Welfare or charity?

The topic of welfare has risen to the fore again as well it should with one of the tax proposals from one of our candidates for President.   If we as a people believe our taxes should be used to give money directly to one particular group selected by politicians then I suppose we have no choice but to go along under our democratic principles.  But I do like truth in advertising.   The refundable tax credits are welfare by any reasonable definition of the word and it strikes me as reasonable to use that term.   The folks who are to receive the cash payments are indeed workers  but they are ones who only pay payroll taxes, to wit: FICA (Socical Security) and Medicare payments.  They will pay approximately 7.5% of their wages for that and their employer has to pay an additional 7.5%.   I don’t view that as any great sacrifice on their part.  After all it is for their own retirement money down the road.  If you believe the theory behind Social Security it is your money being put aside for retirement and the Medicare portion is for your personal benefit too when you become eligible.   The point is that those taxes are not income taxes and those funds don’t contribute to the money needed to run our bloated Federal establishment and all the other expenses of Government.   All the estimates say that about 40% of the folks would qualify for this cash payment  even though they pay no income taxes.  The politicians have made the decision that this group is worthy of special help; that this group of folks can’t make it on their own without public assistance.   The Federal budget is enormous and that means a little over half of us have to fund everything else  for the Government–military, the entitlement programs, like food stamps, etc, all the Federal agencies.  We are reaching a point where there is not going to be enough of us who actually pay income taxes to foot the total bill for everything except Social Security and Medicare.  Just as now there is only about 2 workers for every person collecting Social Security, and that is part of the problem with that system, we will soon be facing the same dilemma with our general Federal budget items.   How low can the ratio go of income tax paying citizens to non payers?   Thirty percent, twenty per cent.   There is a point where it all will collapse.

Start from scratch and ask yourself how much in income taxes anyone should have to pay regardless of their income.   Whether they make $25,000 a year or a million what is the upper limit you  think is “fair”.  How much should someone be allowed to keep of their own earnings.   I have seen several polls on the topic before and most of them say the majority of us believe income taxes should never be more than 30% of anyone’s income.   Remember we all have to additionally pay local and state taxes too.  There has to be a limit unless you prefer a socialistic or communist form of governance where the Government owns and controls everything including the right to tell you where you will work and what you will make and there are no taxes because the Government already owns everything.

We are rapidly heading to a situation where only half of us and soon even less than half will be paying for the operation of the Government.   That is unsustainable.   We need to take a hard look now at our taxing policy.   If we do not there will soon be a true tax rebellion.   Once less than half of us are paying for everything we will have reached a tipping point of opposition.   There is a long and strong reluctance to high taxes in the Nation and it will grow from reluctance to outright defiance.  We could become like Italy where cheating on the tax man is a national sport and only the foolhardy are paying the taxes due.  

 I once read an interesting article years ago by a very famous businesman who proposed that we limit the right to vote to only those that pay income taxes.   If you didn’t pay income taxes in the year before the election you couldn’t vote.  It is a very intriguing concept and does have some merit.   No one would be denied their civil rights.  The right to vote is not well covered in the US constitution.   The 15th amendment only speaks about denying rights based upon race, color or previous condition of involuntary servitude.   Otherwise the Constitution is silent about any Federal standards for voter qualifications.  The premise of the argument was quiet straight forward–why should those who are not paying the bill have a say in how the money is spent?   Shouldn’t those who are funding the Governement have the right to determine how that Governement will be spending the money.  You have heard a lot lately the expression “no skin in the game” referring to the mortgage bailout situation and those homeowners who bought their homes for virtually no money down and that is an apt phrase when it comes to those who don’t pony up income taxes.   What is their skin in the game?   Remember the proposal is abundantly clear that the non tax paying citizens would have all their civil rights under the Constitution protected.  If you have people who don’t pay but still vote isn’t that an invitation to worse corruption in the political process where the ones in control of Government will be inclined to dole out goodies (bread and circuses) to the non payers to keep their votes and thus the power?   If the Government is going to take my money by force of law at least let me have a say in how it is spent and don’t let the non payer have an equal voice.   If I am paying for the free lunch for someone else they shouldn’t get to select the menu.    Those are the arguments.  They do pose very interesting questions  of fairness.   I thought you might enjoy the mental exercise of thinking that through.

Taking your money and giving it directly  to someone else is welfare, it is not merely adjusting tax policy.   If such a welfare program is the will of the people then let them speak to it in plain english.

The English royal family changed its surname during WWI from the German surname(s) that had been used for over a 100 years.  This was at the height of the war in 1917.   You know the name chosen of course–Windsor.  Oh, technically the Royals aren’t name the way you and I are.  It is not Charles Windsor.  It is Charles of the House of Windsor for example.

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Filed under Economics, government, Politics

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