Friday, April 20, 2012

James Madison and Some Thoughts on Taxation

First I thought I'd start with a couple of quotes from James Madison.

"Government is instituted to protect property of every sort; as well that which lies in the various rights of individuals, as that which the term particularly expresses. This being the end of government, that alone is a just government, which impartially secures to every man, whatever is his own.

According to this standard of merit, the praise of affording a just securing to property, should be sparingly bestowed on a government which, however scrupulously guarding the possessions of individuals, does not protect them in the enjoyment and communication of their opinions, in which they have an equal, and in the estimation of some, a more valuable property.

More sparingly should this praise be allowed to a government, where a man's religious rights are violated by penalties, or fettered by tests, or taxed by a hierarchy. Conscience is the most sacred of all property; other property depending in part on positive law, the exercise of that, being a natural and unalienable right. To guard a man's house as his castle, to pay public and enforce private debts with the most exact faith, can give no title to invade a man's conscience which is more sacred than his castle, or to withhold from it that debt of protection, for which the public faith is pledged, by the very nature and original conditions of the social pact.

That is not a just government, nor is property secure under it, where the property which a man has in his personal safety and personal liberty, is violated by arbitrary seizures of one class of citizens for the service of the rest."

"A just security to property is not afforded by that government, under which unequal taxes oppress one species of property and reward another species: where arbitrary taxes invade the domestic sanctuaries of the rich, and excessive taxes grind the faces of the poor."

James Madison, On Property

I'm a particular fan of that last sentence. Even back in the late 18th century they understood that uneven taxing based on how successful one was was completely unjust. Yet today it's seen as just fine, in fact you even have a significant portion of the population that is all for taxing more successful people a greater percentage than they already pay. This problem was created by the creation of a federal income tax to begin with, and then exacerbated by creating a series of tax laws so complex we have an entire industry whose entire purpose is to deal with that law to get their customers the greatest number of cuts and write-offs to allow them to keep more of their own money.

"Their own money," that leads back to the first long quote above, where the money a man earns is his property. It is the government's responsibility to protect that property, and one would certainly expect with that responsibility the government should recieve some kind of recompense for its services. After all, even government employees need to be paid. But is it using that money effectively? That's my biggest argument against increased taxes. Before the government should even begin to talk about increasing taxes it should first be required to prove that it is using that money effectively. That includes massively cutting down wasted spending; overpaying on government contracts is a BIG one, purchasing unnecessary items, wasting money on frivolous GSA conferences...

Instead we have politicians all the way to the top screaming in the town square about fairness. Where does the standard of what is fair begin? Where does it end? If millionaires must "pay their fair share," what exactly is fair? The majority of money used to lower the effective tax rate of the rich is money donated to a cause they believe in, not money hidden away. A good portion of the rest is spent on investment, money earned then applied toward another venture or used to further the goals of a current one. Before you cry that their tax rate is lower than yours, look at all the deductions you get, the money the government pays you back. What is your tax rate really at? My bet is, unless you're making over $200k it's somewhere down around the 5-10% range. That's lower than what Mitt Romney pays, even after his massive charity donations (10% to the Mormon church alone, or ~$3.3 million).

The major adversaries for lowering or keeping the tax rates on the rich where they are are the same people that do not donate at all, or donate very little. Joe Biden and his wife only donated 1.5% of their $387k. Al Gore barely donates 1% of his yearly income from the fraud that is man-made climate change, yet spends hundreads of thousands on spreading his views and then spends millions on his home and transportation around the world (those personal airplane flights aren't cheap).

Also the tax brackets they are seeking to increase include those single people making $200k, or couples making $250k, not just the millionaires and billionaires. That is hardly millions a year, and also affects a good number of small business owners (mom & pop places especially) who file their yearly earnings under personal income taxes to avoid the massive corporation taxes (soon to be the highest in the entire world).

Next time you go off on how it's not fair that these people make so much, remember the above. Don't be jealous because so many of them work harder for that money, and earned it through that hard work even if you don't know everything they went to to get that cushy CEO job. The only truly undeserving "rich" are the professional sports and movie stars, they get to play a game or play make-believe all day long for their cash, yet they seem to keep trying to identify with the little guy... Which class of person is being fake here again?


  1. I'm not sure how to take that last sentence. The use of the word arbitrary leaves to interpretation how much taxation Madison would deem necessary on the 'rich'.

    I think Teddy said it best when he pushed for a progressive tax movement;

    "No man should receive a dollar unless that dollar has been fairly earned. Every dollar received should represent a dollar’s worth of service rendered-not gambling in stocks, but service rendered. The really big fortune, the swollen fortune, by the mere fact of its size, acquires qualities which differentiate it in kind as well as in degree from what is possessed by men of relatively small means. Therefore, I believe in a graduated income tax on big fortunes, and in another tax which is far more easily collected and far more effective-a graduated inheritance tax on big fortunes, properly safeguarded against evasion, and increasing rapidly in amount with the size of the estate."

    Remember that Madison lived in an age devoid of corporatism as we know it. Sure their were the wealthy heirs but the ultra wealthy of the early nation did not own fortunes greater than nations. Madison was a moderate I feel and he stated before in an essay on Political Parties that;

    "In every political society, parties are unavoidable. A difference of interests, real or supposed, is the most natural and fruitful source of them. The great object should be to combat the evil:
    1. By establishing a political equality among all.
    2. By withholding unnecessary opportunities from a few, to increase the inequality of property, by an immoderate, and especially an unmerited, accumulation of riches.
    3. By the silent operation of laws, which, without violating the rights of property, reduce extreme wealth towards a state of mediocrity, and raise extreme indigence towards a state of comfort.
    4. By abstaining from measures which operate differently on different interests, and particularly such as favor one interest at the expence of another.
    5. By making one party a check on the other, so far as the existence of parties cannot be prevented, nor their views accommodated. If this is not the language of reason, it is that of republicanism."

    Specifically I point you to the wording of (2) where he talks about preventing the amassed accumulation of unmerited wealth. Again today corporate power and wealth, I feel, would be at huge odds with the founding fathers. It would almost be alien to them.

  2. And I point you to your own (4) which far more often leads to inequality than a corporation doing what businesses do. As far as (2), who determines what is "an immoderate, and especially an unmerited, accumulation of riches"? An objective party is nearly impossible to find, someone is either part of the crowd that is punished arbitrarily because of a few unscrupulous people, or they are are part of of the crowd of less well off people and thus are generally envious of the success others have achieved that they have not.

    I'm far from rich (hell, I'm barely above our country's poverty line) but I don't think we should be taking money away from those who worked hard to get where they are and are now enjoying the fruits of that labor. A mere TWO PERCENT of our population actually stays below the poverty line their entire lives. Instead in most cases (even in the Bronx) people manage to get above that line. Frankly, our "poverty" line is kind of ridiculous when you look at the rest of the world anyway. We have people in "poverty" who have a car (or two), tv, cell phone (usually multiple), and cable. That isn't poverty. I'm not saying that is the case for everyone, but our measuring stick DOES need to be looked at.

    The people who are trying hard to actually advance themselves should definitely get a hand up, but the federal government is not the way to do it. That is giving power over the lives of others that people should not have. Governments will always attempt to find some means to continue to grow in size and power, it is an extension of human nature. It is better to allow those who make the money to determine who and where they wish to assist with that money rather than taking it from everyone (especially our small businesses who overwhelmingly file under personal taxes as Subchapter S Corporations and nearly all of which have to make more than $250k/yr to survive) just because they make above some magic number that takes no facts into account.