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Taxes vs Charity

A common talking point on the right is that taxes can and should be lower because the social needs of the impoverished should ideally be met by private charity. It is worth noting that this is a very old idea, going back at least to the start of the Industrial Revolution in the early 1800s. The concept was vividly illustrated by Charles Dickens in “A Christmas Carol” in the person of Scrooge, where it was also parodied. And this idea of private charity (and the immorality of using public money to alleviate private suffering) is why a million Irish starved to death between 1848 and 1850.

As usual, there is nothing wrong with the concept in theory. Ideally the wealthy would take care of the poor, with no external compulsion. But experience everywhere shows that they don’t.  If there were any evidence that the billionaires of this country would step in and feed the hungry–all the hungry, nationwide, and not just a few token cases–then there might be some case for cutting their taxes to make it happen. Absent that we can decide that the unfortunate deserved to starve (and a surprising number of people appear to actually feel this way) or we are going to have to come up with a collective solution that is scalable to the whole country. Which we have. And it is operating. If we talk about whether it is too much or too little then there is at least a common agreement that we should be doing something. To argue that we should do nothing at all… well, going down that path wouldn’t end well. Even Ayn Rand needed social security and Medicare in her old age.

It is further worth noting that the existence of extreme income inequality is itself a creation of government. It is not taxation that is feeding economic inequality. It is regulation. And the solution is not less regulation. It is better regulation. Broadly speaking, our tax structure redistributes downward, but our regulatory structure redistributes upwards. And the upward redistribution is far more effective than the downward redistribution, and has been for at least the last 30 years. Hence all the billionaires, but also the corprotocracy.

Now some people claim that this could all be fixed if we just stopped spending so much on war. And it is true that we would have a much more effective government if we stopped wasting money on corporate welfare mis-labeled as defense. But that is not a successful argument against taxation. The problem with excessive defense spending isn’t so much with taxation, per say, but instead with what it is being spent on. If instead of corporate welfare and warfare we spent the money on free college, common infrastructure, and the like, the typical American would have a vastly higher quality of life. And it would be even better with a more aggressive progressive tax structure, and better still with a reformed regulatory structure that was not designed predominantly for upward redistribution.

Ultimately these are political questions, choices we make through our democratic process. Or fail to, when income inequality feeds regulatory capture and the corruption of the political process, leading to a downward spiral of ever greater dysfunction.

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