life and taxes

17 December 2008

Robert J. Samuelson claims*

Sure, the wealthy extract privileges from government, but mainly they’re its servants. The richest 1 percent of Americans pay 28 percent of federal taxes, says the Congressional Budget Office. About 60 percent of the $3 trillion federal budget goes for payments to individuals — mostly the poor and middle class. You can argue that those burdens and benefits should be greater, but if the rich were all powerful, their taxes would be much lower. Similarly, the poor and middle class do have powerful advocates. To name three: AARP for retirees; the AFL-CIO for unionized workers; the Center on Budget and Policy Priorities for the poor.

Ezra Klein and Henry Farrell point out that Congress is actually more responsive to the preferences of the rich than to those of the poor and middle class.

Ezra also notes that tax rates for the wealthy have gone way down and goes on to talk at length about taxes, wealth, and inequality. That’s important, but there’s another key point here: taxes aren’t automatically bad. They pay for social welfare, they pay for the military, they pay for public subsidies for business, and so on. Taxes are a public good.

Does this mean that current tax rates are at an ideal level? No. It also doesn’t mean that they’re too high or too low or too regressive or too progressive, though they may be one or more of those things. It just means that discussions of taxation should proceed on the basis that taxation done right provides benefits everyone rather than on the assumption that taxes do not provide some kind of a return to those who pay them.

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*I wasn’t going to click through to the column, but then felt I should. Surprisingly, aside from the claim about the rich, it’s not a bad defense of lobbying – or at least, of the idea of lobbying.

Update: See also here, especially the income graph.