Should the Rich “Give Back” by Paying More Taxes?

This is from a couple of years ago, but the premise is the same: folks who argue that the rich ought to “give back” (that is, pay taxes) at a higher rate than the rest of us are misinformed on a couple of key points.

  1. The top 10% of earners already pay a disproportionately large share of the taxes that are paid (I’ve written about this a couple of times, but lots of folks don’t understand this, or willfully ignore it).
  2. “Give back” implies a voluntary act of returning something that was previously given. Paying taxes is not a voluntary act; it is transacted at the point of a gun. Society didn’t “give” wealthy people anything, but they did make voluntary exchanges of dollars for goods or services. (h/t Speedmaster)

Over the course of the recent debt-ceiling debate, one argument made in favor of raising taxes on the rich was that they ought to be “giving back.” It wasn’t always clear to whom they were supposed to be giving back, but the argument is that since “society” has made it possible for them to become rich, they should “give back” by paying higher rates of taxation to support government programs.Who pays taxes from NTU

There are quite a few problems with this argument, not the least of which is that the total share of the tax burden shouldered by the rich is actually very high. The top 10 percent of households paid about 70 percent of total taxes in 2008. According to the nonpartisan Tax Foundation, in 2008 the top 1 percent of households paid 38 percent of all federal income taxes even though they earned 20 percent of total adjusted gross income. That’s a higher percentage than 30 years ago, when the top tax bracket was double what it is now. In addition, the average rate the rich actually pay is still notably higher than all the income groups below them. The top 1 percent pay 23 percent on average, and the top 10 percent pay 19 percent. So by those measures, the rich already do “give back” plenty.

Taking, Not Giving – However, I want to focus on two different problems. First, note the phrase “give back.” Whatever one thinks should be the optimal rate of taxation on the wealthy, using the phrase “give” is highly misleading. When one “gives” something, it is voluntary. Taxation, whatever else is true, is not a citizen giving; it’s a government taking. Again, even if one thinks the rich should be taxed more, referring to it as “giving back” is at best inaccurate and at worst dishonest.The bigger problem with the rhetoric of “giving back” is that it is shows a misunderstanding of the fundamental process by which wealth is generated. In particular it ignores the mutually beneficial nature of exchange and assumes that those who have become rich did so by “taking” from others. The only reason one would “give back” is that one has “taken” something inappropriately from others. The “back” in “give back” assumes that the thing in question rightfully belongs to someone else.

via Giving Back : The Freeman : Foundation for Economic Education.

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