Government Spending

Transfer Machine

Why the true burden of government is the spending level

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"The government who robs Peter to pay Paul can always depend on the support of Paul," George Bernard Shaw once said.

For a socialist, Shaw demonstrated good sense with that quotation. Unfortunately, America has become a laboratory in which his hypothesis is being tested.

The theory of government I was taught says that government provides benefits, primarily security, to the entire population. In return we pay taxes. But lately the government has been a distributor of special privileges, taking money from some and giving it to others. America is now about evenly split between those who pay income taxes and those who consume them.

The Urban-Brookings Tax Policy Center recently disclosed that close to half of all households will pay no income tax this year. Some will pay less than zero—that is, they'll get money from those of us who do pay taxes.

The Tax Policy Center adds that this year the average income-tax rate for the bottom 40 percent of earners will be negative and that their cash subsidy will equal 10 percent of the total amount the income tax brings in, thanks to the Earned Income Tax Credit and President Obama's "Making Work Pay" program.

The view from the top also shows the lopsidedness of the tax system. The top 20 percent of earners makes about 53 percent of the income in America but pays 91 percent of the income tax. The top 1 percent pays 36 percent. The IRS says the bottom half of earners pays less than 3 percent.

This presents a serious problem because government has such vast powers to dispense favors. As Shaw suggested, people who pay no tax will not hesitate to vote for politicians who promise big spending. Why not? They will get stuff without having to pay for it.

Yes, working people who pay no income tax still pay taxes: sales tax and payroll (Social Security and Medicare) taxes. But the income tax is big and visible, so it's a problem that a growing number of people don't pay, but get benefits from those who do.

Frederic Bastiat, the great 19th-century French economist, defined the state as "that great fiction by which everyone tries to live at the expense of everyone else." I don't know if he envisioned one half of the population living off the other half.

It's important not to confuse the interests of the taxpayers with the interests of the politicians and other tax consumers. Yet that is done all the time. When the government bought toxic assets (of zero market value) from the banks, it said taxpayers would profit when the economy recovered and the assets once again commanded a positive price in the market. Even if we make the dubious assumption that the government is savvy enough to buy low and sell high, it's not the taxpayers who would benefit from any profits. The politicians will spend every penny, rather than cutting taxes.

To put it bluntly, we are not the government.

The built-in unfairness of the tax system has prompted a range of tax-reform proposals, such as a flat tax and replacing the income tax with a sales tax. These alternatives are better, but they have their drawbacks, too. For that reason, there is something more urgent than tax reform: spending reform.

The true burden of government, the late Milton Friedman said, is not the tax level but the spending level. Taxation is just one way for the government to get money. The other ways—borrowing and inflation—are also burdens on the people. The best way to lighten the tax burden is to lessen the spending burden. If government spends less, it takes less. And if it takes less, the tax system will weigh less heavily on us all.

Once again, we find wisdom in Adam Smith: "Little else is requisite to carry a state to the highest degree of opulence from the lowest barbarism but peace, easy taxes, and a tolerable administration of justice: all the rest being brought about by the natural course of things."

John Stossel joins Fox News on Oct. 19. He's the author of Give Me a Break and of Myth, Lies, and Downright Stupidity.

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  1. As I was preparing the return of a “Net tax receiver”, he asked me whare the government gets the money to send him, when he had nothing withheld from his pay check. I gave the half-true answer that they get it from people who make more, don’t have children of the government subsidized age or ottherwise don’t get freebies (or work two jobs like…..ME!). His response left me speechless – with a self-satisfied smirk he simply said “GOOD!!” Yeah, he’s gonna vote to cut taxes!

    1. You should have told him the true answer. They also get it by borrowing and his children will have to pay with taxes, and he will have to pay with inflation.

      Eat up! Your children will pay the check.

      1. Right, hence the adjective “half-true” before answer. I thought reason commenters could fill the other half in for themselves.

      2. If the apples don’t fall far from the tree, his children won’t pay taxes either, and they’ll be net debtors so inflation will benefit them.

        1. No it won’t benefit them. Inflation hurts workers because wages trail, and it hurts workers because any money they save is usually in cash.

          Also that assumes the ability to borrow is infinite. It’s not.

    2. So you’ve got a guy getting refundable tax credits (I’m presuming he got the EITC and DTC, which is why he was a net receiver), and he’s got a professional preparing his return for him – yet I’m an attorney who practiced tax for three years, making more than enough money to be a net tax PAYER, and paying plenty o’ taxes, believe me, yet my wife and I do our own returns. Hmmm…

      1. It was at a storefront preparation service and he wanted a “next day” refund loan. My experience is that the vast majority of people getting huge checks, far in excess of any or all withholding, don’t even look at the amount of the fee we charge. Most of the profit in store fronts come in the 8 weeks from mid-January to early March, when people with big ‘refunds’ come in. And, YES, he got both EITC & DTC.

