By Martin Bosworth
As someone who’s had more than his share of tussles with the IRS over the years, you’d think I’d be one of those embittered folk who hangs on the every word of Grover Norquist and his army of flat-tax flat-Earthers. It’s easy to feel that way…we see millions of dollars’ worth of our money–money we’ve rightfully earned–go into things like failed faith-based abstinence programs, bridges to nowhere, and missiles that can’t fly straight, and we cry foul at the unfairness of it all.
But the heart of the matter is that taxation is necessary because, left to our own devices, we’re simply too narrow and self-interested to voluntarily fund the things that need funding. True, we may give to charities, but those are causes we care about. It’s easier to work up sentiment for curing breast cancer or helping starving kids eat than it is for paving roads, building schools, picking up the trash, etc. Those latter circumstances are things we take for granted. “Oh, there’ll always be someone to do that.”
Except that isn’t true. Every public service requires some fom of funding, and that means revenue has to come in to fund it. No matter how much we may think we’re entitled to something for nothing, that’s a fallacy we must all be cured of. While I don’t particularly enjoy paying my taxes, I am happy to do so with the knowledge that my money helps to build and maintain the necessary services and underlying structure our nation relies and thrives upon. Matt Stoller at MyDD has a great post that effectively sums up my thoughts on the issue.
Now, with that said, we absolutely must have two things in order to make the tax burden less of a burden and more of a duty:
- Simplify the tax code. This would cause many groups of people pain, as it would involve things like removing the mortgage interest deduction. But it would also involve streamlining or removing the alternative minimum tax, which is hitting more and more people and penalizing them for what was intended to be a loophole-closer against millionaire tax cheats. The tax code should be progressive, and those who earn more should pay more, but it should not be something that requires a doctorate to understand.
- Stronger enforcement of chasing down tax cheats. Now, by this I don’t mean the IRS’ justly-maligned and costly plan of outsourcing debt collection to private agencies. I’m talking more about being able to effectively investigate and enforce people who are trying to game the system. I cough up a few thousand extra dollars to Uncle Sam each year as an independent freelancer, and I take every deduction that I can, but no more and no less. If I can do it, so can these jokers. Of course, it wouldn’t hurt if the IRS got more resources to audit corporate fraud and shady big-business dealings. There’s something inherently malignant about the idea of custodians paying more taxes than hedge fund managers.
The betterment of our country is everyone’s responsibility, and like it or not, taxes are one way to ensure it will not falter. If you think that we could effectively manage our nation solely through the charity and goodwill of individual citizens and private corporations, well, here’s an image from Grover’s own private bathtub to convince you otherwise:
Well, I take issue with the theory that some of these gov’t services couldn’t be provided by private interests. There are private companies that provide toll roads (taxing only the people who use it, think Dulles Toll Road). Privately funded roads have been existence even when the world was a lot poorer (in early roman times, all public roads were privately funded).
As for defense, read Hans Herman Hoppe’s “The Myth of National Defense”. In the history of warfare, the paid mercenaries have always performed better (think of the privateers (pirates), the Hessians, the “contractors” in Iraq).
Potholes. Decaying roads and bridges. Public-school buildings a century old. Too few police officers and firefighters. Pay too low for public-school teachers. Starkly rising tuition rates for college students. Huge college-loan debts. Under-funded financial-aid programs. Millions of children (and adults) without adequate health-care. Minimum wage inadequate for the cost of living for a family of four. Rising property taxes. Sharp increases in the median price of a single-family home. Rising indebtedness, foreclosures and bankruptcies. An overstressed military fighting a war with inadequate equipment. A Gulf Coast still reeling from a hurricane. Many still homeless. A FEMA that’s FUBAR. State, city budgets that cut essential services.
Since 2001, President Bush has given the top 1 percent of the nation’s income earners $72.6 billion in tax cuts but only $2 billion for the lowest 20 percent. (See: http://www.ctj.org/pdf/gwbdata.pdf)
Is this a great country or what?
“A Gulf Coast still reeling from a hurricane.”
If these people were relying on privately funded insurance, do you think they would build their homes below sea level? Do you think that it’s worth $200k per resident of your tax money to rebuild New Orleans…below sea level? If you asked the residents of N/O if they would prefer the city be rebuilt or the cash, which do you think they would pick?
And don’t get me started on public school teachers salaries. Some are underpaid, but are some get paid way too much for their incompetence. And if a place like DC spends $12k per student (times 40 students in each classroom) and they are taught in crumbling buildings by underpaid staff, do you really think that a non-government entity couldn’t do a better job for less money?
Two things. First, there are private interests that are ADMINISTERING toll roads. That’s not quite the same as building them. Second, the teacher salary issue – really, the whole education debacle that you point to here – is way too complex to reduced to a toss-off sentence or two. This is part of why I’m doing Dr. Slammy in 2008 (http://drslammy.wordpress.com/). Getting caught up in the minutiae of this detail or that is a guaranteed way to fail at fixing the big picture.
Ninja, we’ve had this debate before and we’ll probably have it again, but it comes down to this for me:
There are services for which I think government is best, as that means accountability and openness. Now that’s by no means always true, but nor is it always false. For every Metro operator in D.C. who’s making millions in overtime they didn’t earn, there’s an honest cop who puts their butt on the line and gets the paycheck for protecting us. I am okay with that.
We need basic infrastructure, a governable military, and the ability to provide and transport emergency services in times of crisis. Whether we need private equity firms is very much a topic of debate. 🙂
I won’t debate the need of private equity firms. Whether the price discovery function they perform outweighs the costs in a zero sum game with transaction costs is dubious.
As hurricane Katrina showed, we can’t rely on the government to help us out. Many times, they will actually impede more than they help. Also, with the Tsunami, private charities were on the scene in less than 24 hours. It took the US government a long before they got the first naval ship anywhere near there.
I’d make an argument along similar lines to yours, but from the opposite side. Just because there are some functions that the private sector has not been good at providing, doesn’t mean that the public sector is better at providing it. But with the private sector, there is at least some market mechanism to remove incompetent players and control agency costs (shirking, empire building, self dealing, nepotism, corruption).