Tag Archives: fair share in taxes

What is Your Fair Share?

“For were the impulses of conscience clear, uniform, and irresistibly obeyed, man would need no other lawgiver; but that not being the case, he finds it necessary to surrender up a part of his property to furnish means for the protection of the rest…”

– Thomas Paine, Common Sense (1776)

There were not many surprises in President Obama’s 2012 state of the union address on Tuesday. He touted what he claims are the accomplishments of his administration and pushed his left-leaning economic agenda. For the president, all economic growth has its roots in some sort of government intervention, including “help financing a new plant, equipment, or training for new workers,” giving “community colleges the resources they need to become community career centers,” or trying to “spur energy innovation with new incentives.” Of course, further expanding a government that already spends about 50% more than it collects in taxes can only be accomplished one way – by collecting a lot more taxes.

To this end, the president resorted to the perennial liberal/progressive mantra that everyone “pay their fair share.” Obama used this term three times during the speech in regard to taxes. As even many of the Republican presidential candidates seem to buy into it, the president was also unable to resist the urge to promote the latest left-wing myth that millionaires like Mitt Romney pay less in taxes than their secretaries. This is complete nonsense, of course, but it is effective in eliciting the appropriate outrage from people who don’t stop to do either some simple math or even a little critical thinking.

For the president, there doesn’t seem to be a ceiling on what anyone’s fair share might be. However, he does have a clearly defined floor. “If you make more than $1 million a year, you should not pay less than 30 percent in taxes.” Exactly why that number is “fair” or even the millionaire’s “share” is somewhat difficult to determine. Neither does Obama answer the question that should logically follow. If you make under $1 million per year, what is your fair share in taxes?

Now, in any other situation where a group of people agrees to pool its money to buy something, this is a very easy question to answer. If you and three friends decide to go in on a large pizza, each of you will pay 1/4 of the cost. Assuming it is a typical pie, it will be cut into eight pieces and each of you will eat two. Thus, everyone has received an equal amount of the pizza and each has paid his fair share of the cost.

Of course, before anyone determines your fair share of the cost, you would be asked if you want pizza in the first place. In all such arrangements between human beings, other than government, you have a choice of whether you want to buy or not. Perhaps you’d like to eat something else. Perhaps you’re not hungry. You can always allow the other three to buy pizza and provide for your own meal yourself.

Not so with government. Not only can the other three take a vote and force you to buy part of this pizza, but they add insult to injury by proclaiming that their vote represented your consent to buy it. With this dubious consent in hand, they then decide what your fair share of the cost of the pizza will be, regardless of how the slices are distributed. If you have acquired too much wealth, even honestly, then you might find yourself paying for 3/4 of the pizza and only getting one slice in return. Once voluntary consent is eliminated and force is put in its place, it becomes difficult to use words like “fair” and “equitable” without committing grave offenses against the language.

Putting that aside for the moment, let’s assume that 315 million people have actually all agreed to constitute a government and pool their money to pay for its services. Before determining what anyone’s fair share of the cost would be, we first have to determine what services the government can offer. It would not make any sense for the government to offer services that only benefit one or two people, because all 315 million are paying. No, the only legitimate services that the government could offer would be those that contributed to the “general welfare.”

This widely abused term is not anywhere near as mysterious as it is made out to be. Promoting the general welfare is offering only those services that benefit every member of society equally. For example, if the government devotes resources to a military establishment to protect the nation’s borders, it is promoting the general welfare. Regardless of how effective the service might be, every member of society within the borders is benefitting equally from it. From the Wall Street financier to the general contractor to the grocery clerk to the homeless man, all are receiving equal protection from foreign invaders. Thus, a defensive military establishment is a service that promotes the general welfare and therefore could be offered fairly under such an arrangement.

Similarly, a system of law enforcement and courts would also promote the general welfare. If the person or property of one member of society were invaded by another, then employees of this agency would investigate the incident, determine if a tort or crime had been committed, and make a determination on what penalty or restitution should be paid by the defendant. This, too, would benefit all members of the society equally. Whether you were a Wall Street financier whose partner had embezzled millions or a taxi driver whose modest home had been burglarized, you are equally protected by laws against theft.

Notice also that the cost of providing these services is the same for each member of society. Obviously, it costs no more for an army to defend the financier from an invading army than it does to defend the taxi driver. The army defends against the invader for all within the borders at one cost. Similarly, it costs no more to provide a police officer, a judge, a jury, etc. for the financier than it does for the taxi driver. The only exception is defense attorney, which is provided for a defendant who cannot afford one, but this is a minute percentage of the entire cost.

In short, any defense of life, liberty, and property, whether from foreign invasion or aggression by another member of society, is a service that benefits the general welfare. It benefits all members of society equally and costs relatively the same to provide to all members of society.

