How much of America's total tax burden is now borne by a tiny fraction of our total population? An astonishing and disturbing amount. Scott Hodge of the Tax Foundation reports on recent IRS data about the rate of tax receipts in the United States:
… the share of the tax burden borne by the top 1 percent now exceeds the share paid by the bottom 95 percent of taxpayers combined. In 2007, the bottom 95 percent paid 39.4 percent of the income tax burden. This is down from the 58 percent of the total income tax burden they paid twenty years ago.
The top 1 percent are now paying over 40% of total revenues, Hodge finds.
When our founders established our system of government, they were intrinsically aware of the increasingly popular tendency among European theorists and governments towards radical economic redistribution. Thankfully they rejected it. In Europe, the mood was increasingly moving towards taking private wealth from some and giving to others.
The founders argued their strong dislike of this European trend. First, they believed that taking from the “haves” and giving to the “have nots” removed the necessary incentives for self improvement. Second, they believed that a government sanctioning such redistribution exhibited a complete disregard for the protection of property. Protection of property is the duty of good government.
To the first point, Benjamin Franklin wrote to one of his British friends of his concern with the English laws and movement in the United States to follow them:
I have long been of your opinion that your legal provision for the poor is a very great evil, operating as it does to the encouragement of idleness. We have followed your example, and begin now to see the error, and I hope, shall freeform it.
Franklin believed that it was improper for the state to use its power to redistribute income by taking from the “haves” and giving to the “have nots.” Doing so would be counterproductive to the goal of truly helping the less fortunate. In Franklin’s opinion, achievement is punished under such a scheme while idleness and failure are rewarded.
The second reason for rejecting radical redistribution was that the founders believed that property was as inalienable as free speech and religion. As such, it was the duty of the state to protect the liberty of property ownership as much as it was the duty of the state to protect the rights of free speech and religion. When the state takes from the “haves” and redistributes to the “have nots,” it is not protecting the right of property. Samuel Adams described this European method of redistribution as “arbitrary, despotic, and in our government, unconstitutional.”
Thomas Jefferson also warned us about the state sanctioning the act of taking from some and giving to others:
To take from one, because it is thought his own industry and that of his fathers has acquired too much, in order to spare to others, who, or whose fathers have not, exercised equal industry and skill, is to violate arbitrarily the first principle of association, the guarantee to everyone the exercise of his industry and the fruits acquired by it.
So how did we get to where we are today, where 1 percent of our population pays over 40% of all federal revenues? We seem to have arrived at the point of what Madison would describe as a majority faction. In Federalist Paper 10, Madison defines factions as:
a number of citizens, whether amounting to a minority or majority of the whole, who are united and actuated by some common impulse of passion, or of interest, adverse to the rights of other citizens, or to the permanent and aggregate interests of the community.
Madison’s concern and warnings about majority factions was ominous. When a majority gains power for an extended period of time, they have the potential to wreak great havoc on the rights of others. Madison’s conclusion about majority factions is obvious: even though a majority will may be present and fixed, that is no guarantee that the will is right.
In our current context of taxation, we have created a tax code that may indeed have majority support (it is very popular to have others pay while you enjoy the benefit), but the popular support for a radically progressive tax code does not make it right. And clearly, such radical redistribution is counter to the intent of the Founders. Taking property from some is, as Samuel Adams suggested, arbitrary and despotic.