Empey is a fourth-year student at the UCLA School of
Medicine.
By Douglas Empey
Doug Lief’s column “Business
is doing its business on everyone else” (Daily Bruin,
Viewpoint, Feb. 20) invites a few comments regarding taxation
specifically and free market economics in general.
Amid various musings ranging from sock puppets to the evil of
corporations, Lief offers his view that the president’s
proposed tax cut is unfair to the common people. He invites us to
be disgusted that the plan “gives $50,000 to the people on
the top, but only $1,600 to the average taxpayer.”
Before condemning such a pernicious plan concocted by
“Republicans and businessmen,” Lief should consider
that these figures result from the fact that wealthy Americans pay
more taxes than those of us of more meager means. Tax cuts result
in higher lump-sum savings for the wealthy for the simple fact that
their marginal tax rates are already so high.
For example, data from the Internal Revenue Service for the 1998
tax year show that the top 5 percent of income earners paid over
half of the income tax revenue received by the federal government.
Furthermore, the bottom 50 percent paid only 4.2 percent of the
total income tax collected (Wall Street Journal, “Progressive
Plunder,” Feb. 6, 2001). Lief’s assertion that the
proposed tax cut is “Robin Hood being run in reverse”
is simply comical given the markedly progressive nature of American
marginal income tax rates, a system made even more inequitable by
the Clinton tax increase of 1993. The current tax scheme is more
like Robin Hood running out of control.
And yet, the Gephardt-Daschle-Bonior wing of the Democratic
Party, in good populist fashion, continues to give the impression
that the tax cut will leave the poor with an onerous tax burden
while the rich get by without paying their “fair
share.” The numbers simply show this to be false.
The fundamental unfairness and bureaucracy of the American
income tax system underscores the need for significant tax reform,
including the abolition of the IRS and the institution of a
national retail sales tax in its place. Such a system would prevent
demagogic politicians from wielding the income tax as a weapon of
class warfare, unneeded wealth redistribution and social
engineering. But I digress ““ this is a subject for another
essay.
All of this bears upon the broader philosophical issue of the
role of the government in our economic system. Since the early
1980s, the world has undergone a revolution in which the welfare
and state-interventionist economic models have fallen out of favor.
Such systems simply do not produce the wealth and living standards
of the free market, which includes the deregulation of capital
markets, the elimination of tariffs and quotas, and allow the
people to keep their income and invest it in privately owned
factors of production.
Oh yes, there are still holdouts who cling to the old ways (like
Cuba and some in the American media and academia). But as
journalist Thomas Friedman has stated in his recent book on
globalization, “The Lexus and the Olive Tree,”
“Ideologically speaking, there is no more mint chocolate
chip, there is no more strawberry swirl and there is no more
lemon-lime. Today there is only free-market vanilla and North
Korea. … In the end, if you want higher standards of living in a
world without walls, the free market is the only ideological
alternative left.”
President Bush’s proposed tax cut, in addition to
providing a needed fiscal stimulus, is simply one small aspect of a
growing economic conservatism which recognizes the benefits of
diminished government intervention in private wealth and the free
market. Much of the rest of the world is seeing these benefits.
Will we?