  2. The Urban-Brookings Tax Policy Center recently disclosed that close to half of all households will pay no income tax this year. Some will pay less than zero?that is, they’ll get money from those of us who do pay taxes.

    The Tax Policy Center adds that this year the average income-tax rate for the bottom 40 percent of earners will be negative and that their cash subsidy will equal 10 percent of the total amount the income tax brings in, thanks to the Earned Income Tax Credit and President Obama’s “Making Work Pay” program.

    The view from the top also shows the lopsidedness of the tax system. The top 20 percent of earners makes about 53 percent of the income in America but pays 91 percent of the income tax. The top 1 percent pays 36 percent. The IRS says the bottom half of earners pays less than 3 percent.

    Even ignoring fairness, this is not good for the health of the country.

    1. I pay five figures.

      Why does Obama hate me?

  3. Curse the lack of spell checker -“where”, not “Whare” and “otherwise”

  4. But as John Stossel writes, lately the government every government in recorded history has been a distributor of special privileges, taking money from some and giving it to others.

    Fixed.

    This is one of my pet peeves, this concept that government transfers from the politically powerless to the politically powerful is some new wrinkle in American History when it has happened in every government ever.

    1. Agreed, but we are unique in that America was founded to avoid this specifically. So it’s not as notable in other nations as it is in the US.

    2. My understanding, the US Constitution allowed only for taxes for the general welfare, and that is more or less the way it worked until GDMF FDR packed the Supreme Court with SOBs that changed the meaning to be government can do anything it damn well pleases.

  5. Total tax burden, not income taxes should be the measure of taxes. FICA is a tax on income.

    1. What, you’re admitting that FICA is not a Social Insurance contribution?

      What kind of liberal are you?

      1. Isaac, please, you should know by now that whether or not FICA is an insurance premium or tax depends entirely on what point a liberal is trying to make at the time.

    2. And the less you make, the more you get (pecentage wise) for your “contribution” to the government retirement system.

    3. Nice to see someone here recognize that.

      Libertarians enjoy being the economic brain trust for the Republicans, but don’t seem to realize that the intellectual contagion works both ways.

      It’s disappointing to see Stossel repeat Republican talking points.

  6. Well that pretty much puts a bow on it. John Stossel, once the courageous libertarian voice of the MSM, has joined the choir of yammering right wing-nuts on FOX.

    1. I have faith that he wont be compromised by the neocons.

    2. How is talking about wealth redistribution *not* libertarian, again?

    3. John is about as libertarian as it gets. Any more and he’d be anarcho-capitalism.

      What has he said that makes you think that he’s not libertarian?

    4. Well, this outburst of yours pretty much rats you out for what you are, doesn’t it, yammering leftard commie?

  7. John opened his critique with such promise and literary cavalry, but when he juts, almost implementing that the current government is the cause for our out of policy, out of control tax failures, he misses the point. All Governments have failed at reining, if not imposing some stability to the bloated queen that is taxes. Man, when people jump sides, some Michael Jordan-esque them..

  8. lately the government has been a distributor of special privileges…

    Lately? What rock has Stossel been living under? Of course the government is run by Martians. The human beings in the roivate sector don’t have such flaws.

    1. Oh-wee-Oh-wee-Oh!

  9. His response left me speechless – with a self-satisfied smirk he simply said “GOOD!!” Yeah, he’s gonna vote to cut taxes!

    I did some volunteer work in my undergrad years in lieu of yet another general education course of dubious value. That attitude was endemic to what I eventually came to call the Slug Class (Don’t worry- there’s no specific racial or ethnic implication there. Slugs come in all flavors). Anyone who goes out and works hard and creates things is viewed with open, seething hostility.

    One fine gentleman slug once saw a book I had on cosmology in my backpack, and he asked if it was for a class. When I told him, no, I was reading it just because I found it interesting, you could almost hear his rickety neurons misfiring in a neurochemical cascade of confusion. The concept of learning something for the sake of learning something new, well, I wasn’t just an alien from another world, I was a being from a different universe with completely different dimensionality and physical laws.

    I went back to taking general ed courses. At least there I could learn things that didn’t make start to consider Kornbluth’s “The Marching Morons” a work of prophesy.

    And the saddest thing was there’s no reason most of those folks couldn’t make something of themselves. There was nothing intrinsically stupid about them. They had potential as much as anyone. It was all attitude. The exact mix of nature versus nurture that leads to it is a question for experts far from my chosen field of expertise.

