During a recent appearance on Letterman, Rand Paul argued that the rich — far from being undertaxed or not paying “their fair share” — already pay most income taxes. Letterman expressed reservations about the numbers, adding “You know, I think he’s wrong about some of these things. I just can’t tell you why.” The audience clapped agreement.
Naturally, this evoked squeals of outrage on the Right. Thomas Woods (“David Letterman, Economist,” Campaign for Liberty, Feb. 25) contemptuously dismissed “Letterman and the geniuses in his audience,” saying they “made fools of themselves” by refusing to believe an “easily verified fact.” Jack Hunter, at The American Conservative (“David Letterman’s Willful Ignorance,” March 1), seconded Woods with a back slap and a hearty “Attaboy!”
So I guess Letterman and his audience would be smarter to uncritically accept any statistic that comes out of a politician’s mouth? Maybe they’d heard the old saying that “figures don’t lie, but liars figure.” Or the one about “lies, damned lies, and statistics.”
On closer examination, it’s clear that the significance Paul attached to his statistics — if not the statistics themselves — deserves a bit of critical scrutiny.
For one thing, there’s the dog that doesn’t bark: The focus on income taxes to the exclusion of other forms of taxation. A centerpiece of the neoliberal agenda in recent years has been shifting the incidence of taxation from returns on property to returns on labor. A great deal of income from property isn’t taxed, or is much easier to evade than a payroll deduction from wages Just look at all the income that’s sheltered in tax-free munis. When all taxes are factored in, the system is still progressive — but just barely so.
I’ll reserve my gratitude to the rich for the higher income taxes they pay until I get a closer look at where all that income comes from. How much of that top tier of income comprises rents on artificial scarcities created by the government’s enforcement of illegitimate property rights?
How much of it results, specifically, from direct government subsidies, from direct government collusion via all those “Complexes” (Military-Industrial, Prison-Industrial, Automobile-Highway-Real Estate Developer, etc.), from oligopoly and cost-plus markups in government-cartelized markets, from “intellectual property” monopolies, from tribute on land engrossed with the help of the state, and all the rest of that Baptists-n-Bootleggers stuff?
As an anarchist, I don’t advocate taxation of any kind. But I’m not exactly crying on my pillow at the thought that a feudal lord is paying a higher tax rate than his serfs. As far as I’m concerned, when one branch of the state starts beating up on another branch of the state, it’s best to make some popcorn and enjoy the show.
Unlike Letterman, I don’t see the answer as more taxes on the rich. The answer is to abolish all the state-conferred subdidies, protections and privileges that generate all that ill-gotten wealth in the first place.
Speaking of easily verified facts, Woods also ridiculed Letterman’s association of the crackdown on organized labor with the decline of the middle class, even though — wait for it! — “the growth of the middle class occurred in tandem with a decline in union membership.” In our own timeline, as opposed to the alternate history Woods inhabits, the neoliberal trend of the past thirty-odd years has been associated with both declining union membership and increasing polarization of income between rich and poor.
At one point Hunter snarks about blaming “the evil rich” for “America’s economic woes.” Hmmm … You’d think Hunter would assign government a significant share of blame for our economic ills. So who does he think controls the government? Whom does he think it serves? Last I heard, there weren’t many poor people in Congress. Former House Speaker Nancy Pelosi was married to a billionaire investment banker. And last I heard, there were plenty of people from Goldman-Sachs on the Cabinet, but not so many welfare moms.
Although (by strong implication, anyway) Paul & Co. frame the issue as the shiftless majority voting themselves loot at the expense of the hardworking rich, what’s really happening is that the rich who control the state are smart enough to understand what the system — not the free market, but the corporate economy as currently structured — needs for its survival. The rich simply have more investment funds sitting around than there are productive outlets for, while productive capacity sits idle for want of demand. If the government didn’t bolster aggregate demand by taxing it and then spending it into circulation, we’d be in a permanent big-D Depression.
So maybe Letterman and his audience, far from “making fools of themselves,” actually showed some sense in refusing to buy a pig in a poke.
Translations for this article:
- Spanish, Letterman Cuestiona a sus Superiores.
