Taxcutter
09-26-2012, 10:51 AM
You can quibble about the numbers but the simple fact is that there are a lot of people who don’t pay income taxes (the largest piece of federal revenue) and that large number is approaching the number who do pay taxes.
Here is a piece that discusses the rise of the nonpayers. WARNING: Unless you are a professional statistician this is dry, dry, dry. But it does show some insights.
http://taxfoundation.org/article/fiscal-costs-nonpayers
quote;
“The concern is that when people perceive the cost of government to be cheaper than it really is, they will demand ever more government benefits because they either don’t feel the cost directly or believe that others will be paying those costs.”
“Basic economic theory tells us that consumers will respond to a drop in the price of a product by demanding more. By extension, economists predict that as the price of government goes down for a citizen, he or she will then demand more of it.”
Taxpayer says:
When enough people think that government runs on “other people’s money” they will demand more of government. In the Fifth century B.C. Socrates noted this as the principle weakness of democracy. Smart cookie, ol’ Soc.
Quote:
“After the late 1960s, with the start of the Great Society programs, the growth of transfer payments and the growth of nonpayers begin to move closer together.”
“…as nonpayers increase, transfer payments also increase. Moreover, this correlation between nonpayers and transfer payments is strong.”
“…budget constraints mean that increases in transfer payments are forcing cuts to, or “crowding out,” non-transfer payment government spending.”
Taxcutter notes:
That’s where all the “infrastructure money went – into entitlements.
Quote:
“…the dire fiscal straits we are now in, and which much of Europe is struggling with as well, can only be responsibly addressed through a more balanced tax burden. In particular, so long as income taxes fund the largest part of government spending, exempting half the population from income taxes is not a sustainable fiscal model. Debt accumulation and eventual default await those democracies that fail to connect a majority of voters to the cost of government spending.”
Taxcutter says:
The combination of increased transfer payments (the link defines them rigorously) and taxpayer non-participation has trended up sharply since the late 60s when the Great Society programs began to kick in. Add that to the avalanche of regulations and litigation growth since about that same time and you have a pretty good idea what has happened to our society.
Looking at all this one has to be impressed by the wisdom of the Framers. They built up a government that - as a feature – had almost no transfer payments and a completely consumption-based taxation system that emcompassed the entire population. If you bought stuff (and why else have money?) you paid a tax. Because government spending was small (for the most part) that tax rate was small. Totally fair and totally sustainable. The old boys (the Framers of the Constitution) look very wise compared to the leaders over the last half-century.
Here is a piece that discusses the rise of the nonpayers. WARNING: Unless you are a professional statistician this is dry, dry, dry. But it does show some insights.
http://taxfoundation.org/article/fiscal-costs-nonpayers
quote;
“The concern is that when people perceive the cost of government to be cheaper than it really is, they will demand ever more government benefits because they either don’t feel the cost directly or believe that others will be paying those costs.”
“Basic economic theory tells us that consumers will respond to a drop in the price of a product by demanding more. By extension, economists predict that as the price of government goes down for a citizen, he or she will then demand more of it.”
Taxpayer says:
When enough people think that government runs on “other people’s money” they will demand more of government. In the Fifth century B.C. Socrates noted this as the principle weakness of democracy. Smart cookie, ol’ Soc.
Quote:
“After the late 1960s, with the start of the Great Society programs, the growth of transfer payments and the growth of nonpayers begin to move closer together.”
“…as nonpayers increase, transfer payments also increase. Moreover, this correlation between nonpayers and transfer payments is strong.”
“…budget constraints mean that increases in transfer payments are forcing cuts to, or “crowding out,” non-transfer payment government spending.”
Taxcutter notes:
That’s where all the “infrastructure money went – into entitlements.
Quote:
“…the dire fiscal straits we are now in, and which much of Europe is struggling with as well, can only be responsibly addressed through a more balanced tax burden. In particular, so long as income taxes fund the largest part of government spending, exempting half the population from income taxes is not a sustainable fiscal model. Debt accumulation and eventual default await those democracies that fail to connect a majority of voters to the cost of government spending.”
Taxcutter says:
The combination of increased transfer payments (the link defines them rigorously) and taxpayer non-participation has trended up sharply since the late 60s when the Great Society programs began to kick in. Add that to the avalanche of regulations and litigation growth since about that same time and you have a pretty good idea what has happened to our society.
Looking at all this one has to be impressed by the wisdom of the Framers. They built up a government that - as a feature – had almost no transfer payments and a completely consumption-based taxation system that emcompassed the entire population. If you bought stuff (and why else have money?) you paid a tax. Because government spending was small (for the most part) that tax rate was small. Totally fair and totally sustainable. The old boys (the Framers of the Constitution) look very wise compared to the leaders over the last half-century.