What Do You Want, More or Less Freedom?

When we debate taxation, there are questions I never hear asked… and today I will ask them.

Warren Buffet points out an injustice in our tax law that allows him to pay as much as 22% less in federal income taxes than the middle class. He pays 17.7% while some of his employees pay 39.7%.

Obviously unfair, right? It should be fixed, right? So what is the solution?

Warren Buffet wants taxes raised on the rich and a Senate committee agrees.

So here are my questions:

  • Why not reduce the middle class tax rate instead?
  • Why does every proposal to create fairness and equality require that we crack down on those that have most freedom?
  • Why doesn’t Warren propose that the middle class only pay 17.7%?
  • How do you benefit if someone else has less and the government has more?
  • Why give the government more money? Do you think they are responsible with the trillions they already have?

It reminds me of a child tattletale saying, “How come Joey gets to do that?” and the teacher says, “Oh I didn’t notice, we’ll have to make a rule against that. Joey stop it.”

The tattletale feels smug, Joey lost his freedom, and neither is better off. They are now equally miserable. Not my kind of fairness… I like solutions that result in more freedom, not less.

24 thoughts on “What Do You Want, More or Less Freedom?”

  1. Great points Steve. No reason to increase the burden on anyone.

    In fact, the government doesn’t even have the trillions of dollars that they are using irresponsibly. The Federal Reserve (private banks) print money out of nothing and the government borrows it. Our taxes don’t actually pay for most of the “privileges” provided by the government, they just pay off interest owed to the Fed.

    I suppose a more “fair” method would be to implement a system like the Fair Tax. No one pays personal income tax, but we pay a much higher tax on goods purchased. Then the rich actually pay more taxes, assuming they have more expensive consumption habits (yachts, cars, big houses, etc.) – and we all have the freedom to pay less taxes by consuming less.

  2. John,

    I realize this post went into a political and moral area. But I have to ask the same questions about everything, not just taxes.

    When we see somebody getting a better deal than us, why don’t we ask for the better deal? What part of us likes to screw the guy that is getting ahead? It is a strange human trait.

    Example: – I have $100 dollars and you have $500 dollars, but I’d be happier if I had $80 dollars and you had 90$. I don’t care about how much I have as long as I have more. It’s sad really. It leads to all kinds of foolish behavior and wasted resources.

    When we ask for fairness we rarely get treated better, we get treated the same or worse. Mostly.. fair means… equal pain…I hate to say it… but fairness can be the enemy of freedom.

    Two people waiting on death row for spitting on the sidewalk are getting an equal sentence. It’d be ideal if neither of them were on death row, but I must concede it would be better if only one of them were on death row even if it was unfair. Saving a life and being unfair is better than killing two in the name of fairness.

  3. I am one who believes that government officials should always err on the side of liberty. I’m also one who believes that income taxes are a violation of our rights. Because of the 16th Amendment, I guess I can’t say “violation of our Constitutional rights,” but I’m one who realizes that the Constitution is not the source of our rights. Even though income taxes are Constitutional, the way they are collected is clearly a violation of several of our enumerated rights. However, since the courts are part of the government and judges receive their pay from our taxes, it’s difficult to find one who agrees with my views.

    The Fairtax (Fairtax.org) would be a huge step in the right direction. Electing more people who think like Rep. Ron Paul would be an even better step.

    I, like you, would rather have the better deal than to screw the ones who are getting the better deal. And, of course, I use the term “better deal” as a metaphor since I really don’t want any deals from any levels of government except for them to leave me alone and let me keep my property.

    Providing emergency and police services, a military, and a conflict resolution/court system are the only legitimate purposes of government.

  4. Great points, indeed! I was self employed most of last year, and essentially I was taxed twice: for the total amount that we earned, and then again on what I made as an independant contractor. I’m sure there were loopholes I missed but I’m not so “indepent” that I can hire a slew of CPA lawyers to handle my taxes for me. I really think the whole income tax system needs to be abolished.

    But the bigger question you pose is even better: why do we settle for less in these situations? I am just now learning to take responsibility for my dreams and success and I discovered that it is hard to say, “I deserve better.” Compromise is always a good tactic for negotiation, but it isn’t a goal in and of itself. Society — especially the school system, as you’ve written about — imposes on people at a young age to accept less, even when they should not do so.

    Freedom, for me, is asking for everything I want. I may not get it all but I have the right to ask, and to pursue the opportunity to acheive my dreams.

