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John Stossel
John Stossel
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Transfer Machine


"The government who robs Peter to pay Paul can always depend on the support of Paul," George Bernard Shaw once said.

For a socialist, Shaw demonstrated good sense with that quotation. Unfortunately, America has become a laboratory in which his hypothesis is being tested.

The theory of government I was taught says that government provides benefits, primarily security, to the entire population. In return we pay taxes. But lately the government has been a distributor of special privileges, taking money from some and giving it to others. America is now about evenly split between those who pay income taxes and those who consume them.

The Urban-Brookings Tax Policy Center recently disclosed that close to half of all households will pay no income tax this year ( Some will pay less than zero — that is, they'll get money from those of us who do pay taxes.

The Tax Policy Center adds that this year the average income-tax rate for the bottom 40 percent of earners will be negative and that their cash subsidy will equal 10 percent of the total amount the income tax brings in, thanks to the Earned Income Tax Credit and President Obama's "Making Work Pay" program.

The view from the top also shows the lopsidedness of the tax system. The top 20 percent of earners makes about 53 percent of the income in America but pays 91 percent of the income tax. The top 1 percent pays 36 percent ( The IRS says the bottom half of earners pays less than 3 percent.

This presents a serious problem because government has such vast powers to dispense favors. As Shaw suggested, people who pay no tax will not hesitate to vote for politicians who promise big spending. Why not? They will get stuff without having to pay for it.

Yes, working people who pay no income tax still pay taxes: sales tax and payroll (Social Security and Medicare) taxes. But the income tax is big and visible, so it's a problem that a growing number of people don't pay, but get benefits from those who do.

Frederic Bastiat, the great 19th-century French economist, defined the state as "that great fiction by which everyone tries to live at the expense of everyone else." I don't know if he envisioned one half of the population living off the other half.

It's important not to confuse the interests of the taxpayers with the interests of the politicians and other tax consumers.

Yet that is done all the time. When the government bought toxic assets (of zero market value) from the banks, it said taxpayers would profit when the economy recovered and the assets once again commanded a positive price in the market. Even if we make the dubious assumption that the government is savvy enough to buy low and sell high, it's not the taxpayers who would benefit from any profits. The politicians will spend every penny, rather than cutting taxes.

To put it bluntly, we are not the government.

The built-in unfairness of the tax system has prompted a range of tax-reform proposals, such as a flat tax and replacing the income tax with a sales tax. These alternatives are better, but they have their drawbacks, too. For that reason, there is something more urgent than tax reform: spending reform.

The true burden of government, the late Milton Friedman said, is not the tax level but the spending level. Taxation is just one way for the government to get money. The other ways — borrowing and inflation — are also burdens on the people. The best way to lighten the tax burden is to lessen the spending burden. If government spends less, it takes less. And if it takes less, the tax system will weigh less heavily on us all.

Once again, we find wisdom in Adam Smith: "Little else is requisite to carry a state to the highest degree of opulence from the lowest barbarism but peace, easy taxes, and a tolerable administration of justice: all the rest being brought about by the natural course of things."

John Stossel joins Fox News on Oct. 19. He's the author of "Give Me a Break" and of "Myth, Lies, and Downright Stupidity." To find out more about John Stossel and read features by other Creators Syndicate writers and cartoonists, visit the Creators Syndicate Web page at




2 Comments | Post Comment
I agree the cutting spending would be a great way to start loosening the burden on people. Let's start with the military, which accounts for over half of the federal government's discretionary spending.
Comment: #1
Posted by: Timothy Griffy
Wed Oct 7, 2009 6:03 PM
Dear John Stossel, Several million jobs lost, and no accountability by politicians! Doesn't take a rocket
scientist to figure out politicians have been out of line! Taxpayers are willing to sell them
a one-way ticket to Gitmo, which is more than they deserve, take all their assets to pay
off the trillions they've borrowed, without Taxpayers consent, and bid them farewell!

Remember the song “Step out of line and they'll come take you away!” Definitely, should
apply to politicians, lobbyists, unions, CEO's, special interests, insurance and drug
companies! PACS must be dissolved! Taxpayers know these ‘blood-sucking ticks' can't
get elected without millions from these people who're seeking something in return!'
Taxpayers know this is corruption! Why should Taxpayers have to pay more for their
insurance and medicines, just so politicians can get elected?

Several million jobs lost, and no accountability by politicians! Doesn't take a rocket
scientist to figure out politicians have been out of line! Taxpayers are willing to sell them
a one-way ticket to Gitmo, which is more than they deserve, take all their assets to pay
off the trillions they've borrowed, without Taxpayers consent, and bid them farewell!

Why should Taxpayers be held responsible for the ‘so-called agreements and the
borrowing of trillions of dollars from foreign countries made by the politicians?'
Taxpayers know that all the Committees being used by politicians on local, state, and
federal levels, are just a way to hide what they're really doing! ‘Ways and Means, Ethics,
Appropriations, Government Reform, Economics, Financial Services, Pensions, Rules,
Finance, Education', I think you're getting the message! For past five decades, wouldn't
you think that with all these committees someone honest with intregrity would have
stepped up to the plate and put an end to ‘corruption and greed' in government?

‘A real joke' - letting the crooked politicians ‘investigate one of their own!'

Someone once said “The American people will never knowingly adopt socialism. Under
the name of “liberalism, they'll adopt every fragment of socialist party, until one day
America will be a socialist nation without knowing what happened!”

Wake up, America!

Comment: #2
Posted by: Shirley deLong
Sat Oct 10, 2009 9:35 AM
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