The Rich, The Fair Share, and Other People’s Money.

Recently, information was leaked from a law firm in Panama showing a large number of wealthy people from many countries setting up Panamanian shell firms to disguise their income and avoid domestic taxes. This included 211 people with addresses in the United States.

To a hardcore libertarian like myself, this is great stuff. Avoiding taxes and depriving the government of money are heroic deeds. These folks have the right idea.

There is no question that many of the people listed the Panama papers are huge hypocrites who push for higher taxes and rail against domestic tax loopholes while scheming to protect their own wealth. Irritating, ever-present John Kerry is one of them. The former Prime Minister of Iceland is another. Both of these men frequently hammer on the importance of paying “fair share” taxes while investing millions in offshore shell companies to hide their wealth.

Taxes for thee, but not for me.” These are the people who deserve to get hammered, although nothing revealed in the Panama Papers was explicitly illegal. But hypocrites deserve to get hoisted by the petards of their own policy in action.

THE FAIR SHARE

Inevitably, such a revelation encourages pro-tax people to demand that the rich “pay their fair share” in taxation, and call for the closing of tax loopholes. We are already hearing this in relation to the Panama Papers.

Problem: the “fair share” is a stupid and meaningless slogan. What makes something fair? Something is “fair” when two people agree that it’s fair. Fairness is contingent on voluntary agreement between two parties. This is why the idea of government intervention to make things fair is preposterous. If the government intervenes to force someone to do something, then it becomes unfair by definition. I have discussed this before.

So when people cry out for the rich to pay a “fair share” in taxes, what they really want is the government to step in with guns and makes things “absolutely unfair”. What these people really mean is “I’m envious of rich people and want access to free goodies paid for by other people’s money.”

Instead of closing tax loopholes, I have better idea: let’s expand the loopholes to include the rest of us. I want loopholes in loopholes. I want the tax code to be so full of loopholes that every taxpayer in the USA can get out of paying taxes on a year-to-year basis.

DEMOCRACY AND FAIRNESS

The question is this: who gets to decide what constitutes a “fair share”? The President? The Supreme Court? Congress? Take your pick. No matter the answer, the next question is “Why?” Why should this person or that agency get to choose what is “fair”? Are they God? Is their word divine? Are they the arbiter of all things? My answer is easy: No, they ain’t. To any extent that I conform to what the government claims is a “fair share”, it’s only because the government is allowed to beat me up and throw me in jail for disagreeing.

Many people will say this: “We live in a democracy. Voters decide.” And many people will agree with this, both left and right-wing. I disagree. This is a demonstration of the modern religion of democracy, which has been called “The God that Failed” (due respect to Whittaker Chambers). The main commandment of Democracy is this: “Thou shalt not steal, except by majority vote.”  Most people will agree that stealing is wrong, but they somehow get muddled on this if it’s the government that does the stealing.

None of this is legitimate or moral. But American voters accepted theft as a way of life long ago. Voters don’t care about morality. They don’t care about the law, as in the case of Hillary’s e-mail server. Former Judge Napolitano has shown why, by federal law, Hillary is a felon. But voters don’t care. Hillary promises that “the rich” will pay their fair share; and what American voters care about most of all is getting a cut of the loot. Call it their “fair share”, if you will.

At its core, democracy appeals to mass looting. Voters gravitate to whichever politician defends their cut of the loot. This is why welfare programs are called “entitlements”: because voters really believe they are entitled to free goodies paid for by other people’s money.

THE RUDE AWAKENING

The politics of the “fair share” are the politics of theft. At root, they are something worse: the politics of envy. Envy is one of the most destructive of all emotions: “If I can’t have it, you can’t have it either.” No good can come of envy.

Political promises built on envy will only destroy existing wealth, not “redistribute” wealth, as we are often told. When society is fueled by envy, people will come out less wealthy than they were before. People will be more miserable than they were before. Think “Every country that has a had a communist revolution.”

But there’s more: These promises are built not only on envy, but also lies. The current outstanding federal debt, including all future liabilities, is over $222 trillion. The government will never be able to meet these obligations. At some point, they will turn out their pockets: “Out of dough. Sorry.”

Voters do not pay attention to this. The great volcano next to the city is smoldering. The dome is bulging profusely. The inevitable eruption is obvious. But the voters do not pay attention. They know that politicians lie. They understand that the government spends money it does not have. But nobody is worried. They go about their lives, oblivious to the bulging volcano of federal debt. Middle-class families plan their lives around federal subsidies. Oldsters plan their retirement around Social Security and Medicare. They think the inevitable “boom” won’t happen to them.

Things that can’t go on forever, won’t. Voters will figure this out. There will be a rude awakening.

CONCLUSION

Legitimacy is the key to political supremacy. No ruling party can hang on to power without some degree of legitimacy.

In some places, legitimacy stems from who has the biggest gun. In Soviet Russia, legitimacy of the Communist Party first came from Marxism: “We will create a utopia.” This quickly devolved into, “Well, we can’t  make utopia, but we do have the biggest guns.” 

In modern Western democracies, legitimacy revolves around government checks. In America, these are most represented by Social Security and Medicare, which oldsters tend to really believe they are entitled to. But nearly all voters in America are guilty of this, not just the elderly. As long as the checks keep coming, the political supremacy of the Washington Establishment will remain legitimate. When the checks stop coming, the foundation of the West’s political structure will be rocked to its core.

If you understand this, you are already ahead of the game. Knowing is half the battle.

A dose of hopeful optimism: For people who believe in actual fairness – that is, a free and voluntary society – this loss of federal legitimacy will be a chance to replace the prevailing political order with something better. I predict a large reorientation to state-level politics over federal politics. This will be good for liberty.

 

 

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