    For fun:
    http://en.wikipedia.org/wiki/The_Marching_Morons

  10. The theory of government I was taught says that government defends individual liberty and we pay no (income) taxes. Of course I wasn’t really taught that since I went to public school but that was the way our government was originally designed. It’s why we need to repeal the 16th and 17th amendments. Then since the states would be paying for the federal government and they would elect Senators special interests would be kept in check and all would be well with the universe.

  11. Edward, i realize you are far too stupid to comprehend this, but the whole point of libertarianism is that governmental actors are just as subject to human flaws as every other, well, human, and that therefore concentrating power in their hands is retarded. It’s not about WHO has the power over others, it’s that the power exists at all. Kill yourself.

    1. Since he’s back, I guess that means his mother finally rotted to the point even he won’t fuck her.

      Xeones knows the score, but in case you were wondering…

    2. Xeones

      Right. Concentrating power in the hands of unrestrained private actors is so much better. Moron.

      1. Wait… Power? Last I checked the “unrestrained private sector” can’t make me buy their shit or even step foot in their businesses unless I want to.

        What awesome power they have indeed… I fear mighty Walmart, who’s low prices and wide selection “force me” to shop there… OOOHoooooooOOOOOHHHHH!!!

        Oh wait… No. I don’t fear that. What I do fear Mr. Lefiti, is that some asshole politician will write a law where I go to jail if I don’t pay taxes and then send the money forcibly taken from me to politically connected businesses against my will.

        You tard.

        1. How unsurprising that a white collar elitist douchebag would think that shopping where the prices are lowest is a matter of choice and not survival.

  12. As I was preparing the return of a “Net tax receiver”, he asked me whare the government gets the money to send him, when he had nothing withheld from his pay check.

    Why not tell him that they borrow it, so if he ever plans to make decent money he can expect to pay it back, with interest?

  13. It should be noted though, that by implementing the Fair Tax, we would save around $200 BILLION a year in tax compliance costs. Course as a CPA that would mean less potentail revenue for me, but still I’m will to take a hit like that for the good of the country.

  14. I like Stossel, but this article is just too unfocused to resonate with me. He talks about unfair taxes and unfair spending, and touches on government corruption/incompetence, but doesn’t really make a good case for anything. For example, it doesn’t measure up to his “welfare queen” article. https://reason.com/archives/200…..are-queen.

  15. Oh well, Who is John Galt?

  16. If we want fair taxes, shouldn’t we have fair income? We’re in a society now where CEOs make several thousand times what their lowest paid worker does. This opposed to around 50 times in the 1950s. If you want to shore things up, I think, “the poor should really shoulder more of the cost” is the wrong way to go about it.

    1. Fair income is whatever others are willing to pay you.

    2. We’re in a society now where CEOs make several thousand times what their lowest paid worker does.

      Then perhaps you should attempt to understand why this is the case?

      Why was this not the case when the market was nearly free?

      Why does the situation keep getting more distorted the bigger government gets?

      1. Now the government artificially propping up corporations with hand outs and subsidies being complete BS is something we can agree upon. I’m just not as convinced unrestrained free market is the cure. Not without serious changes to the culture of corporate America.

        It’s one of the few issues that still keeps me interdependent as opposed to libertarian.

        1. Edit: Interdependent should read independent.

        2. It’s not just corporations (including unions), it’s monied interests of all stripes.

          I just don’t understand how anyone believes increased government power will not be used for those interests. It always has been. Big business has grown along with big government.

          Obama talks socialist but continues to be in bed with the money.

          Is it true that the money will maintain an unfairly gained position if the markets were freed?

          Yes. But over time competition will mitigate that. Which is exactly what the money doesn’t want.

    3. “several thousand times”??!??

      I’ll go ahead and call Bullshit, on you sir. Try doing some math once in a while.

      The average American makes around $45,000 a year. So… Let’s see here, what’s… Ohhh…. 4,000 X $45k? (I figure, 2 = couple, 3 = few, and 4 = several thousand, at minimum right?)

      Are there a lot of CEOs making $180,000,000 a year?? Hmm… Let’s check, yeah? Oh. Right. NO!

      According to CNN Money at least, of the top 10 highest paid CEOs in the world, a grand total of 3 were paid above that. Again… In the goddamn world.

      Look, that said, the wealth-gap is a real “problem” in some ways, but it’s really nothing more than a side-effect of the mercantilist/corporatist system we’ve got running combined with fractional reserve banking, but given your gross exaggerations, I won’t expect you to understand that.

      1. I’ll try to keep a more civil tongue than you have, sir. I said several thousand times their LOWEST PAID employee. Not the national average income.

        Please read more carefully. It cuts down on misunderstandings.

