The Ethics Of Taxation And Efficiency Of Government Services



By Marc Guttman Published on 5/27/2007 in The Day



Although many of us think of the middle of April as the “tax season,” the Tax Foundation's calculations have found that in 2007 the average American taxpayer finished paying off his or her yearly tax burden on April 30. That is, we have worked from Jan. 1 until April 30 to pay our share of income taxes, social insurance taxes, sales and excise taxes, and property taxes. “Americans will work longer to pay for government than they will for food, clothing and housing combined,” said Tax Foundation President Scott A. Hodge. Since we, in Connecticut, have chosen to tax ourselves the most, the average Connecticut taxpayer was not paid up until May 20.

Some readers may wonder why this warrants an article, since “death and taxes” are inevitable. Others dismiss as selfish anyone who considers tax rates too high and wants to cut them back. Statists — people who believe in government taking on a large role in our lives — see high taxes as something that responsible and fair-minded citizens should pay happily. We all must contribute to the community, and those who ask questions are usually seeking to dodge their responsibilities.

Yet why would anyone blindly sacrifice the fruit of almost five months of labor and not consider whether the personal loss to one's family is of equal or significant enough value to the community? Whether or not it is ethical to force people to contribute to our public endeavors, everyone should consider the value of what it is for which we are paying.

Modern consensus generally accepts national defense on a federal level, and on a local level, community police protection, fire protection, prisons, some public edifices, public educators, roads, civil and criminal courts, contract insurance, and some communal space, as appropriate endeavors of government, although much of this is still up for debate by many. It was not that long ago that government was limited to these functions. Certainly it has grown well beyond them.

A family member recently told me that she would not mind paying her taxes, if she could just decide how her allotment would be spent. This is not how government spending works.

Value of goods and services

In the free market, each individual prioritizes the importance and value of goods and services for themselves and spends his or her own money as they feel will best maximize their happiness. Through government, we mutually decide what has value to the community and contribute and spend as the majority chooses. Benjamin Franklin described this as two wolves and a lamb voting on what to eat for lunch. This is because when our production ends up in the communal trough and we no longer have personal ownership of it, we fight each other to direct the booty towards the things that we each personally value. Franklin also predicted, “When the people find that they can vote themselves money, that will herald the end of the republic.”

In this way, many people are forced to contribute their efforts towards the things they do not value nor support. For some, this may be overseas wars that go well beyond matters of defense, corporate welfare, farm subsidies, the drug war, tens-of-thousands of bureaucrats and regulators in hundreds of agencies producing questionable results, abortions, promoting religion, privacy and other personal liberty infringements, campaigns of disfavored political candidates, to mention some.

To make matters worse, it often seems that what gets funded by the government is rarely even the desire of the majority, but rather that of powerful voting blocks, the wealthy and connected, and the unified.

Aside from the ethics of taxation, one must also consider the efficiency of government-provided services. Does it make sense for Connecticut citizens to send their money to Washington D.C., or Hartford for that matter, and then try to maneuver to have a portion of that money returned to their community? Much of our money is lost to the machinations of bureaucracy, mismanagement, graft, fraud, cronyism, and taxpayer-subsidized decadence for our civil-servant legislators. In addition, government programs often have negative unintended consequences even for those they aim to help.

Taxing personal income

In 1991, Connecticut started taxing personal income. Proponents had claimed the income tax revenue would lead to property-tax relief and jumpstart the economy. D. Dowd Muska of Connecticut's Yankee Institute in his essay “Fifteen Years of Folly: The Failures of Connecticut's Income Tax,” explains that between 1991-2003, Connecticut's property-tax collections rose 19.8 percent; personal-income growth in Connecticut has slowed significantly; Connecticut job growth has been nonexistent since 1991 with the FDIC recently concluding that since the early 1990s, “no other state ... has had such stagnation in employment.”

Now Gov. M. Jodi Rell has proposed a 10 percent income tax hike to expand subsidies to public schools, despite lack of evidence demonstrating a relation between education spending and student performance. While no one wants to underfund education or any important functions of government, should we not first repeal inappropriate and ineffectual spending instead of burdening ourselves more?

We have given the wealthy and organized special interests unfair influence over us by allowing our elected officials to overstep their constitutional restraints, thus making our government, our income, and our liberties saleable items. The answer, of course, is not to increase taxes but to decrease spending by returning government to its constitutional limits. Otherwise, we in Connecticut may be working until June 20 next year to pay off our tax burden.

Dr. Marc Guttman is an emergency physician and vice chairman of the Libertarian Party of Connecticut. He lives in East Lyme.

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