Oct

Approaching 100% Taxation

I know 100% taxation sounds absurd. Conceptually, it is nearly identical to full blown socialism, in which income is unconnected to work, and what is consumed by the worker is ultimately dictated by bureau.* Yet it is not simply a mere academic triviality to think of socialism as 100% taxation. It allows us to frame different taxation levels in terms of our own freedom. A simple example illustrates well the proper economic view of a tax:

Let’s assume you are making $100,000 a year, and taxed at 10%. This amounts to $10,000, and signifies that $10,000 of your purchasing power has been shifted from you to your government. With this $10,000, your government turns around and provides municipal services. For argument’s sake, let’s assume $5,000 goes to road construction and other transportation infrastructure, and the $4,000 goes to police, firefighters, garbage collection, etc., and $1,000 goes to maintaining the bureaucracy to manage these services. These are what most would consider legitimate functions of government, and for the purposes of this discussion they are meant to serve as non-controversial examples. What happens, essentially, is that you are deprived of 10% of your income and it is put to use according to another’s (hopefully mandated) charge.

So what is a tax, then? It is your money being spent by another. Taxes are always controversial, but generally less so when they are low and their expenditure in accordance with the social contract (Constitution, state charter, et al.). Still the undeniable fact remains that as taxes increase, you lose your freedom to shape the economy around you.

That’s why bills like Kerry-Boxer should positively frighten every citizen of this country. Like its House counterpart, Waxman-Markey, it is a massive tax. Quoting from Heritage, who looked at an evaluation from The Institute for Energy Research:

“According to a new study commissioned by the Institute for Energy Research (IER), “Households in the lowest-earning quintile—those earning less than $18,370 per year—would pay $451 per year or a substantial 4.5 percent of their income. This additional tax upon these households would be larger than every other tax they currently pay, except the federal payroll tax, which costs an average of $656 per year, and would be roughly equivalent to a 69 percent increase in the federal payroll tax on these households”

Heritage expands the analysis:

“Our cost estimates of Waxman-Markey project higher energy and other costs for a household of four are nearly $3,000 per year between 2012 and 2035. Gasoline prices will rise by 58 percent ($1.38 more per gallon) and average household electric rates will increase by 90 percent.”

These are monstrous numbers. It is nothing less than a brazen attempt to seize control of industry by dictating the terms on the master resource, energy, while at the same time garnishing a huge amount of money for the government to spend how it sees fit, rewarding allies and punishing opponents. Such a bill is rightly viewed as a monstrosity, an affront to our nation’s heritage and attack on its posterity.

When the smug commentators in media ridicule vocal Republican pundits and everyday protesters for calling Obama and the Democrat Congress socialists, they ought to think long and hard about the nature of taxation, and what happens when we are steadily marching down the road to higher and higher tax rates. For starters, consider these stats. Up until WWI we were spending less than 10% on Federal governance. This year, we are going to spend an estimated 45%, the highest level since 1945.

Looking around, I don’t see any Nazis.

*For the record, I don’t believe the United States could ever turn authentically, i.e. purely, socialist for the simple reason that we would never accept the stoic lifestyle; there would be a revolt (like, say, the “tea parties”) long before then.