    4. Amee,
      Are you complaining about differences in income?

      Why don’t you become a CEO?
      Instead of making $25,000, you could make $25 million. Hey, only a few 1,000 made that much, & most are in entertainment (film, media, sports, music) so put your reservation in.
      Entertainment is much easier, an education is often not needed. Fair?

      1. I neither want to be a CEO nor want to make $25m a year. I’d be happy with a livable wage where one doesn’t have to work multiple jobs and spend the majority of the day away from one’s family. That perhaps companies and corporations remember that without the people who actually get their hands dirty they don’t produce anything. It’s the hands of the workers that hold up the company, they’re partners in that company’s success and should be treated as such.

  17. Here’s a novel idea: Everybody pays a flat percentage of their income for income tax.

    Or, better yet, no income tax. Replace it with a national sales tax (something low like 1%) and a national lottery.

    1. Here’s a better idea… Get rid of the income tax entirely, and replace it with……. Nothing.

      1. I like how you think, Mr. Malone. 🙂

  18. The burden of government spending will ALWAYS be borne by those who labor to create value.

  19. Ugh. He gets around to mentioning that everyone does, in fact, pay taxes, but then promptly dismisses those taxes because they aren’t as “big and visible” as income taxes? He means he can’t rehash the canard of the lazy freeloader if he includes other taxes.

    What is so absurd about all the bitching about “fairness” in the tax code is that in our society, in which the gap between the richest and poorest is as big as it ever has been, libertarians still want to soak the middle class more and ease the burden of the very wealthy, which is the direct consequence of their favored tax schemes.

    To echo AhmNee above, there is no way in hell CEOs have suddenly become that much more productive. In fact most CEOs get royal treatment for life regardless of how much they contribute. The system of compensation is broken, and all financial risk has been transferred to the poorer classes, and it’s not an accident but a direct result of libertarian-inspired tax schemes of the last 30 years.

    1. Hey! Look who’s here: it’s Tony – or The Wet Nurse – from Atlas Shrugged!

    2. “libertarian-inspired tax schemes”?
      I’ve never heard of such a thing. don’t you mean pro-state tax schemes?

  20. Well, we should ask why roughly half the people aren’t paying any income tax. The obvious answer is that they effectively have no income.

    So, why is this? Free trade – the jobs these people used to have, have all been exported to the third world.

    Is there a solution?
    Yes: Wage-differential import tariffs.

    Free Trade = No Real Jobs = Economic Catastrophe. Want a functional economy? Get rid of free trade – you’ll soon see that it isn’t really free: you’ve paid for it with your future.

    1. Free Trade = No Real Jobs = Economic Catastrophe

      Wow the ignorance is profound. And you don’t draw any connection between protectionism and job loss?

      you’ll soon see that it isn’t really free: you’ve paid for it with your future.

      Lol. Cuz you’ll have a great future when the US loses it’s last exports, has lost the reserve currency, and can borrow no more.

      FFS.

      Sean, RC.. tell me this brainiac is an outlier.. I need some hope..

      1. Sorry bro… I don’t think he is. I think we’re the outliers. 🙁

    2. This is pretty damn insane.

      Free trade means that you actually get goods at a market cost and thus quality can go up while price comes down, by employing resource where they are most efficiently utilized rather than chaining yourself to broken business models and overpriced labor.

      I would contend that the ONLY thing keeping the American economy really afloat right now is the benefits of global trade allowing us international avenues of exchange, better division of labor and cheap goods.

      The real question you need to ask is why the jobs left the US in the first place… What could it possibly have been that (hint) required labor costs to be so high in the US that it drove a lot of businesses (especially manufacturing) elsewhere?

      Think about it for a bit…

      1. Right. Overpriced labor. Because corporate America would love to see us make the ~$2/hr they pay their international laborers in China, Mexico or the Ukraine. Obviously it’s all the American worker’s fault to want to be able to pay rent, afford a car and still want to be able to take a vacation every few years. Pshaw. Vacations for the workers. Next they’ll start thinking they have rights.

        1. Next you’ll start thinking you have a clue.

          The policies you think you want are exactly what has caused the labor to go overseas, which means more workers seeking fewer jobs, which means lower wages. The more you try to tax and redistribute or force wages to be high the more jobs flee. It is positive feedback.

          This is all because the ‘managed marketeers’ like you don’t grok causation.

    3. The obvious answer is that they effectively have no income.

      Um, no.

      It’s called “refundable credits”. Certain provisions in the tax code that provide a credit that you can get refunded – even more than the amount of tax you might have paid or be liable for.

      So you can make a certain amount of income – i.e., not that you “effectively had no income” – but that you did not make too much that you were disqualified for the credit. And then you “get back” money from the gubmint that you never paid it in the first place. If you did pay taxes, you get all of those back (based on various deductions), PLUS the refundable credit.

