by Ari Armstrong
The following article originally appeared at Boulder Weekly on April 13, 2006.
Talk about pissing away our tax money. The federal government allocated "$1 million for the Waterfree Urinal Conservation Initiative," Citizens Against Government Waste found. The organization's 2006 Pig Book identifies 9,963 "pork projects" that cost "a record $29 billion."
However, Jacob Sullum of Reason magazine puts such "earmarks" in context: "Based on the Congressional Research Service's numbers, earmarks account for something like 2 percent of the federal budget." However, Sullum adds, "as Heritage Foundation budget expert Brian Riedl notes, legislators have been known to support big-ticket items such as the Medicare drug benefit in exchange for the promise of pork."
USA Today reported, "The federal government is currently spending 20.8 cents of every $1 the economy generates... House budget documents show. That's the most rapid growth during one administration since Franklin Roosevelt." And the total budget approaches $3 trillion.
While a representative of the Office of Management and Budget told USA Today that most of the "new funding" is for the military, the fact remains that military spending is just over half of "discretionary" spending, while allegedly "mandatory" welfare spending is even higher. The White House's "mid-session review" lists Department of Defense spending as $490 billion and Social Security as $545 billion.
Not only does the national government take around a fifth of our wealth, it imposes an intimidating and costly tax bureaucracy. The Cato Institute's "Tax & Budget Bulletin" points out "that the number of pages of federal tax rules has increased 42 percent since 2000." The total number of pages is now 66,498, which of course no actual person can begin to comprehend. The total tax-compliance cost is an estimated $265 billion.
Yet in Boulder the usual debate seems to be whether to increase taxes a little or a lot. I doubt that many Boulderites will be truly happy until the U.S. follows in the economic footsteps of France. Among many of my friends, though, the debate is not over how much higher taxes should be, but whether there should be taxes at all. The basic idea is that individuals have rights, and that among these are life, liberty and property. People have a right to use their resources to produce, trade freely with others, and earn income from those willing to pay. And they have a right to use their wealth as they see fit.
At most, tax rates should be just high enough to cover those governmental functions that protect individual rights by providing the police, courts and national defense. All spending for charity should be voluntary.
During a class sponsored by the Independence Institute, Penn Pfiffner took issue with the idea that "taxes are the price we pay for a civilized society." Instead, Pfiffner argued, the rate of taxes indicates the extent to which society is uncivilized, i.e., willing to use force and unable to accommodate voluntary interactions.
Pfiffner also quoted from Frederic Bastiat's The Law, published in 1850. The Foundation for Economic Education notes about Bastiat that "most of his countrymen chose to ignore his logic," as they do today.
Bastiat argues that the sole legitimate function of the law is protect life, liberty and property. But unfortunately "[t]he law has placed the collective force at the disposal of the unscrupulous who wish, without risk, to exploit the person, liberty, and property of others. It has converted plunder into a right, in order to protect plunder."
Our national day of plunder is April 15.
Bastiat describes how the ethos of plunder can sink a society: "[W] hen plunder is organized by law for the profit of those who make the law, all the plundered classes try somehow to enter... into the making of laws. According to their degree of enlightenment... [e]ither they may wish to stop lawful plunder, or they may wish to share in it. Woe to the nation when this latter purpose prevails!"
For legal plunder does not merely unjustly and forcibly transfer wealth from some to others. It also imposes serious drags on productivity. The plunderers spend considerable resources transferring wealth to themselves, while the plundered spend resources trying to protect themselves. Higher rates of taxes and welfare mean lower incentives to work. To the extent that the fruits of investment are taxed, investment is diminished. Redistributive taxation diverts labor from more productive uses to less productive uses. Taxes on labor diminish the incentive to specialize, which reduces the benefits of a division of labor. Redistributive taxes weaken the links between an individual's planning and prudence and his or her success, promoting irresponsibility. And legal plunder invites corruption by politicians, bureaucrats and recipients of the transfers.
So most significant is not the overall rate of taxation, or even the rate of taxation as a percent of national product. The biggest problem is that higher taxes diminish national productivity. Legal plunder thus hinders the advances in medicine, energy, space exploration and other technologies that would improve human life and health and inspire the human spirit on this world and beyond.