor pay more

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It turns out Mitt Romney was more correct then he knew when he said 40% of the country “don’t pay any federal taxes”. A report from the Congressional Budget Office this week contains some interesting data from the 2010 Census. The top 40% of wage earners pay 106% of federal taxes, while the bottom 40% pay a negative 9%. Think about that for a minute, a minority of the population is paying more than the entire federal tax burden while for another 40% the tax code is essentially direct welfare. This is not sustainable and making the so called poor pay more is the only solution.

When a large segment of the population can essentially vote themselves other people’s money they will do so. When huge portions of the country feel protected from the deleterious effects of deficit spending because they are not paying for it, they will have little interest in keeping spending at sustainable levels. Eventually the economic havoc wrought by continuously expanding deficits will take everyone down, but explaining long term harm from a perceived immediate benefit is generally a hard sell, just ask an addict.

You can look at the numbers in the PDF of the CBO report I linked to above and a companion story here, but essentially an extra $18,000 per person is being transferred to the bottom 40% of the population through the tax code. This is separate from the myriad of existing welfare and social programs from cell phones to Medicaid. In a country that is already $17 trillion in debt this situation cannot long endure. More importantly, this deserves to be remembered in an era when all we hear is that income inequality is growing because the rich are no paying their fair share. Obviously when one looks at the actual numbers, the rich are paying far more than their fair share. In fact they are paying everybody’s share. Eventually the definition of rich will continue to expand until anyone with a middle class job is forking over most of their income so the rest of their fellow citizens can receive "wealth transfers"

The poor and everyone else need to pay more. When citizens are selecting our leaders and supporting policies they need to fully comprehend the consequences, good and bad. People will not do their due diligence, or even a basic cost benefit analysis, if someone else is paying the bills. This is basic economics and we see it every day in health care and tuition inflation. More disastrously, we see it every day in politicians playing Santa Clause and promising outsized and poorly overseen government programs and benefits. Nobody cares because someone else is paying the bill. The consequences of poor fiscal discipline and a lack of serious consideration of the proper relationship between citizen and state have historically doomed once great powers. We are no different. The poor need to pay more; it’s the only way to save the republic.



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