      The internal revenue code is massively fucked up.

      1. What refundable credits are you talking about? The Earned Income Credit? You make it sound like the lower class gets these huge windfalls. Most of the time the EIC makes up the difference from an unlivable wage to an almost livable wage.

        These people are people who wait all year for the pittance given to them so they can get long overdue repairs done on their cars or for once be able to buy something they need or want.

        1. Maybe if some of these folks would stop paying their local rent-a-center $3000 for a $1000 TV, they might have money left over to fix their car.

          1. You’re listening to the Bank and Credit Card Company spin again aren’t you? They’d love us to believe their PR that says that Americans are spending more frivolously than ever before. Buying cars and TVs that they can’t afford. But if you go out and look at the studies done it’s all wrong.
            http://bostonreview.net/BR30.5/warrentyagi.php
            http://marketplace.publicradio…../15/reich/

            Just a couple of examples. But to summarize, American’s aren’t spending beyond their means, incomes have gone down. Then why has disposable income gone up? Because more and more people have gone to two income homes and that extra income skews the numbers.

  21. there is no way in hell CEOs have suddenly become that much more productive

    So you think CEO’s graduate form high school and ‘suddenly’ get handed responsibility for megacorps?

    They are paid like that because they are that valuable to the organization and it’s judged too risky to hire someone less expensive. No other reason.

    The question you should be asking is how the markets got so distorted in the first place, and why every time we get more government intervention the situation only gets worse.

    But you want more. And you think this time.. it will work..

    1. Thats a great theory, but in the real world their pay is set by goards of cronies and constantly escalates.
      There is no correlation between performance and pay at large public corporations.
      it’s really socialism for the rich and libertarians shouldn’t justify it because it says that it private or free market when it clearly isn’t.

      1. Disney increased it’s value from 2 billion to 43 billion in the 1990s. You don’t think the CEO should get to enjoy a big paycheck, since he created all that new wealth, and those new jobs?

        Or how about Ben & Jerrys – when they first started out, they declared that their CEO would get paid no more than 5 times the salary of their average worker (for which they were hailed in the MSM). They hired an ignoramus, who lost the company money. They fired him shortly thereafter, and quickly abandoned their altruism. To get someone willing and able to handle a multi-national, multi-billion dollar corporation, you have to pay for it. Get over it.

        1. Right. Because it was Disney’s CEO who did all the work and drove up their profit. It had nothing to do with his workers. The workers don’t deserve either credit nor compensation. Welcome to the new feudalism.

          1. So you would put in a $50k shlub and lose everyone’s jobs.

            Do you ever note that even in employee owned businesses CEO’s get paid a lot more?

            Sure they could out Jim the floor foreman in charge and ‘save’ a lot of money. Why doesn’t that happen?

            1. Because corporate America has created a culture where unscrupulously high salaries are competitive. But while you site one instance where a low salary CEO that didn’t work out, there are exponentially more stories where a high paid CEO didn’t work out as well. So, by your logic, you’re suggesting putting in a $25m shlub.

              1. If you’re an owner or shareholder or worker/owner, why do I have any say over how much you feel it’s worth to you to have a good CEO?

                And who created this ‘culture’? How did it happen, exactly?

      2. Thats a great theory, but in the real world their pay is set by goards of cronies and constantly escalates.

        How do those cronies happen? Sure at places like GM or Goldman Sachs or government bureaucracies there’s a lot of that.. and those are businesses in markets that are highly regulated.

        There is no correlation between performance and pay at large public corporations.

        As a generalization, that’s patently false. Large corporations in free markets are famously draconian about productivity.

        it’s really socialism for the rich and libertarians shouldn’t justify it because it says that it private or free market when it clearly isn’t.

        Right, markets like banking and health care are not free
        Think it through. Not free markets == abuse in proportion to how not free they are.

        How many times have you heard about abuses or corruption in say the electronics business?

        1. Intel fined record amount in antitrust case:
          http://www.nytimes.com/2009/05…..mpete.html

          Samsung corruption probe:
          http://www.nytimes.com/2007/11…..msung.html

          You were saying?

          1. So two.

            And you think this compares to banking, health care, or public education, or public anything?

            Spend your credibility more wisely.

            1. We’re only allowed 2 links per post, sir. I’m new here and I know that.

              Those two links were from a quick internet search. You were implying that it was unheard of. I’d say your credibility is bankrupt.

  22. I like the fact that the poor don’t pay income taxes because of two reasons: a.) the poor have a higher percentage of non-discretionary income than the rich and I would prefer the poor spend their own money on their basic needs than routing their tax money through an expensive government bureaucracy and giving it back to them; and b.) it creates an opening where income taxes could be gradually phased out from bottom up. Imposing income taxes on the poorest members of society now would start riots, but phasing it out for the lower-middle and middle classes would be popular, and eventually make it possible to phase out for everyone.

