Opinion | Morgan Liddick: Obama penalizing the productive to support the poor
On Your Right
Building a fence is hard work. It takes precise measurement, careful cutting and fitting, heavy digging and lifting, and a knack for navigating the tedium of the permitting process. But in the end one has something worthwhile from one’s own effort. And if the neighbors see good work and need help with their own projects, well … there’s friend points in helping when one can. That’s the virtuous cycle of neighborliness.
But suppose that after one’s fence is built, the neighbors are envious. Instead of asking, they band together and appear on the doorstep to demand their fences be completed too, right away. Thus, taxation. It’s money, not labor, but the principle is the same: neighborliness by compulsion.
Which is not to say that taxation is bad, per se. Properly used, it provides clean water — as Breckenridge knows. Good roads, paid for by those who use them. National defense, as enumerated in the Constitution. These taxes are the price we pay for a prosperous, organized society. But these are not the only, nor even the most expensive, of our tax burdens.
An early gambit in the tax reform games offers a glimpse of the damage tax policy can do. In January the Obama administration proposed that the exemption offered for 529 Education Savings Accounts be eliminated because they gave breaks to “affluent families.” Instead, the administration proposed federal education subsidies to lower-income students — presumably paid for by money gained from the elimination of tax breaks for wealthy 529 account owners. Thus the administration proposed the productive and diligent, who see to their own needs, be penalized to support those who do neither. Because that’s “fair.” Why it is fairer than moving heaven and earth to make certain those who cannot provide for themselves are given the tools and opportunities do so, is clear: the former increases individual freedom and choice, while the latter enlarges the scope and power of government. Unfortunately it also subsidizes substandard performance and as everyone knows, what it subsidized, grows.
Corporate tax code proposals offer another look at dysfunction. At present, the U.S. tax rate for large companies is the highest in the industrialized world save for France — and it is scheduled to rise. Revenues are projected to increase by more than $210 billion in the next 10 years — most of it to be redistributed to individuals and favored causes. Once again, the productive are penalized to support others. As a result, U.S. corporations and their money tends to flee to more hospitable climes abroad, a simple cause-and-effect relationship that infuriates and appears to baffle the Administration’s Wizards of Smart. Two of the highest-taxed U.S. corporations, Microsoft and IBM, are good examples of this trend. Raising rates will eventually drive taxpayers who can’t flee, to cheat. For more than a century, Americans paid for their various governments honestly, if grudgingly. They saw direct benefits in doing so, and although they might grumble about the overall cost, paying tariffs and later, income tax, was seen as a citizen’s duty. Now that a dollar paid to the federal government is at least as likely to end in a neighbor’s pocket as in the ledger of a company building roads or fighter aircraft, the sense of contributing to the common weal is less evident. If these trends continue, we will become Italy, where tax cheating is virtually a patriotic duty.
Another pernicious effect of federal tax policies as they are is rent-seeking. Through intense lobbying and active realignment of policies and products with the latest demands not of the market but of federal regulators, large corporations work to shift the burden of taxes onto others not in favored sectors or who lack deep pockets or prestigious K Street addresses. In 2012 and ’13, three of the 10 highest-taxed U.S. corporations were involved in fossil fuels. No company involved in “alternative energy” was in the top 25. General Electric, one of the country’s largest suppliers of wind turbines and other machinery for the anti-global-warming bandwagon, paid an effective tax rate of zero. This shift of expenditures from innovation and production to politics will slowly stifle the economic dynamism which had long distinguished our country.
Finally, as “fairness” is used more and more to set the successful and productive against the rest, resentment becomes prevalent on both sides of the divide. The sense that we are all Americans and consequently in this together slowly evaporates in a fog of envy generated for political gain. This is the slow poison that will end the world’s most productive economy and ruin us all.
The neighbors will have arrived at the door with shotguns, shackles and a fistful of work orders. Permanent indenture for those unable to escape will follow.
Morgan Liddick writes a weekly column for the Summit Daily News.
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