Sunday, October 09, 2011

What Is A "Fair Share"?

President Obama has stirred up a resounding chorus demanding that “the rich” should “pay their fair share,” which sounds really good, but is certainly not well defined. Who are “the rich,” what is their “fair share” and what is it that they are paying a fair share for?

I am a proponent of a progressive income tax, and I believe our tax structure should be more progressive than it is. It should also be one whole hell of a lot less complex, but that is a different argument. A discussion about reforming our tax code and restoring it to a more progressive nature would be sensible but the mantras of “tax the rich” and “pay their fair share” are, like most political sloganeering, misleading and unhealthy.

At various times “the rich” have been defined as anyone making over $250,000, or anyone making over $500,000, or the latest Congressional definition of “millionaires,” which would be anyone with a net worth over $1 million regardless of their income. It’s hard, they say, to hit a moving target, but it’s really hard to hit a target when you don’t know what the target is.

Not to mention that our constitution prohibits passing a “bill of attainder” anyway, which this could probably be found to consist of. For those who don’t know, that is a bill which singles out an individual or group for punishment without a trial. We do it all the time, with moves like the defunding of Planned Parenthood, which is another example of how Congress tramples on the constitution as vigorously as the executive does.

“What they are paying for” is the operation of the federal government, which means that we need to look only at federal income tax. “Other taxes” such as payroll and local taxes don’t count toward the “fair share” calculation, because they have nothing to do with running the federal government or the degree to which the federal government operates in a deficit condition.

So what is a “fair share” of the cost of government? Well, how about the people who have income and pay no income tax at all? They benefit from the function of the federal government and pay not one dime toward its operation. Remember we cannot argue that, “Well, they pay taxes, because they have payroll and local taxes,” because we are speaking specifically about paying the cost of operating the federal government, and those other taxes do not contribute toward that cost.

So, people who pay 23% of their income toward the operation of the government are not paying their “fair share,” but people who pay nothing apparently are paying their “fair share” because we are not asking them to pay more than they are presently paying.

I’m not suggesting that low income people should pay higher taxes, or that rich people should not pay higher taxes, I’m just pointing out that the term “fair share” is a pretty slippery term. Basing an act of Congress on such an intangible concept is nonsensical.

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