The root cause of progressive taxation

Don Boudreaux of Cafe Hayek recently posted this bit of wisdom from  “Walter J. Blum’s and Harry Kalven, Jr.’s 1963 “Introduction” to the ten-year-anniversary re-issue of their 1953 classic and insightful book, The Uneasy Case for Progressive Taxation“:

At the time of an emergency which brings about a tax increase, it appears that a sudden new burden can be more easily borne by the rich, thus suggesting that the tax system is made more progressive in the upper-income ranges.  When tax reduction is in the air, it appears that the less rich are more deserving of the reduction, thus suggesting that the system should not return to the tax pattern which prevailed before the increase brought on by the emergency.  It is almost as though tax reduction is viewed, not as the erasing of a prior tax burden, but as an independent distribution of a “bonus” by the government.  Neutrality in tax reduction … would in a simple fashion often require that higher-bracket taxpayers benefit from the tax cut substantially more than those in lower brackets.  But this symmetry is not likely to persuade the popular mind.


For me, as soon as we start talking about ‘fair’ tax systems, we’ve gone too far because we’ve changed the conversation away from ‘what we want government to do’. We now have taken the bait and assumed that all functions of government, existing and proposed, are legitimate and the biggest problem we have is how to fund it.

Government should be something that everyone pays for so we will think very carefully about what we are getting for our money.

If (especially in non-emergency times) you want more government than you are willing to pay for, then I think you owe it to whomever asks to show your work without being grumpy.

My guess is, if you belong to an organization that has a group of people charged with figuring out how to spend money that you have put into the pot, like a church, that you also expect a reasonable accounting and justification for that spending from those folks.

When it comes to thinking about what we want government to do, I like to think of example a little closer to home like my Homeowner’s Association to check my rationale.

Each homeowner in my neighborhood pays a flat, relatively small, sum of money each year to maintain our neighborhood pool and common areas. I’m okay with the HOA overseeing those functions.

However, I’d get concerned if my neighbors started talking about setting HOA fees based on income because a) they want a ‘fairer’ collection of fees, b) they want more fees or c) they have other things they want to do and need more money.

I don’t think it would be hard for anyone to see this would lead to lower-income neighbors freeloading on the higher income neighbors (“sure we can afford that playground and shelter, as long as you are paying for it”), while simultaneously (and illogically) becoming a channel for lower-income neighbors to alleviate their envy for their higher income neighbors while also leading the HOA to want to do things beyond its initial charter of caring for the pool and common grounds without sound reasoning for doing so. Why do I want the guy in charge of hiring and paying the pool guy to also use our money for an unemployment insurance program for my neighbors?

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