All Your Salary Are Below To Us

Apparently the newest pro-tax meme out of the Left is that millions of dumb Americans don't already know that they are benefactors of social spending programs and that if they understood this, they would surely support government expansion.  Such programs they highlight include:

  • 529 or Coverdell savings deduction
  • mortgage interest deduction
  • hope or lifetime learning tax credit
  • student loans
  • child and dependent tax care credit

etc. etc.  Whole list here.  I don't want to spend too much time on this silliness, but two immediate responses come to mind

  1. If tax credits, ie the ability to keep more of your money and be taxed less, is a government social program, then the implication is that all your money belongs to the government, and the very fact you keep any of it is a gift or benefaction of the government for which you should be grateful.  The fact the Left cannot understand the simple difference between, on the one hand, keeping more of your own money, and on the other, getting money that has been taken by force from others, explains a lot about the current budget fight.
  2. In many cases, Americans "benefit" from government programs because the government does not allow any alternative.  Or, if it allows an alternative, the government provides heavily subsidized services or pre-paid services (e.g. public education which you pay for whether you use it or not) that crowd out private alternatives.  Just because roads and schools and home loans have heavy government involvement does not mean that they require that government involvement to exist.

More analysis here.

  • anoNY

    #1 above really shows how the liberal mindset has elevated government above We the People. This is a return to monarchist thinking, though without an all-powerful leader (However, I'm sure many on the left would be comfortable with Obama in THAT driver's seat).

  • anoNY

    Almost forgot, and feel free to delete this once a change is made:

    The title should be "All your salary are belong to us", not "below."

  • Matt

    Mortgage Intrest is currently my only significant tax deduction. I would gladly trade it in for a flat tax at a reasonable rate.

  • Ted Rado

    There is no such thing as "government benefits". The government taxes you, fritters away much of it on nonsense, and distributes the rest to where it will (they hope) get them the most votes. Yes, some will benefit more than they pay in taxes, but on average, the taxpayer loses. If you bet on being one of the fortunate who receive more than they pay, the math is against you.

    The same fallacy applies to business taxes. They are simply a pass through to the final customer. It is a way of hiding high personal taxes from the citizenry. Worse, high business taxes make US products more expensive, less competitive, and hence result in lost jobs. It would be much easier, and fairer, to eliminate business taxes and raise individual taxes. What difference does it make if you pay a thousand more for a car or pay the thousand as taxes? Remember: we pay for everything either as consumers or taxpayers. There is no free lunch. Those who benefit by the government robbing the productive and giving the money to the nonproductive are really criminals. They are robbing, but using the government rather than a gun as your tool. Let charitable institutions do the social work rather than the government.

  • http://dullgeek.blogspot.com dullgeek

    This reminded me of an argument I've had with a friend of mine who is constantly trying to tell me that not taxing someone is the equivalent of spending money on that person. His argument is that $100 not collected in tax from someone reduces the government's ability to spend $100 on everything else in exactly the same way that $100 spent on some program reduces the government's ability to spend $100 on everything else.

    But your post helped me come up with a counter argument to this. Sure, from the government's accounting perspective it looks like not taxing someone is the exact same as spending. But from an economics perspective, government spending involves 2 people: the person who makes money and pays the tax, and the person who consumes that spending. The person making the money has no incentive to increase their production because they don't get to spend that money.

    OTOH, a person who is not taxed $100 is both the money producer it's consumer. That person has a greater incentive to produce.

    So that, from an accounting perspective they may appear the same. But from an incentive perspective, not taxing is much more productive than spending.

  • richard

    Warren,

    Hold on, you make no sense ;-)

    > If tax credits (...) is a government social program, then the implication is that all your money belongs to the government

    vs

    > mortgage interest deduction

    This discussion is the same all over the world (I'm from the Netherlands). Mortgage deduction is basically a 'discount' on the tax you have to pay. So if you don't earn it first, you get no 'discount'.

    Try not-working for a year and you'll find out: If you don't earn the money in the first place, the government is not going to give it back to you! Who's money is it?

  • http://www.ianrandom.com Ian Random

    Supposedly, the interest deduction is what is left after they repealed it all other interest deductions.

    "Charging taxes on interest is double taxation because the people who earn the interest also have to pay taxes on it. So, as Wikipedia notes, when Congress created the income tax in 1913, it allowed people to deduct the interest from all personal loans, not just mortgages. But in 1986, Congress (no longer worried about double taxation) repealed that deduction for all loans other than home loans. The stated reason for leaving that deduction was to promote homeownership."

    http://ti.org/antiplanner/?p=5010 (would prefer a left wing source)

  • Dan

    Re: mortgage interest deduction. Interest payments are deducted from your income, but dollar for dollar it is income to the mortgage holder. The money did not escape taxation; it was paid by someone else. It's fairer than dividends, which are taxed twice.