Home > Economics > Tax season – Anyone actually a fan of big government now?

Tax season – Anyone actually a fan of big government now?

OK folks, so its tax season. I smile a little because my high school/college friends who suddenly were so gleeful about Politician X’s new proposal to expand coverage to Y program, need to now put their money where their mouth is and actually pay taxes. Except that well, they’ve found ways not to pay them…..

You see, I definitely have my share of left-leaning friends who have discussed the latest tricks/gimmicks in finding the biggest refunds on their tax returns. I find it a little bit inconsistent that somebody who generally supports increased government programs also are trying to find ways to prevent (at the individual level) such funds from reaching these programs. Look, I have no problems with finding tax refunds in themselves regardless of political belief.  In no way should Uncle Sam ride off these as my friend Peter calls em, “interest-free loans”,  especially if you weren’t supposed to pay taxes on it. I do have a slight issue when one extols the benefits of expanding education funding, works for a bulge bracket finance firm (as NKS once said, “they are working for the Machine they once raged against”) and then chooses to write off the 5 Brooks Bros. suits as a “uniform expense”.

Simplify the tax code…
But here’s the thing. For one, just practically speaking, if all of these taxes are being written off, why not just simplify the tax code to more flat taxes or consumption-based taxes. (The merits of the argument can be found here and here, so I won’t go into it too much).

Have the rich pay taxes means you should too
As for the solution of making the rich pay taxes. If you are making 70k  a year (not unreasonable for a guy working a couple years out of a top-tier school including bonuses etc.)  you are already at the top 30% of annual income meaning, comparatively speaking, you are rich. But another thing I think progressives need to consider the regressive nature of a befuddling tax code. A Gordon Gekko type with his accountants is probably gonna have an easier time maximizing his deductions over a working single-mother type and her recent-grad accountant at H&R Block. Friends, at least realize this, if you are finding a bunch of things you can write off, know that “the rich” are probably doing just the same. The mechanics can often be legal but quite sketchy, but regardless this is perhaps not the best way to raise revenue……

Also, ever play Sim City 2000? People don’t stick around if you raise taxes on them, your city begins to make Detroit seem like paradise and you lose tons of revenue. Soon you take out a bond from the dude who probably either worked for the Mob or Goldman (take advantage of low rates, float a bond!), you fall into major debt and then you realize realize the only solution is to press all the disaster buttons to turn your city into Sim Gomorrah 2000 and start all over. (But I digress…)

Annoying libertarians aren’t hypocritical (but they still are annoying)
At least libertarians don’t pretend they have some noble motives. Their candidness in their political beliefs wanting their own money, because its their own money, is certainly refreshing.  So I wonder if you are looking for all these deductions why not just jump to the libertarian ship and try to reduce the unnecessary taxes. If you are that concerned about social welfare, use those funds for charitable purposes. Efficiency-wise I’d pat you on the back and you could find the optimal rate to make sure roads and such are still paved.

“Trickeration” like uniform expenses and the like (which should be considered tax evasion) are most infuriating and inexcusable. Even if you are the staunchest libertarian completely paranoid of the IRS, I would still find your justification shallow. When you have a big Obama bumper sticker telling me how important health care is, I find it even more distasteful. Its really a simple game, where the taxpayer knows his chances of getting audited are slim to none.

My challenge to Libs
I could go on and on about how left-leaning politicians hypocritically store their income away in tax shelters (here’s one of many) But I don’t want to straw man a political philosophy, because the worst people in the world, politicians, act like well, politicians. I know there are plenty of liberals who aren’t like that as well.  Thus I offer a small challenge for my friends of the more-government-programs persuasion. Obviously, your tax code is between you and God, I mean, Government (sorry two different faith-based systems).  If you are trying to search for all these refunds, I am not calling you a bad guy if its legal, but why not vote for those who simplify the taxes to flat/consumption taxes. If you are gaming the system, I would implore you to consider your how this is totally antithetical to your political beliefs. If you feel you can use that money for better charitable purposes, see solution above. As for the libertarians, I just think you guys want a government that lets you smoke pot.

Mark 12:17

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  1. March 8, 2010 at 10:40 am

    Fantastic post, BDK. One of my favorites.

    I couldn’t agree more – consumption based taxes are not only more efficient but also a key component of rebuilding savings in this country.

    Thanks for the shout-out. I’m eager to read some of our lib friends’ responses.

  2. longley
    March 8, 2010 at 10:54 am

    Haha Shenai loves the shoutouts (missed you thursday night, why you gotta leave early?)

    1 – consumption based taxes are absurd when you realize that you are taxing 100% of the income of the poor and a minor fraction of the income of the rich.

    2 – BDK you are blurring the line here between policy and personal, which is a counterproductive practice. The best illustrative on this I’ve ever heard is from Burton Gerber, cold war super-spy, giving a talk on torture. He said that the political failure of Dukakis was best represented when he was asked what he would do if he caught someone raping his wife. Famously against capital punishment, he gave a long diplomatic answer about the rule of law. Burton’s comment – “his answer should have been ‘i would fucking kill him, but my personal urges should not be the basis of our legislation’.” So basically yea, if I could save a friend’s life by torturing someone, id do it, but I’m against torture. I’d like to think we are an advanced enough civilization that we can grasp that distinction.

  3. March 8, 2010 at 11:07 am

    Sorry man, had to move a dining table into my new place. It’s solid. In fact, I’m sitting at it right now.

    1) What’s absurd about them? Here’s a practical suggestion: Tax 10% of everyone’s consumption as a nation-wide sales tax. If someone’s income is less than some certain level (maybe $30k annually so as to safely include all Ph.D. students), they are exempt from this tax. This lowers the marginal propensity to consume for higher income Americans without affecting the poorest members of society.
    2) I think in this case, BDK’s thought exercise is a good one. I’m not satisfied with you saying that one can support larger government programs while still trying to evade taxes that pay for them. This inconsistency undermines the basis of government programs in the first place – namely that such programs help lead to a more just society (in libs’ view) and that we all should pay for that benefit. I’m surprised you don’t see an inconsistency in that.

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