In The Wall Street Journal today, Former American Express Chairman Harvey Golub expressed his disagreement with Buffett’s desire to increase taxes on him and many others less well off than himself.
Golub makes several points worth considering. Here’s one point that is usually glossed over in this debate (emphasis added):
Almost half of all filers pay no income taxes at all. Clearly they earn less and should pay less. But they should pay something and have a stake in our government spending their money too.
It sets up a bad incentive structure when some voters pay no income tax. It costs them nothing (directly, and they may benefit directly) to vote for politicians who grow government. The bad incentive structure is illustrated well by the old cliche, it’s like two wolves and pig voting to decide what’s for dinner. Having more voters pay something for government with their hard earned dollars might cause more voters to hold politicians accountable for spending their money wisely.
Golub also questions how wisely elected officials spend our money. Decades ago Milton Friedman pointed out that we spend money least carefully when we spend other peoples’ money on other people. That is government spending.
Golub asks questions that are rarely asked in the mainstream:
Governments have an obligation to spend our tax money on programs that work. They fail at this fundamental task [because of Milton Friedman’s observation]. Do we really need dozens of retraining programs with no measure of performance or results? Do we really need to spend money on solar panels, windmills and battery-operated cars when we have ample energy supplies in this country? Do we really need all the regulations that put an estimated $2 trillion burden on our economy by raising the price of things we buy? Do we really need subsidies for domestic sugar farmers and ethanol producers?
Why do we require that public projects pay above-market labor costs? Why do we spend billions on trains that no one will ride? Why do we keep post offices open in places no one lives? Why do we subsidize small airports in communities close to larger ones? Why do we pay government workers above-market rates and outlandish benefits? Do we really need an energy department or an education department at all?
Galub ends on this note:
Before you “ask” for more tax money from me and others, raise the $2.2 trillion you already collect each year more fairly and spend it more wisely. Then you’ll need less of my money.