Internet fables and tax fairness

 

I enjoyed two opinion pieces from the Wall Street Journal today. First, Gordon Crovitz adds color to the story of who invented the Internet. Big government supporters often herald the internet as government innovation done right, but Crovitz calls that an urban legend and gives credit to Xerox’s R&D lab.

And, in a good example of organizational myopia, Xerox tried to leverage the network to sell more copiers, rather than connect all humans. Crovitz adds a good point made by someone else:

As for the government’s role, the Internet was fully privatized in 1995, when a remaining piece of the network run by the National Science Foundation was closed—just as the commercial Web began to boom. Economist Tyler Cowen wrote in 2005: “The Internet, in fact, reaffirms the basic free market critique of large government. Here for 30 years the government had an immensely useful protocol for transferring information, TCP/IP, but it languished. . . . In less than a decade, private concerns have taken that protocol and created one of the most important technological revolutions of the millennia.”

Another piece by Ari Fleischer dissects the claim that the Federal tax code is unfair. These two paragraphs sum it up nicely.

There’s also another way of looking at fairness, and that’s the tax burden. Here, consider the top 20% of income earners (over $74,000). They make 50% of the nation’s income but pay nearly 70% of all federal taxes.

The remaining 30% of the tax burden is borne by 80% of the taxpayers, those who make less than $74,000. In short, this group’s share of taxes paid, 30%, is lower than the share of income they earn, 50%.

To be fair, fair share supporters will argue that you also need to add consider payroll taxes, which are not ‘progressive’. True enough. But, these supporters never seem to address that there are benefits tied to payroll taxes as well.

The main idea of payroll taxes, Social Security and Medicare, is to force some financial accountability. I’d be willing to make those programs voluntary. That would solve any progressivity issues on the collection side.

 

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