Is There Anyone Left to Pay Taxes?

The Tax Foundation reports that soon nearly half of the tax returns filed will owe no federal income tax, according to the economic plans of John McCain and Barack Obama.

In its analysis Both Candidates’ Tax Plans Will Reduce Millions of Taxpayers’ Liability to Zero (or Less), the Tax Foundation reports that McCain’s announced tax reforms will result in 43 percent of tax returns owing no federal income tax. Obama’s would result in 44 percent.

Is this huge number of zero-income tax payers good public policy? Is it wise to have so few tax payers and so many tax consumers? I believe that taxation is wrong and needs to be drastically reduced, if not eliminated. But if we must have taxation, it needs to be fair, and to touch all people. Writing in a letter to the Wall Street Journal recently, M. Todd Henderson of the University of Chicago Law School wrote this:

The downside of a tax system of givers and takers is that people who don’t pay for things care less about them. When I was a management consultant working with a nonprofit client, I asked my boss why we made the client pay for a portion of our relatively expensive fees. He told me that having some “skin in the game” makes the client care more about the project, makes us care more about delivering value to them, and keeps the relationship one of mutual respect. The analogy to citizens and government is plain. Low-income taxpayers, like the nonprofit client, will simply care less about tax policy, wealth redistribution, and the growth of the welfare system if they aren’t paying for it. Making everyone pay, even if just a little bit, reinforces the Founders’ notion of “We the People” by making us all financially responsible for the government we have.

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