Taxes Are Not Charity

April 08, 2010

Original publication: The Economist

Date of publication: April 8, 2010

"Here's the thing: taxes are not charity. It would be a bad idea for wealthy people who feel they should be paying more taxes to instead contribute large amounts of money voluntarily to reduce the national debt. The first, less important reason for this is that any individual's contributions would be meaninglessly small; they can make far more difference by using the same amount of money to advocate for higher taxes, as these millionaires are doing. But the second, more important reason is that even if a million millionaires got together and voluntarily donated money in such quantities that it made a measurable dent in the deficit, it would be even worse, because they would be giving license to other people to continue pay less than their fair share of taxes. It's an invitation to free-riding, with the public-minded rich subsidising the irresponsible and selfish.

If America did not have a severe and potentially catastrophic national debt problem, one could have a legitimate argument in which some people argued for higher taxes and more defense, health care, transportation, etc, while others argued for lower taxes and less defense, health care, transportation, etc. That is not the situation in which America finds itself. For 30 years, we have systematically collected much less in taxes than our government spends; the structural deficit used to be around 3% of GDP, but over the past two years it's leapt up due to the recession. Over the long term, we need to make painful choices to bring expenses and revenues back into line. There are two legitimate arguments one can make here. One is 'I think we should raise taxes in the following ways.' The other is 'I think we should make the following massive cuts in defense, health care, transportation etc.' It is not legitimate to say: 'Hey, if you feel like paying more to reduce the debts we all incurred together, go ahead; as for me, I'll pass...' "

Read the full article from The Economist.

 

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