    1. My point is: if you tax the poor, you will need more welfare programs to pay for the difference – and they will have more incentive to demand such assistance as they would be paying for the government at immense burden to their quality of life.

  23. Tax the rich to pay for the middle and lower classes and you will find yourself without rich. Remember, they have the money to leave…….

  24. Bill Gates could not make his billions on an island. He benefited from goverment in at least two ways: many his emplyees were products of public education and the middle class consumers can only afford his products because of goverment. So it makes sense for him to pay higher taxes to keep the system going.

    1. Andrew, that’s remarkably silly on both counts.

      1. Public Education
      First off, many of his employees were educated in other countries. Microsoft is an international operation after all. Our public education system is often considered one of the worst in the developed world and our kids out of high school and even now, some out of college are only “competitive” for jobs with a lot of people in other countries because U.S. immigration law keeps them out. Likewise, the public education system explains Bill Gates’ success only to the extent that it explains the failure of every single company that has fallen by the wayside over the last 100 years. EVERY employer, by your reasoning has “benefited” from the government-run school system… Yet, one would think that if that were a huge advantage, no new company would fail.

      Lastly, on this topic, Bill Gates (and every other property owner) ALREADY PAYS FOR THE SCHOOLS! By owning a large personal estate, not to mention the various office-buildings and whatnot for the company (which he does) he is paying vastly more than average person in taxes that are supposed to go directly to the school system. So saying he should pay even more income tax on top of that is absurd based on your argument.

      2. Middle Class exists because of government

      !? Wtf are you talking about? The middle class exists because of mass production. Massive increases in companies’ ability to manufacture goods and to streamline the costs through intelligent innovation and global trade are what allow the great bulk of ordinary people to have houses, indoor plumbing, cars, computers, telephones, electricity, etc. The government (outside of maintaining property rights & basic rule of law) has dick all to do with that. Notably, each time the government meddles and tries to “redistribute” wealth – the bigger government gets, the bigger the gap between the rich & middle class gets! Worse, whenever the government gives special deals to the middle class (a la CARS), they do it typically at the expense of the poor.

      I will, however accept the argument that Bill Gates has benefited from favorable legislation, helpful zoning laws and special tax exemptions. That said, he’s also been the subject of anti-trust suits and such as well. It’s probably a wash on that front.

      1. It is well documented that goverment investment in public education is responsbile for creating qualified employees and middle class consumers. Studies also show that without goverment actions, the education as whole will be under-investigated and the country much poorer. Bill Gates will be poorer as a result. Just imagine that if we eliminate the public education system supported by the goverment, many young families would not be able to afford sending their children to private schools, and the U.S. will become a third world nation in one generation.

        1. Yet we became a first world nation without it.. hmm.

          Your premises are wrong.

          We we prosperous because we were free, education happened because we were prosperous. You act like public education is free education, it costs something. Just like health care.

          1. “You act like public education is free education, it costs something. Just like health care.”

            Placing the domain of the best education and best healthcare in the domain of the rich.

            “We hold these truths to be self-evident, that all men are created equal, that they are endowed by their Creator with certain unalienable Rights, that among these are Life, Liberty and the pursuit of Happiness.” – Declaration of Independance

            So, tell me. If all men are created equal. Why are you entitled to more ‘life’ than I am? Because you have more money?

            We aren’t educated because we’re prosperous. We’re educated because we’re free. One of the first acts of a tyranny is to stop the education of it’s subjects and stifle free thought. An uneducated mind is not a free mind. How can an individual that can’t comprehend liberty and the world around it know what makes it happy and thereby pursue happiness? Education itself always has and always will be free, the cost comes from the framework built around it’s distribution.

            I’d say your premises are wrong. We didn’t become a first world nation without it. We became a first world nation because of it.

            1. Placing the domain of the best education and best healthcare in the domain of the rich.

              And public education has changed that a lot has it?

              Why are you entitled to more ‘life’ than I am? Because you have more money?

              No one is ‘entitled’ to anything. You have a right to life, liberty, and pursuit of happiness, because these are things you have a right to protect.

              You do not have a right to take someone else’s liberty, life, or pursuit of happiness.

              You may get the government to use their guns to take it, but despite you call it a right, that’s not a right, that’s spoils.

              We didn’t become a first world nation without it.

              The history is plain, sir. You’re wrong.

              FWIW I’m not against subsidized education. I’m against an education monopoly. It’s extravagantly wasteful, and unfairly penalizes the poor. Vouchers FTW.

