Posted by
Always To The Right on Thursday, October 23, 2008 12:00:59 AM
We have heard much in the press lately about the American taxpayer
being forced to rescue the sharpies on Wall Street from their own greed
and...
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Anti-bailout sentiment cuts "across class lines" on Main Street
because "the taxpayers are on the hook for the bad judgment of others,"
as the Washington Post put it.
Now for a reality check.
Many Americans probably won't pay a cent of the cost of this
bailout. That's because a rapidly increasing percentage of U.S.
households legally pay no income taxes, and many others pay so little
in taxes that they already get back more from the federal government in
services than they send to Washington.
The number of taxpayers who generate a surplus for the federal
government — that is, pay more in taxes than they receive in services —
is small and shrinking, which is why the only way that the folks on
Main Street will pay for this bailout will be if Main Street is where
the mansions are in your town.
But since 1990, Washington has added all sorts of tax credits —
subsidizing everything from "lifetime learning" to adoptions — that
have further reduced the tax tab, and in the process raised the
proportion of households with no federal tax liability to 33%.
Both presidential candidates would vastly accelerate the trend.
Barack Obama's tax cut proposals, if enacted, would boost the
proportion of those paying no income tax by one-third to a whopping 44%
of all households, according to the Tax Foundation. John McCain's
proposal is not much different. Under his plan, 43% of households would
pay no federal income taxes.
But even among those who still pay an income tax, only a small
percentage would likely be on the hook for the additional costs of the
bailout.
By one estimate, the federal government already spends more than
$20,000 per household in direct services or services that are
considered part of the "general good" of the nation (like national
defense).
In the end, how we actually pay for the bailout is just part of the
issue. The larger point is that if McCain or Obama follow through with
their tax plans, we'll continue a trend that makes us look more and
more like some European social welfare state, where many people have a
stake in growing government entitlements, which fewer and fewer
taxpayers finance.
At some point along that road, change becomes impossible because too
many citizens benefit from the system in place, while those who pay the
freight for this system try whatever they can, including starting
businesses elsewhere, or reducing their output, to avoid the
disproportionate tax bite.