Tuesday, May 13, 2008

Taxation without representation

I am guest blogging at Zane Safrit's place. Check out his blog. He provides great information and links for small businesses. Zane is a truly good guy and it is a pleasure to work with him. My posts there will be more business related, commentary on health care, accounting and taxes.

This morning I posted a graph showing historical tax levels as a percent of GDP. Zane's question was:
So, you're saying:
A. there's no value-added experience from the taxes we pay, or
B. we're not getting our money's worth,
C. we have taxation without representation.
D. All of the above.

My response was that we're not getting our money's worth as entitlements will eventually eat the whole economy if not changed.

Upon further reflection I would add that we are getting close to taxation without representation. Tax law has been simplified by removing large numbers of taxpayers from the tax roles. Nearly 50% of earners pay no taxes because their income does not reach a taxable level.

If 50% or more of the citizenry does not pay taxes but still enjoys the benefit of government, then they can vote themselves benefits at the expense of someone else. There is no end to the things I might like to have if someone else is paying for them. If the majority can vote themselves benefits at the expense of the minority (the taxpayers) then perhaps that is taxation without representation.

ADDED: James Carville (in reference to downscale urban and rural Democrats) says; “people that look to the federal government to soften the harder edges of capitalism.” I like that. Hard edged capitalism can certainly cause hardship on a micro level.

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