The Federal Government’s Job Is Not to Redistribute Income
9:24 AM, Nov 23, 2011 • By JEFFREY H. ANDERSON
The Washington Post’s Greg Sargent claims to debunk the conservative argument against raising taxes on wealthier Americans, by drawing attention to “how much the share of their own income they are paying in taxes” and observing how much that share “has shrunk” (italics in original). But the facts don’t back him up.
Sargent claims that, from 1986 to 2008, the share of income that the top 1 percent of American income-earners paid in federal taxes dropped from 33 to 23 percent. But the Congressional Budget Office (CBO) says that the percentage actually rose from 25.5 to 29.5 percent from 1986 to 2007 (the last year for which the CBO provides such figures). And according to the left-leaning Tax Policy Center, the share of income that the top 1 percent paid in federal taxes in 2008 was 30 percent. So wealthier Americans are not only paying a higher share of federal taxes — the top 0.1 percent now pays more in federal income tax than the bottom 80 percent — but the share of their own income that they are paying in federal taxes has risen as well.
The bigger problem, however, is not Sargent’s facts but rather his implicit belief that it’s the federal government’s job to redistribute income so as to equalize (to whatever degree) after-tax incomes. This is a far cry from James Madison, who wrote in Federalist 10 of the “diversity in the faculties of men, from which the rights of property originate.” Madison added that the protection of these faculties “is the first object of government.” To put this otherwise, inequality of income doesn’t necessary indicate that a society is free, but equality of income necessary indicates that it’s not — for equality in incomes will not arise naturally in a free society but will require government intervention and redistribution, at the expense of the inalienable right (so often violated in other nations and other ages) to keep the fruits of one’s own labor. Madison and Sargent have very different notions about the proper ends of government.
Moreover, a quarter-century (and more) of experience demonstrates that increased income redistribution — as the middle class pays progressively lower federal tax rates, and as the lower two income quintiles no longer pay any federal income taxes at all but instead get money back — hasn’t done much of anything to help the middle class. During the Obama years, when redistribution of income has picked up all the more, the real median American household income has plummeted — it’s dropped 6.7 percent during the Obama “recovery” alone.
What’s needed is to stop focusing on (socking it to) the 1 percent, and start focusing on advancing economic policies whose explicit goal is to promote the prosperity (through higher incomes, not greater redistribution) of the middle class.