It's a rite of spring: tax bills coming due, and Americans complaining about taxes.
Some of the most vociferous complaints come from those at the Tax Foundation, sponsor of the well-known Tax Freedom Day -- the day on which we've earned enough money to pay our annual tax burden. This year's date is April 30.
The idea of Tax Freedom Day has obvious intuitive appeal no one enjoys paying taxes or getting letters from the IRS. But closer examination reveals Tax Freedom Day to be a misleading rhetorical ploy that confuses legitimate dispute over the proper rate of taxation with a poorly conceived critique of the morality of taxation itself.
The fundamental idea underlying Tax Freedom Day is the libertarian notion that we have a strong moral claim to enjoy as much of our pre-tax income as possible, and that government is trampling on our freedom by taking away such a substantial share of "our money." This notion in turn rests on a mental image of the economy in which the market produces society's wealth, while government merely consumes it.
Both of those ideas are mistaken, for the same reason. The reason we have no moral claim to our pre-tax income is that that very income is made possible not simply by our personal efforts, but by our participation in a broader system of social cooperation ("the economy") that is itself made possible in part by taxes and the public action they facilitate.
SIMPLY PUT, the vast size of our economy -- and the rewards it offers to us as individuals -- are in very large measure made possible by the fact of government and various government activities, past and present. What would the American economy look like without roads and public infrastructure, public education, homeowner subsidies, government support for research and development, federal insurance for bank deposits, unemployment insurance, regulation of securities trading, and, lest we forget, national defense and enforcement of laws protecting persons and property? It would be a more chaotic, less secure, and much poorer economy without those and many other public activities.
Consequently, the Tax Foundation and like-minded advocates are wrong to assume that if government were sharply reduced, an individual now earning $75,000 in pre-tax income and paying $25,000 in total taxes (a 33-percent effective rate) would be better off on account of having fewer taxes to pay. Why? Because we cannot assume that individual would continue to earn $75,000 in pre-tax income if government were forced to substantially scale back its activities due to lower tax revenues.
To take an obvious example, if government allowed Virginia's roads to fall into disrepair, that would over time substantially hamper the state's long-term economic prospects -- and in turn, the quality of jobs and income available to individual citizens. Or if Medicare were eliminated, some persons might enjoy a slightly higher income, but others would face catastrophic costs in trying to care for themselves or a sick parent. Or to take a more extreme illustration, if the police vanished tomorrow for lack of funding, chaos would likely ensue and the economy would collapse, taking everyone's pre-tax income with it.
Seen in this light, there is nothing unjust about government requiring us as citizens to pay our stipulated share of taxes. Those taxes uphold the system of government and the public activities that make a secure, prosperous economy possible. Bemoaning the need to pay taxes, while insisting on a moral right to one's pre-tax income, is like refusing to do household chores and still expecting to have a clean kitchen and fresh laundry.
TO BE SURE, there is ample room for legitimate debate over the appropriate scope of public activity and the appropriate role of taxation. But advocates of smaller government fundamentally confuse the issue when they claim, imply, or assume that we have a moral right to our pre-tax income (since it's "our money"). We don't.
Rather, we have a right to our post-tax income, and a right to have a voice in the democratic process when legislators debate and determine the level and purposes of taxation and make judgments about how the tax burden should be distributed. Indeed, a more vigorous civic debate regarding both the practical question of how best to advance the common prosperity and the moral question of how post-tax income and opportunities should be distributed would be welcome.
But once the political process has worked itself out, we as citizens are not just legally but morally obliged to pay our stipulated share of taxes. To pretend otherwise is both to ignore the manner in which public activity helps make prosperity possible, and to deny the obvious truth that our personal rewards come not simply from our individual efforts in isolation, but from our participation in a larger system of social cooperation, of which government is a constituent part.
Thad Williamson is an assistant professor of leadership studies at the University of Richmond.