www.mozilla.com Weather Central
Voices
Headlines

Today's faults -11/26/2014, 7:45 AM

Meatless Mondays -- forget about it -11/26/2014, 7:45 AM

Cosby, serial rapist? That's a lot to forgive -11/26/2014, 7:45 AM

Letting it fly -11/26/2014, 7:45 AM

KanCare oversight -11/26/2014, 7:45 AM

Giving thanks for blessings as Kansans -11/25/2014, 10:11 AM

Local fixes to local problems? -11/25/2014, 10:11 AM

Energy security -11/25/2014, 10:11 AM

Pipeline politics -11/24/2014, 10:04 AM

They killed Peter Kassig -11/24/2014, 10:04 AM

Going from bad to good on election night -11/23/2014, 6:38 PM

Free Speech can be shield or a sword -11/23/2014, 6:38 PM

Dodge City merger -11/22/2014, 6:38 PM

House mis-speaker -11/21/2014, 9:50 AM

Obama vs. Us -11/21/2014, 9:50 AM

Really smart conservatives love public debt -11/21/2014, 9:50 AM

Official welcome -11/20/2014, 9:52 AM

Control freaks in the U.S. -11/20/2014, 1:24 PM

How did we get here? -11/20/2014, 9:52 AM

An open letter to the GOP -11/19/2014, 10:03 AM

Successful farming -11/19/2014, 10:03 AM

Getting personal -11/18/2014, 9:15 AM

Teachers, not facilities -11/18/2014, 9:15 AM

Schoolteachers and the Legislature -11/18/2014, 9:06 AM

Water vision -11/18/2014, 9:06 AM

I see wonderful things -11/17/2014, 9:26 AM

Politics prevail over truth in Kansas elections -11/17/2014, 9:26 AM

Progress at mall -11/16/2014, 5:22 PM

Opinions on the general election -11/16/2014, 5:22 PM

Why are schools afraid of freedom? -11/16/2014, 5:22 PM

Educational fraud -11/14/2014, 9:42 AM

The American public gets smart -11/14/2014, 9:41 AM

State revenue -11/13/2014, 4:48 PM

Staying positive -11/13/2014, 2:14 PM

Democracy delusions -11/13/2014, 2:14 PM

An awesome tribute -11/13/2014, 2:14 PM

Military underpaid -11/12/2014, 2:15 PM

Success for Moran -11/12/2014, 11:54 AM

Shop wisely when you go -11/12/2014, 11:53 AM

2014: The year of no ideas -11/12/2014, 11:52 AM

Veterans Day -11/11/2014, 10:13 AM

A new start for veterans' health care -11/11/2014, 10:13 AM

Awaiting Brownback's mark -11/11/2014, 10:13 AM

Roberts and catcalls heard 'round the world -11/10/2014, 9:18 AM

Honoring all who served -11/10/2014, 9:18 AM

Brownback coalition prevails -11/9/2014, 6:03 PM

Seeing the news is necessary -11/9/2014, 6:02 PM

Immigration reform -11/9/2014, 6:02 PM

Scholar-athlete charade -11/7/2014, 8:32 AM

How about a beer and a short break? -11/7/2014, 8:32 AM

Fighting poverty -11/7/2014, 8:32 AM

Voting his mind, apparently -11/6/2014, 9:51 AM

Electing liberty -11/6/2014, 9:50 AM

UNC's troubles -11/6/2014, 9:50 AM

Fast-food pay -11/5/2014, 2:32 PM

Oil, natural gas driving security -11/5/2014, 10:20 AM

Ellis' future -11/5/2014, 10:19 AM

Family ties -11/5/2014, 10:19 AM

Quarantine questions -11/4/2014, 10:03 AM

Counting non-voter votes -11/4/2014, 10:03 AM

Low blows -11/4/2014, 10:03 AM

Take country back -11/3/2014, 4:36 PM

Big First Tea Party endorses Roberts -11/3/2014, 4:36 PM

Changing times -11/3/2014, 4:27 PM

Elect an Independent -11/3/2014, 4:27 PM

Leiker excels -11/3/2014, 4:27 PM

Watching decline -11/3/2014, 4:27 PM

Lack of respect -11/3/2014, 9:58 AM

Holding memories for Aunt Millie -11/3/2014, 9:53 AM

Playing the game -11/3/2014, 9:53 AM

Vote responsibly -11/3/2014, 9:53 AM

Sherow is change -11/3/2014, 9:53 AM

Silly season and cynical strategies -11/3/2014, 9:52 AM

No endorsement -11/3/2014, 9:52 AM

Thank you, Hays -11/3/2014, 9:52 AM

Another Koch division? -11/2/2014, 5:09 PM

A Matter of truth -11/2/2014, 5:09 PM

-11/2/2014, 5:09 PM

Leiker for House -11/2/2014, 5:08 PM

Bottom of barrel -11/2/2014, 5:08 PM

Candidate asks for support -11/1/2014, 5:09 PM

Roberts serves Kansas -11/1/2014, 5:09 PM

Face of the experiment -10/31/2014, 4:36 PM

Leiker fits the bill -10/31/2014, 4:18 PM

Ellis has a choice -10/31/2014, 3:06 PM

Health-care truth -10/31/2014, 2:55 PM

Dropping the ball -10/31/2014, 2:55 PM

Governor's tricks -10/31/2014, 2:44 PM

Ballot measures -10/31/2014, 11:10 AM

Marijuana debate -10/30/2014, 2:44 PM

Republican crossover -10/30/2014, 2:35 PM

Roberts not the answer -10/30/2014, 10:25 AM

See the signs -10/30/2014, 10:23 AM

Incumbents always win -10/30/2014, 10:23 AM

Convention center -10/30/2014, 10:23 AM

Schodorf for SOS -10/30/2014, 10:14 AM

Supermarket shenanigans -10/29/2014, 10:19 AM

