Colorado Amendment 59 vs. liberty and prosperity

Ari Armstrong has written two good posts against the proposed Colorado Amendment 59 here and here.  He writes:

Those wishing to forcibly transfer more money from those who earn it to those who want it constantly review the benefits (real or imagined) of higher tax spending. What they generally ignore are the costs.

Sure, when the government transfers money from Alice to Ben, Ben gets to spend the money on something he wants. But Alice has less to spend on her needs and those of her family, and those with whom Alice does business also suffer.

When people evaluate economic opportunities, they tend to move to where they can keep more of what they earn — to spend, invest, or give away as they see fit — and live and work as they deem best, rather than as politicians demand. We Coloradans enjoy a relatively strong economy in large part because it remains a relatively free economy. Higher taxes threaten to alienate vibrant businesses, entrepreneurs, and young workers.

Higher taxes also reduce liberty. People have a right to enjoy the fruits of their labor. Regardless of whether politicians and activists mean well in forcing some people to surrender their money to others, the practice is morally wrong.

As Ben DeGrow points out, Education Week has written that

State Treasurer Cary Kennedy (no relation to RFK Jr.) said that Democrats would win a ballot initiative to “drive a stake in the heart” of the state’s Taxpayers Bill of Rights…

Funny that she uses a vampire metaphor to describe the Taxpayers Bill or Rights, which limits government’s ability to tax.   Wouldn’t appropriation of people’s wealth through taxes be analagous to a vampire’s sucking blood? (Thanks to Ari Armstrong for pointing out the irony of the metaphor.)

Also, check out Barry Poulson’s Issue Backgrounder and video critique. The Cauldron also has an amusing narrative.

Obama will “ask us” to serve

In his speech at the University of Colorado, Colorado Springs, Barack Obama says he will “ask Americans to serve” and “ask for your service.”  But will he ever actually ask?  Sure, he can ask for our vote, and there a point where all eligible voters can choose to vote for him or not.

But when will Americans have the choice to serve or not? In his speech he outlines several new government-run tax-funded service programs.  But when do we have the choice whether to fund these or not?  When does he ask us, and when do we have a chance to say “no”?  Or is Obama saying he wants to take our money without asking, and then with it create government programs that give others the opportunity to serve?  If so, why doesn’t he say that?

If only all politicians were so honest

U.S. House Democrat Maxine Waters during a hearing concerning gas prices.

I suggest she read the Constitution she swore to uphold, think a bit about property rights, and watch this video by John Stossel. My favorite part is the graph showing that tax revenue from the tax on gasoline exceeds oil company profits.

Tax musings

I originally had this at the end of my previous post, but it’s worth its own post.

On a related issue, I continue to be amazed at how seldom, if at all, I hear people write or talk about taxes in terms of “what am I getting for this”? I start thinking about this when pondering the “progressive” income tax. There must be a non-biased name for this. I’d prefer to call it the punitive income tax. Often defenders of it say that people earning higher income should pay more. But under a flat tax, that is, where everyone pays they same percentage of their income, those who earn more do pay more. So I don’t know how one goes about figuring out the “correct” form of tax brackets.

The price of most products people buy do not depend on one’s income or wealth. One exemption is property insurance, such as home-owners or car insurance. But the customer can determine his preferred level of coverage.

My guess is that underneath the desire for a “progressive” tax system is the idea that one person’s need is a moral claim on another person’s wealth. Not to get into a dissertation on ethics here, but I don’t see what facts support such a claim. And even if it were true, is an action ethical if one is forced to do it?

Back to taxes, I found some IRS data quite interesting. For example Table 1 here shows that as fo 2005 the top 10% of income earners pay more than 70% of all income taxes. Table 7 at this IRS site (an Excel file), shows how much the top X percent of income earners pay in income tax as a percentage of total income tax collected. For the top 10% of income earners, their share has risen from 54% in 1986 to 70% in 2005. Of course, people move in and out of this top 10% group every year.

The Detroit News published results of Congressional Budget Office report showing that since the tax rate cuts of 2000 (not simply “tax cuts” as cutting the tax rate can increase total tax revenue), people in the top 20% of incomes paid more taxes than before the rate increase.

Taxes reach into both our wallet & soul

I’m paraphrasing one of my favorite lines in Yaron Brook’s recent commentary in Forbes about how politicians use tax exemptions to garner political favor and control our behavior. He does a fine job of connecting what we usually consider to be an economic issue with a moral issue. Here are some excepts:

Tax policy works by attaching financial incentives to a long list of values deemed morally worthy. If you want to maximize your wealth come tax time–and who doesn’t?–you must look at the world through tax-colored glasses, “voluntarily” adjusting your behavior to suit social norms and thereby qualifying for tax breaks. In this way, the social engineers of tax policy preserve the impression that you’re exercising free choice, while they’re actually dispensing with your reason and your judgment. …

Government’s job is not to dictate your values but to protect them. In a free country, you choose values and then use your own money as a tool to achieve them. But a value-rigged tax policy reverses this cause and effect–it uses your money against you, bribing you with tax breaks that let you keep some of your earnings in exchange for abandoning your preferred values. …

Today, it is commonly accepted that Uncle Sam has a right to reach not only into your wallet but into your soul, through tax policies that substitute some version of the “public interest” for your own rational desires. …

In place of the limitless variety that emerges when individuals plan their own lives in a free society, tax laws strive to impose a dreary sameness–as if every individual should get married, have children, buy a home and save for retirement on a government-approved schedule–and as if every company should look to bureaucrats for the one true path to selecting real estate, equipment, fuels, employees and financing. Such artificial homogeneity has no place in the tax policy of a government dedicated to protecting individual rights.