Let us now consider some services that the government offers that do not promote the general welfare. Healthcare is obviously one. First, all members of society do not benefit equally when the govenrment provides healthcare. For example, Medicare only benefits people over 65 yeras of age and disabled people under 65. Not only does the program not benefit all members of society equally, but it actually does not benefit those paying for it at all, while those receiving the benefits (those over 65 and the disabled) do not pay at all. Recall the pizza example. Imagine if you had to pay for a whole pizza that your three friends ate, and then had to pay additional monies to provide for your own meal. Medicare, Medicaid, or other government programs for specific groups are really no different.

In addition, government medical care can never cost the same to provide to all members of society, as security services do. Some people will be sicker than others, either through misfortune or their own lifestyle choices. Some will need surgeries or chemotherapy or other expensive care. Some will need relatively little care. It is not an exaggeration to say that there may be 315 million different costs to provide healthcare to 315 million different people.

Education is another service that does not promote the general welfare. When the govenrment provides education, it is of absolutely no benefit to anyone that is not in school or does not have children in school. Neither does it benefit parents who homeschool their children or enroll them in private schools or childless adults who all must pay for government education. Some of the people who benefit do pay part of the expense, but obviously this does not constitute “fairness.” It is no different than if four friends all paid for 1/4 of the pizza, but two of them ate it all. Certainly, the other two had no “fair share” for any of the pizza at all. As with healthcare, the cost of education is also going to be different for different people. An education in medicine has a different cost than an education in engineering or art.

In looking at the federal government’s budget, one can see that the overwhelming majority of the money spent is not spent for the general welfare. Almost all of it is collected from one group of people and spent for the benefit of others. The only services provided by the federal government that truly promote the general welfare are those that concern defense of the borders and defense of person and property related to interstate commerce. At the state level, only defense of person and property within the state promotes the general welfare. All other services represent a forced redistribution of wealth from one person or group to another. When anyone other than the government engages in a “forced redistribution of wealth,” we call it “armed robbery.”

It should also be noted that even the “Defense” portion of the federal budget largely does not promote the general welfare. Only that portion necessary to defend U.S. citizens from aggression by foreign nations does. Those expenditures related to defending people in other countries or which are unnecessary for security not only do not promote the general welfare, they do not benefit anyone within the United States at all – except for those military contractors and financiers that are fortunate enough to profit from these activities.

There is also frequent confusion about government services commonly referred to as “infrastructure.” It is argued by some that if the government builds a road that is accessible to everyone, it promotes the general welfare. However, this argument does not hold up to scrutiny. If federal money is used to build a light rail system in Florida, it is going to benefit people who live or travel frequently in Florida much more than people who do not. Certainly, a citizen in California or Montana is unlikely to ever even see that railroad, much less benefit from it equally. Who would not agree that his fair share of this railroad is zero?

Even at the local level, a road or a bridge does not benefit every member of society equally. The local businessman whose products are more cheaply transported is going to benefit far more than the occasional traveler that might use the road for convenience. Yet, when the government builds the road, both are forced to pay equally. Furthermore, since the businessman is running heavier vehicles over the road with much greater frequency than the occasional traveler, it costs more in maintenance to provide this service to the businessman than to others. Obviously, the road or bridge does not promote the general welfare even at the local level.

So, what is your fair share in taxes? The answer is that you owe an equal share of those services provided by the government that promote the general welfare. Those services benefit you and everyone else equally. However, examination of any government budget, at the federal, state, or local level demonstrates that these services are now a tiny fraction of overall spending. A quick look at Florida’s budget summary reveals that about 8.7% of government spending promotes the general welfare. That $4.9 million in expense should be born by every citizen of Florida equally. The other $51.4 million does not promote the general welfare and should not be provided by the government at all.

An examination of the federal government’s budget for 2012 yields similar results. Once you subtract services that do no promote the general welfare, like education, healthcare, social security, and that part of the defense budget that is devoted to purposes other than protecting U.S. citizens from foreign aggression, you are left with a tiny fraction of overall spending.

For services that promote the general welfare, there is a finite cost. It does not vary depending upon how productive you are, so your fair share of that cost certainly can’t be a percentage of your income. Logically, the way to determine your fair share is to divide the total cost of services that promote the general welfare by the total population. If you have no dependents, then the quotient is your fair share. If you have dependents, then you simply multiply that quotient by the sum of your dependents and you. When you do the math, you’ll find that your fair share in taxes is a very small amount. As Thomas Paine pointed out, it is that tiny portion of your property necessary “to furnish means for the protection of the rest.” It would be easily paid by even a person of modest income. It would not require an income tax, as history before 1913 demonstrates.

For those services that the government provides to other people, your fair share is zero. However, the government routinely forces some people to pay more than their fair share and allows others to pay nothing at all. It generally collects the most in taxes from people who receive the least in benefits, which is the predictable result of offering services that do not promote the general welfare. Now, President Obama wants some people to pay even more. He and the Congress have the power, but that does not make it right. And please, President Obama, don’t insult our intelligence by calling it “fair.”

Tom Mullen is the author of A Return to Common Sense: Reawakening Liberty in the Inhabitants of America.