In the posting "There Is Nothing Wrong With Your Vision," the Chicago Freedom Forum discussed the troubling phenomena that 43.4% of Americans do not pay federal taxes. One economically, politically and socially relevant question is: what are the general demographic dimensions of the federal transference of wealth. Or in other words, from whom is wealth being transferred from and to whom is wealth being transferred to? After searching through the footnotes of other research I found:
Age: More than one-third (35 percent) are younger than age 25, and 54 percent are younger than age 35. So, to a certain extent wealth is being transferred from older to younger generations.
Race: When we combine the populations of non-payers and non-filers and look to see what overall percentage of each group is not paying taxes, we find that: 50.7 percent of African American households pay no income taxes, 35.5 percent of Asian American households do not, 37.6 percent of White American households do not, and roughly 52 percent of Hispanics pay no income taxes. So, to a certain extent wealth is being transferred from Whites and Asians to Blacks and Hispanics.
Family Structure: Among the population of non-filers, female-headed households are even more dominant. Roughly two-thirds of these households are headed by women, whereas 37 percent are headed by men. So, to a large extent, wealth is being transferred from traditional two parent families to families headed by single mothers.
Not surprisingly, the demographic groups that most benefited from the transference of wealth most strongly supported Obama, so to a certain degree they were simply voting themselves a raise. After having studied the history of other nations, I am absolutely certain that regimes that transfer wealth across ethnic, cultural and social lines in diverse societies increase social and political tension. Yet politicians like Obama do not hesitate to do so, because the number one rule of demagoguery is to reward your followers and punish your opponents.
http://www.taxfoundation.org/research/show/542.html
The downfall of major societies, lets take Chinese dynasties, occured not when the lower classes recieved subsidies from the govt. The downfall occured when the govt could no longer afford to subsidize the lower class when the gap between rich and poor became to great and the rich wer able to use means to maintain their wealth without paying the taxes and fees.
ReplyDeleteWe can argue over what is an appropriate amount. And we can argue theoretically on the nature of democracy. But on a practical level, when the rich can thrive and avenues are cut off to the poor, that is the downfall of society. The poor (and lower middle class), ironically, are the base of every society. If you make their lives unbearable through cutting off subsidies the economy will shatter in a way that confiscatory tax rates could not.
Your comments are thoughtful, but you are mistaken about the Chinese. They never subsidized the poor, they usually taxed them in goods (agricultural production) and labor (like the construction of the great wall). The dynasties collapsed usually because the government spent and taxed the public into oblivion.
ReplyDeleteAs I will address in a future post, there is no question that high levels of inequality are not good for society, but the question is what is the least destructive way to address is. A redistributive regimen lowers the overall level of wealth and freedom in a society, as seen in Zimbabwe and other failed socialist ventures. But, nations that were able to organically curb inequality by increasing the productivity of their citizenry (such as South Korea and Taiwan) were much better off.
I should also mention that the problem with redistributive regimens are that the burden of taxation is not always so clear.
ReplyDeleteFor example, those who seek to "tax those greedy rich landlords" end up raising the cost of housing for poor and working class families.
Those who seek to "make those evil corporations pay" through higher corporate income taxes, inevitably raise the cost of all goods and services.
When governments start expanding the money supply to pay for all those wonderful programs they create inflation which falls heaviest on the middle class.
And in the case of California and Illinois when you increased the tax and regulatory burden on businesses to "help the poor," jobs will quickly leave the state much to the detriment of the poor.