Americans can fix the Senate -10/29/2014, 10:19 AM

A plea to city commissioners -10/28/2014, 8:58 AM

Having no price tag -10/28/2014, 8:58 AM

myTown Calendar

SPOTLIGHT
[var top_story_head]

Devious taxation and accounting

Published on -4/27/2012, 9:42 AM

Printer-friendly version
E-Mail This Story

The Washington-based Tax Foundation does a yeoman's job of keeping track of how much we're paying in taxes and who's paying what. It turns out American taxpayers worked this year from Jan. 1 to April 17 -- 107 days -- to earn enough money to pay their federal, state and local tax bills.

That statistic requires some clarification, and I ask my readers to help me examine it.

According to the Congressional Budget Office, Congress will spend $3.8 trillion this year, about 24 percent of our $15 trillion gross domestic product. But federal tax revenue will be much less, only $2.5 trillion, or 16 percent of the GDP. That means there's a shortfall of $1.3 trillion. Some people, including economists, say there's a deficit. That's true, but only in an accounting sense, not in any meaningful economic sense. Let's look at it.

If Congress spends $3.8 trillion out of this year's $15 trillion GDP, what must it do to accomplish that goal? If you said it must "find a way to force us not to spend $3.8 trillion privately," go to the head of the class. One way to force us to spend $3.8 trillion less is to tax us that amount, but we're being taxed only $2.5 trillion.

Where does the extra $1.3 trillion come from? It surely doesn't come from the tooth fairy, Santa Claus or the Easter Bunny.

The fact of business is that if Congress spends $3.8 trillion of what we produce this year, it necessarily must force us to spend $3.8 trillion less privately this year. The most honest way to force us to do that is through taxation. Another way is to enter the bond market and make interest rates higher than they otherwise would be, thereby forcing us to spend less on private investment in homes and businesses. Then there is debasement of the currency through inflation, which is taxation by stealth.

A common but misleading argument is that future generations of Americans will pay for today's spending. Think about it. Is it possible for someone who has yet to be born to pick up the tab for what we do today? Pose the question another way. When we fought World War II, were the resources used and the sacrifices made to fight the war produced between 1941 and 1945, or were they produced and sacrificed in 1980, 1990 or 2000?

Subsequent generations benefited from our fighting the war by being born into a free nation. Congresses profligate spending will burden future generations through making them heirs to less capital and, hence, less wealth.

The bottom line is that whatever Congress consumes this year is produced this year, not in 2020, 2030 or 2040. That means, in the real economic sense, the federal budget is always balanced.

Instead of focusing on how the federal government has grown from 3 percent or 4 percent of our GDP -- as it was from 1787 to 1920 -- to today's 24 percent, our attention has been diverted to tax fairness demagoguery.

Let's look at tax fairness. According to Internal Revenue Service data for 2009, available at www.ntu.org/tax-basics/who-pays-income-taxes.html, the top 1 percent of American income earners paid almost 37 percent of federal income taxes. The top 10 percent paid about 70 percent of federal income taxes, and the top 50 percent paid nearly 98 percent. Roughly 47 percent of Americans pay no federal income tax.

Here's my fairness question to you: What standard of fairness dictates that the top 10 percent of income earners pay 70 percent of the income tax burden while 47 percent of Americans pay nothing?

The fact that the income tax burden is distributed so unevenly produces great politically borne fiscal problems. People who pay little or no income taxes become natural constituents for big-spending politicians. After all, if you pay no income taxes, what do you care if income taxes are raised? Also, you won't be enthusiastic about tax cuts; you'll see them as a threat to your handouts.

Walter E. Williams is the John M. Olin Distinguished Professor of Economics at George Mason University, Fairfax, Va.

digg delicious facebook stumbleupon google Newsvine
More News and Photos

Associated Press Videos