Very interesting article, Kevin. I did watch the interview with Senator Paul and the first thing that struck me was a heavy dose of frustration. I definitely like Rand Paul and how he is shaking up the Senate a bit, but my frustration came from how he argued. It was soaked with that mealy-mouthed "the private sector is better at some stuff, the public sector is better at some stuff," and made himself look like an apologist for the rich. That's why I like your site (and others as well) that stress the philosophical and moral arguments against the state
"And Jack Hunter, at The American Conservative (“David Letterman’s Willful Ignorance,” March 1), seconded Hunter with a back slap and a hearty “Attaboy!”"
He seconded himself?
" I’ll reserve my gratitude to the rich for the higher income taxes they pay until I get a closer look at where all that income comes from."
Are there no tax payers in the current system who have become "rich" legitimately?
Thanks, McBell (the second was a lot easier than the back slap).
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That should be “… is composed of rents on artificial scarcities …”, “… comprises rents on artificial scarcities …”, or “… consists of rents on artificial scarcities …”.
Nice article, fantastic point, too many cliche metaphors
"Are there no tax payers in the current system who have become "rich" legitimately? "
None, depending on how you define "rich". There are no legit billionaires. Not possible.
Not because there's some sort of arbitrary moral limit on wealth, but simply because if you accumulate enough wealth you reach a threshold where you have to benefit from statist interventions or you plateau.
Kevin,
Your fearlessness to tackle subjects so many would shy away from just continues to amaze me. As I read the piece and having already seen the Hunter vid even before, the question that popped into my mind was, "had the Senator's name been other than Paul, would the same coverage and indignation toward Letterman still been displayed?" Just because I was forced to ask myself that question to begin with may indeed be speaking volumes to me!
Thanks again for going where so few dare to thread.
I may have introduced that "comprised of" in editing for newspaper submission.
Whether or not the usage is correct is a matter of conflicting expert opinion. I'm pretty sure Strunk and White say no; Oxford says yes.
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Well, you didn’t ought [sic] to do it.
I think you were a bit harsh on Tom Woods. While it is correct that the income distribution is more polarized now, it is also important to note that the actual living standards of the poor have improved, and that the poor have a high rate of upward social mobility.
http://www.learnliberty.org/content/are-poor-gett…
I'm with PML on this.
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I was with you up until: "The rich simply have more investment funds sitting around than there are productive outlets for, while productive capacity sits idle for want of demand. If the government didn’t bolster aggregate demand by taxing it and then spending it into circulation, we’d be in a permanent big-D Depression."
My own opinion on the matter is quite different, but all i wanted to point out here is that this seems like a fairly controversial thing to just assert without argument at the end of an article which was mostly about something else.
While the point of the article is well-taken, I find too much collectivism to be comfortable with it. Terms like "the rich" and "the poor" are from the vocabulary of the statists, not from anarchists, who deal as individuals.
Steve: Probably, at least a portion of them at the lower rungs of the "rich" ladder. But even if only a majority of the income of hundred-millionaires and billionaires is the result of artificial property rents and corporate welfare, it certainly casts Paul's apologetics in a different light, doesn't it? If he argues that the rich pay a majority of the taxes, and you argue that a majority of their income is stolen loot, it makes a difference.
Vertilius: Well, I make a lot of controversial statements without having the space to really make a case for them. It comes with the columnist territory. And I thought the question of whether the ruling class was promoting its own interests with all that government spending their taxes funded wasn't exactly tangential to the subject.
Yup, I am sure the government forced everyone to use Windows.
People have the ability to work within the system or they don't.
If there was no state, then you guys would be railing against corporate powers.
If it wasn't corporate powers it would be repressive gangs or tribes.
If it wasn't gangs or tribes, it would be scary big mean individuals.
This is where the far left welfare babies and the anarchists meet, there is everyone to blame for their lack of success except themselves.
<burbleburbleburble> <cough cough cough>
It's the system maaaaan, it's trying to represss us and keep us down maaaan.
Right on buddy.
I know a guy who runs a sovereign wealth fund.
He never gets instructions to hold as much money back as possible.
I think it is rather self evident that money chases more money and power.
I can't find a lot of cases of billionaires just sitting on all their money.
It is a ridiculous premise on its face.
This article writer sounds more like a communist then an anarchist.
According to any coherent moral theory, anyone that puts the most into something should get the most out of it.
Or, we could go with class warfare and communism, mush closer to an anarchist society there.
What does that have to do with the post? The author maintains that the wealthy do not deserve a sizeable portion of their wealth because it is acquired through deviant means.
Rand Paul is too much like (Ayn) Rand and not enough like (Ron) Paul.