  5. Steve,

    It’s odd that I JUST finished reading a Warren Buffett book but in it he talks about how it’s his (and other wealthy people’s) duty to give back and redistribute wealth to society. If that’s the case, why not have an even more progressive tax without loopholes? So for someone like Warren, why not tax him at a 50-60% rate? Then again, FWIW, Warren doesn’t make that much per year – most of his wealth is tied up in Berkshire and his salary is fixed at $100k. Of course, he makes money on the side and with personal investments, but it’s not like he makes a billion a year like some of the hedge fund guys.

  6. A couple of random comments. Warren Buffet’s 17% is a whole lot more money than my 39%. Why should he pay so much more than I do? I suspect in economic terms, Buffet actually adds more to the economy than I do (by a factor of about 10,000). But if you think of government as a service, does Buffet require that much more government than I do? “Fairness” as used here really is a code for wealth distribution. What I find baffling is why the Buffets and Soroses of the world buy into wealth distribution. Is it that they have so much money they can afford have more taken away through taxes, and they just don’t care? Buffet makes millions per year just by doing nothing. I guess what I’m saying is this: heavy taxation of the so called rich isn’t going to cramp Buffet’s lifestyle, but it definitely will seriously affect middle class people who are trying to become wealthy, but who are not yet wealthy. Or now that Buffet is so extremely wealthy has it all gone to his head? Does he look at the average American in a patronizing way? Does he think that we need taking care of? Just some thoughts! Great post! Thanks, Steve!

  7. Steve,

    I actually agree with you, but maybe didn’t express my thoughts well. I think we should all pay as little tax as possible – and for those taxes that are absolutely necessary I think we should have a simpler system to ensure that the billionaires as well as the middle class can pay an equally small amount.

    Why do we like to screw the guy that’s getting ahead? Maybe it’s part of a competitive nature that we’ve had drilled into us since primary school. Maybe it’s our mistaken belief in the “zero sum game” – that resources are finite and when other people have more than us we lose – and we’re too lazy to improve our own circumstances so we’ll just sabotage everyone else. Maybe it’s just because misery loves company.

    Whatever the reason, it’s surely a poor excuse.

  8. Rafael,

    First, I want to say Warren Buffet is a brilliant investor and I agree wholeheartedly that the wealthy have a moral obligation to spread their wealth around.

    But here is where I part with Mr. Buffet’s morality…

    I don’t believe you can legislate morality. Forced action or inaction at the point of a gun or threat of imprisonment isn’t active morality, its extortion. Real morality comes from your heart and soul not from threats. So Mr. Buffet is free to be as loose as he wishes redistributing his own wealth, but forcing others to redistribute their wealth under threat of force isn’t moral in any sense of the word. The government will gladly take any extra money Warren would like to send them. I’d prefer he give it to private charity, but nevertheless they will take it and he is free to give it.

    Just as Mr. Buffet believes it is moral to share your wealth, others believe it moral to practice abstinence, but I ask… should we legislate that? Drug laws are a miserable failure. Prohibition was a failure. Obscenity laws failed. And tax laws will fail to create the utopia the central planners desire. The thing that frightens me about central planners is that they truly believe that only they can fix us, that they are smarter and better than the rest of us, and that they alone can save us from ourselves. Sounds like the inquisitors to me. They view us as children, so no wonder so many of us act as children. There is no utopia except your own utopia. How can you force utopia upon another? The only utopia possible is one in which no force or fraud is initiated upon anyone and in order to bring that about each individual man must choose to change his own heart. There is no other solution. All the great mystics have said it. Peace comes from within. Force is the tool of the tyrant.

  9. John,

    I understood you clearly. You were clear as the stars are bright tonight.

    I just took your comment as an opportunity to get on the soapbox again.


  10. Oh the federal government. It’s funny how we’ve grown to accept it, debating how much of our income is a fair amount to give it. The government is only there to serve us, and we’re supposed to live in a republic of individual states not a federal style of government. Trade & military protection, wasn’t that supposed to be the only purpose of a federal government? In the 19th century Alexis de Tocqueville wrote “The American Republic will endure until the day Congress discovers that it can bribe the public with the public’s money” . How prescient. So yeah, I have a history degree from one of those schools in Boston, sue me. But honestly, the federal government has become a self perpetuating machine whose only purpose is to stay in power. I’m a small government social liberal myself. We don’t need more taxes for anyone, we need less pork, and a smaller government. If you wanted to live with government controlling every aspect of your life that’s why individual state governments were set up.

  11. hey Steve,

    In my opinion the problem lies with the traditional education system. For ages, the educational system has taught us how to learn to be professionals – lawyers, doctors, engineers, teachers. It taught us how to study hard and get a good job. Growing up most of us were told to “Study hard and get a good job and the company will take care of you”.