        2. Your comment totally ignores how poor blacks were educated when schools were segregated.

          It is a little-known that the NAACP chose Topeka KS Board of Education to argue for integration because black schools in Topeka KS were outperforming the white ones. Thus, the lawyers had no need to argue for a hand-out from the state or federal government.

    2. This is ‘tarded. People who have their money taken away from them to pay for public schools, thus leaving them too poor to afford private schools, are not benefited by this process.

      Middle class consumers would be richer if the government wasn’t stealing up to half of their income, and could thus buy more of Gates’ stuff.

  25. @ Sean

    alot of those US jobs left because we allow other nations to artificially maniupluate thier exchange rates (see China etc) thus making their goods much cheaper than they would be.

    In addition, we allow a lot of countries to have much more access in our markets than we have in thiers, again not free trade.

    Finally, trade only occurs when you exchange one thing for another. When one country does all the buying, and another all the selling, that is not trade.

    I suggest re-reading Ricardo’s work on compartive advantage, and trade.

    The US policies that we have now, are certainly not free trade, OR beneficial.

  26. “Finally, trade only occurs when you exchange one thing for another. When one country does all the buying, and another all the selling, that is not trade.”

    I understand your (and Ricardo’s) point here, but money is part of every trade. We happen to be on the downward sloping half of a peak where we are living off the productive efforts of our grandfathers. They did good work, and until 1976, we were a massive creditor nation producing a huge chunk of the world’s goods. That said, money IS something being traded. Money is fungible and useful for the purchase of other goods, obviously – so to say that we’re not engaging in “trade” when we pay China money for their tires, etc. is as silly as saying that I’m not engaging in trade when I exchange money for tires at my local Goodyear dealer.

    As Thomas Sowell has pointed out on a number of occasions, by these definitions we’re in a constant “trade deficit” as individuals on a daily basis.

    NOW… The problem is not that we’re trading money for their “stuff”, but that we’re not also trading very much stuff for money to other people, and instead are “acquiring” money by borrowing from our trading partners and then printing when it comes time to pay the bill.

    What I was getting at with employment, however, is that all else being equal – we have lost a massive amount of low-skill jobs simply because of things like minimum wage. The higher that wage gets, the fewer jobs are going to be available in the US which could be done more cheaply in Thailand or Vietnam… There’s a pretty easy-to-understand tipping point here, where the cost to hire labor outside the U.S. and then ship the goods back in is cheaper than manufacturing goods here and saving on international shipping costs. This is largely a government-caused phenomenon.

    1. Free trade advocates ignore the effect of currency manipulation in trade flow.
      If we really had free trade with china for instance, the value of the currency wuld have risen long ago making their products more expensive here, thereby limiting the trade volume. That’s the type of feedback loop that is inherent in any free market, and missing with so called free trade today.

      1. It’s at least silly to assume a free market advocate doesn’t understand we don’t have free markets. We’re not free market conservationists;p

        Of course there’s a problem with fiat currencies. There’s also a problem because China has our nuts in a vice because they own so much of our debt so we can’t complain too much.

        There’s debate among free market libertarians but personally I’m an advocate of natural money.

        In the computer age I think it’s inevitable. Even now you may get debit accounts/debit cards which are backed by gold reserves.

  27. Let’s start cutting back on the spending. To begin with, let’s re-institute the old laws disqualifying from voting those who receive welfare. And no, not SS nor Medicare (Medicaid, yes) nor unemployment; those things you pay for. When you’re getting welfare, you cannot vote. When you stop getting welfare for at least one year, you can vote again. Folks who get welfare don’t have to pay for the foolishness and are often net beneficiaries – in money terms – of government spending. Then, with a lowered value of demagogery and fanning the fires of class warfare to being elected, we might see some serious changes on how the states and federal government operate. Lower taxes are more likely when only the folks who pay taxes get to vote.

    1. IMO anyone who receives any government funds should not be able to vote in the government they receive funds from. IE state employees should not be able to vote in state elections, federal in federal, municipal in municipal, etc.

      And yes I would include SS, medicare, etc. Everything.

      1. Be careful. Your inner despot is showing.

        You’re talking about disenfranchising not only the poor, but the lower class who needs foodstamps to make sure their children are fed; enlisted military men and women whose income is still below the poverty line and need help to make it from paycheck to paycheck; the people who do the work and make sure your world turns.

        And why? Because the government tries to help those who need the help most? You think that these are just lazy people who have engineered a way to suckle off the government teat? You think that the serfs should be happy that you leave them scraps while you send their sons off to war?

        And yes, I say you and not the government because with your vision you get to vote, you have a voice in that government. They don’t.

