Ever wonder how much "return on investment" (ROI) taxpaying citizens get for turning a portion of their income over to the federal government to to finance spending programs that are supposed to benefit its citizens?
According to a report published by the Tax Foundation, the answer to that question is somewhat complicated. However, much of the answer depends on what strata of society those taxpaying citizens occupy:
- For every $1.00 high-income families pay in federal taxes, they receive $0.25 cents in federal spending.
- For every $1.00 middle-income families pay in federal taxes, they receive $1.57 in federal taxes.
- For every $1.00 lowest-income families pay in federal taxes, they receive $8.13 in federal spending.
- Aggregating these figures by groups, the federal government's tax and spending policies combine to redistribute more than $2T from the top 40% of families to the bottom 60%.
According to the report, the total amount of redistribution has increased slightly over the past 12 years (so that includes the tenure of Democrats' most-detested Republican President, George W. Bush) with middle-income and working lower-income families the biggest beneficiaries of tax federal tax policy largesse.
Taxes and spending have distributional effects. Focusing solely on tax distribution while ignoring spending distribution--as liberals do--their argument is based upon a highly distorted picture which neglects how the nation's tax policy impacts Americans in different income groups.
The Motley Monk argues that what's needed is a "just" tax policy, namely, one that focuses upon tax distribution (75% of the equation) as well as spending distribution (25% of the equation). Yes, there would be less "progressivity" on the tax side. B but that could easily be offset by increasing progressivity on the spending side.
What would that look like?
A flat tax (let's say 20%) with a defined poverty line below which no tax would be paid.
What's needed first, however, is the formulation of a sound "theology of taxation," one that's rooted not in Marxian redistributionism but in principled capitalism.
Let the discussion begin...
To read the Tax Foundation study, click on the following link:
"The Distribution of Tax and Spending Policies in the United States."