    What the educational system has not taught us is how to manage money and build wealth. If we’re not learning this at school then we must learn from our own parents. The problem is that our parents grew up in the same system that we grew up in. They learned from their parents and so on and so on. We have outgrown the old ideas about money because we are continually evolving and changing. Therefore, are parents are educating us about money from a system that is outdated and has been for a long time.

    So now you’ve got all these highly educated professionals that went through the traditional education system and are running the country. They’re running the country and they don’t understand much about money. They don’t understand how to build wealth and so they continue to tax us. The tax us and drive the country into more debt. What did you expect?

    Solution: Have the rich and wealthy teach us how to think and grow rich. If we transform the educational system we will transform the planet. If we do this then we will regain our freedom.

    Warren Buffet for president!

    Other thoughts?

    Stephen Martile
    Personal Development with NLP

  12. I think you’re getting your issues muddled here.

    Warran Buffet is suggesting the system of taxation today is not fair, and that it should be. I agree.

    You seem to be confusing this with the question of what should be the total tax revenues the government should raise, a completely seperate issue. Raising taxes for the rich is not about giving the governement more money, it’s about making the tax system fair. Raising taxes for the rich would reduce taxes for everyone else, assuming the total amount of money raised is the same.

    And I have no idea who’s freedon you’re suggesting is being lost here. The freedom of rich people not to pay taxes?

    Like it or not, government and taxation are here to stay (and that’s a sperate issue anyway). All Mr. Buffet is saying is that the way taxes are raised should be fair to everyone.

  13. Jonathan,

    Your right to own the output of your productivity is freedom. Someone else owning it is slavery.

    So if the government takes 10% of your output and 20% of my output, it isn’t fair. You could make it fair by either raising your rate to 20% or lowering mine to 10%. I prefer they lower mine to 10%, so I have more of the output I produce which is my freedom. Rasing your to 20% does me no good. You have lost ownership of your output and I still pay the same tribute.

    Raising taxes on the rich doesn’t reduce the taxes everyone else pays. That’s a misconception. It just raises the taxes the rich pay… it doesn’t affect the rates of others. There isn’t a built in balancing system.

    In our lifetime, we have never seen a increase in taxes on the rich reduce the tax burden on the middle class. The government can’t afford to cut upper middle class taxes, because they pay a massive portion of the taxes. The worker bees (employees) pay the highest percentage of taxes. The poor pay little and the rich pay less as a percentage because they usually own businesses. The middle class worker pays thru the nose.

  14. Jonathan,

    You’re right though it did get muddled.

    My real curiosity is this…

    Why is taking more the only way to level things? Why isn’t taking less an alternative? Whenever I hear about fairness… it usually means sticking it to somebody who’s winning. Why isn’t fairness defined as getting out of the way and allowing others to succeed as well?

    Or is it about fairness at all?

    Warren’s comment is just brought the thought to mind.

  15. Not that I don’t like to hear myself talk, I do, but I feel the need to jump in again and I feel bad. Jonathan, Mr. Buffet is saying the amount he pays in the current system is ridiculous, but, repeat after me, correlation does not equal causation. Just because the present system is ridiculous does not mean he would not want a completely different system if given the choice. In other words, an unfair tax system is not the ultimate cause of ridiculousness, being taxed without a reason in the first place is. Personally, I’m pro inheritance tax (yeah! meritocracy, you worked hard, your children had a good upbringing, you already gave good genes to your kids, seriously, how many advantages do you want???), pro consumption tax (you’re so insecure you need to buy luxuries to feel important…. do not pass go, do not collect $200), and anti income tax (You work harder than your neighbor? You should not pay more for the war in Kazikstan which is vital to our national security against…. Terror…Nazi..Communist!!!!) Stop being sheep and giving money to the feds without asking why. They work for us, remember?

  16. Great points. I’ve also witnessed the same situation wherein, people who get penalties are not satisfied unless others will also join him with the penalties. It’s an attitude we need to forget and start with a good one.

  17. Great discussion and thanks! Wow — this is a question to ponder, and while freedom rarely comes cheap – neither does it come through war and greed.

    After just returning from several weeks in Ireland – I was interested to see the powerful relationship they attribute between peace and national prosperity. Interestingly – they let go of war and agnry rhetoric – and watched their economy strengthen so fast they cannot keep up to it today.

    they result – people in Ireland have regained a great vision and they are the second richest European nation.

    And our economy decreases daily as we increase the rhetoric and wartones that keep us down. Nuff said — but thanks for the great angles to consider on a vital topic! I need to think about this discussion even more – because of the good ideas posted here.

  18. Steve, sheer numbers of the middle class compared to the upper class would mean that the government would lose too much revenue. Seems like there could be a compromise so that the middle class and Warren Buffet’s class could pay the same tax.

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