        1. You’re talking about disenfranchising not only the poor

          No I’m saying if you want to be treated as a dependent child then you should have commensurate privilege.

          the people who do the work and make sure your world turns

          The people making the world turn are the tax providers not the tax consumers.

          What do you do when you run out of other people’s money? The rich can hide or move their money, and are. Businesses are. Jobs are leaving.

          Your scheme inevitably results in cannibalism when you destroy or scare off all the productive.

          You think that these are just lazy people who have engineered a way to suckle off the government teat?

          Engineered? You mean like Cloward and Piven

          You think that the serfs should be happy that you leave them scraps while you send their sons off to war?

          What war do you assume I want to send anyone’s son to?

          I was in the 101st. I served voluntarily.

  28. Lots of thoughtful stuff here. But one claim on Mr. Stossel’s part puzzles me. “But lately,” he writes, “the government has been a distributor of special privileges, taking money from some and giving it to others.” Could he identify a time in human history when this has not been what governments have done? This isn’t an exception?it’s the rule.

  29. Ike, that’s an awesome idea

  30. Kroneborge: Thanks, I think. I don’t see the [sarcasm on} indicator, so I’ll take it at face value. It isn’t new or original. For a long time – how long varies from state to state – in order to receive whatever welfare was available, you had to sign a “pauper’s oath”, in effect swearing that you were broke, unemployed and maybe unemployable. That oath was a disqualification for voting and for precisely the reasons I outlined. Not racist, as more whites receive welfare than any group; not permanent, get a job and support yourself for a year and stop taking welfare and you can vote. Cruel to the poor? Not any more cruel than what we do to them now in education, etc. Disenfranchising? Yes, but only until you become employed and remain that way for a year. Genuinely crippled? Truly disabled? Dunno. For myself, I’d say depends on the source of your income or benefits: if you paid into it, you can vote; if you didn’t you can’t. Military? Well, if signing up to take one for Uncle Sam isn’t “paying” for it, I don’t know what is. But then, that’s my ox; I’m a retired Army sergeant.

    1. Lets bring back the debtor’s prisons, too.

      As a retired Army sergeant, you should know better. In the early 90s when the military was not giving out raises, the veterans association volunteered to give up their COLA increase if the government would give the lower enlisted personnel a pay raise because our military men and women under E-4 or E-5 were making below poverty level income and most military families of those ranks depended on one or more state and federal subsidies to get by. Now if Federal employees were having trouble getting by with their income from a secure job (at least for 4 years at a time) how much more difficult must it have been for men, women and children who did not have secure work, did not have federally mandated wages and did not have access to base benefits like healthcare, AAFES and other base programs that helped lower income members and member families?

      I’m sorry, Sir. But if you were an Army Sergeant, I doubt you were one of the good ones.

      You’re right. Your idea isn’t racist. It’s classist and elitist and does you no justice. Talk of disenfranchisement of any sort is a step backward into the feudalism and tyranny our forefathers sought to get away from. And in my opinion, sir, is profoundly unpatriotic.

      1. I’d rather serve in his squad than yours. You’d coddle the incompetent troops and suck up to the incompetent officers and get me killed.

        And yes I do know, I’ve served under NCO’s like that, and also hard asses.

        I’ll take the hard ass.

        1. Wow. You’re really showing your true colors. You’re equating military members who’s income is below the poverty line with incompetency. One could extrapolate that to you, being poor equals being a worthless human being.

  31. John, it is a mistake to focus on income tax as if it were the only tax. Everyone pays FICA taxes and sales taxes. However, the larger point is that government spending is now about 45% of GDP. Milton Friedman suggested that spending, not taxation, is the best measure of the burden of government. Whether the cost is extracted by taxation, inflation, or borrowing, the rest of us are still on the hook.

    Most people believe they are net beneficiaries of this process, but sober reflection casts doubt on that theory. Are government schools really a net benefit? Is the most expensive military in the world a net benefit?

  32. My only point is that if you take the Bible straight, as I’m sure many of Reasons readers do, you will see a lot of the Old Testament stuff as absolutely insane. Even some cursory knowledge of Hebrew and doing some mathematics and logic will tell you that you really won’t get the full deal by just doing regular skill english reading for those books. In other words, there’s more to the books of the Bible than most will ever grasp. I’m not concerned that Mr. Crumb will go to hell or anything crazy like that! It’s just that he, like many types of religionists, seems to take it literally, take it straight…the Bible’s books were not written by straight laced divinity students in 3 piece suits who white wash religious beliefs as if God made them with clothes on…the Bible’s books were written by people with very different mindsets

  33. My only point is that if you take the Bible straight, as I’m sure many of Reasons readers do, you will see a lot of the Old Testament stuff as absolutely insane.

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