The Myth of the Rich’s “Fair Share”
It has, in the last several years, become one of the greatest political and social debates so far of our generation: the attacks to and fro regarding “the one percent,” “the ninety-nine percent,” wealth inequality, and wealth redistribution. This child of the worldwide Occupy movement has forced its way into this year’s election season, and may very well determine the victor of that race.
Accusations of rampant crony capitalism, a lack of government regulation and oversight, and a malicious plot by the top one percent to control everything, have been made since the fall of 2011. Attacks are leveled at many people, both specific individuals and larger demographics: the Koch brothers and Sheldon Adelson, down to the owners of major media outlets and corporations, to a much wider-applied “upper-class white male” grouping.
These people, it is claimed, manipulate elections and acquire economic monopolies that triple and quadruple their already huge profits. From there, they exact total influence and control over the government and, eventually, the people themselves. Presidential candidate Bernie Sanders, the Democratic Senator from Vermont, is perhaps the most well-known of these crusaders; even Hillary Clinton, who is the wealthiest candidate in the race behind Donald Trump, has moved to attack “Wall Street cronyism” and the purported evils of wealth accumulation.
One of the great mysteries of this phenomenon, however, is not the aforementioned claims of inequality and unfairness, but rather the proposed solutions to these inequalities, and the remedies to cure what they claim to be a disease on American democracy. One of the most well-known and agreed-on of these solutions on the American left, is an even higher progressive tax; that is, to tax the richest Americans even more, while lowering taxes on everyone else.
Some, probably many, of you will agree with such a proposal – and why not? On paper, increasing the tax rates on the one percent will increase government revenue, decrease income inequality, and allow for further tax cuts on the middle class. If one were making $4 million annually before taxes, and a fifty percent income tax were put in place for those making over $1 million, he would still have $2 million left over to spend – which seems fair in the long run. But it isn’t as simple as this.
Senator Sanders and many other liberal politicians often claim while on the campaign trail, that the rich need to pay their fair share. What a confusing phrase; where did it come from? What exactly is a “fair share” – how can we quantify it? Is it a fifty percent income tax? Seventy-five percent? Ninety percent or more? Does anybody even really know? Thus stems the problem with this solution.
Even if we take Senator Sander’s proposed tax plan, which puts high-end incomes around fifty-two percent, what is keeping the government from increasing this as time goes on? The income tax has increased gradually through time ever since its implementation in 1913 – and what is keeping this trend from continuing, unabated?
On top of this, Sanders’ proposed payroll tax increases and Wall Street speculation taxes – the latter of which would greatly affect the millions of middle-class Americans that do trade on the stock market – would spread the misery onto millions of unsuspecting Americans, not just the rich. Add to these tax rates the various property, sales, state and local taxes, and nearly every American family would be paying an excessively high - and frankly, unwarranted - percentage of their income to the government in taxes (especially in states that have a propensity for higher taxes, like California, Oregon, New Jersey, and my native New York).
Arguing that the government has the right to place a certain income tax level on someone due to their wealth – the justification being that the government is making that person pay his or her “fair share” – is dangerous indeed. If the government can tax one’s property freely at any rate because it is fair, then what is keeping the government from, in the future, extrapolating this “fairness” to even higher levels, so as to bring people to financial ruin, or to bring the country to economic collapse through job outsourcing?
The power to lay and collect income taxes has been clearly established as a distinct power of the federal government by the 16th Amendment to the Constitution; and the Supremacy Clause of that same document establishes federal law as the law of the land. Theoretically, then, as state nullification of federal laws has been ruled to be unconstitutional by the Supreme Court, there is no limit as to the income tax rate that the government can place upon the citizenry.
Montesquieu and Lord Acton both famously said that men with power will ultimately be corrupted by it, and will abuse that power to whatever end. Similarly Locke said that government “has no other end but the preservation of property” (within which he included oneself as one’s own property). I think it is high time that we think very long and hard about these ideas, lest we forget those great republican ideals that the United States was founded upon. After all, it was the violation of the right to property – and unfair taxation without representation – that started the whole American Revolution in the first place, nearly 250 years ago.
Fall 2016 Edition