Home
Do the rich get more benefits from the government in return for their tax dollars? In a recent post, I casually mentioned that all citizens get roughly the same benefit from the government. Several readers objected. Let's throw some more gasoline on that campfire.

This question matters because if the rich get more benefits from the federal government, some would say it is "common sense" that they should pay a higher tax rate. But, as regular readers of this blog know, common sense isn't a real thing. And its ugly cousin, fairness, is a concept invented so dumb people could participate in arguments. Fairness isn't a natural part of the universe. It's purely subjective. So let's agree that fairness can be ignored in this discussion. We'll stick with what can be quantified, sort of. (If it were easy, it wouldn't be fun.)

We'll also limit our discussion to federal income taxes because that's the main topic of national debate during this election year.

On the payment side, we all agree that the rich pay far more per person in taxes than the poor. And the vast majority of the rich pay a higher tax rate as well. The exceptions are some subset of the superrich, who are perhaps 1% of the top 1%. Let's ignore the superrich for now because any discussion of that special group drags us into the unrelated topic of capital gains taxes.

We can also exclude from this discussion the 49% of American adults who pay no federal income taxes. They pay plenty of other taxes, but for now that is a separate discussion. To keep things clean and simple, the question boils down to this: Does the average millionaire get more benefits from the federal government than the average member of the middle class who pays federal income taxes?

Consider national defense. The rich pay far more per person to fund our military. Some would argue that is "fair" because the military is protecting far greater assets for the rich. For me, that doesn't pass the sniff test. If our military disbanded tomorrow, the rich would move their money and their families to a safer country and leave the middle class to become slaves to the conquering Elbonians.  The argument that our military gives greater protection to the rich, because the rich have more assets, assumes our national enemies are nothing but burglars looking for loot.  It also assumes money can't escape across borders with its owners. Granted, the rich might lose their mansions and businesses if they escaped with the rest of their wealth, but the middle class who can't afford to escape would end up working in the Elbonian salt mines. According to my calculations, the middle class get more benefits from the military because national security prevents them from becoming Elbonian slaves. The rich are only at risk of losing a portion of their stranded wealth when they head to Switzerland. And depending on the ambition of our hypothetical enemies, we all benefit equally by not being killed. A rich dead guy is not happier than a middle class dead guy.

How about education? The rich benefit from an educated workforce because it allows them to staff their companies and grow their wealth. The middle class benefit by having job opportunities and a non-zero chance of someday becoming wealthy. In my case, a government-subsidized education system allowed me to go from lower-middle class to rich. And that makes me...oh, say 50% happier than I would have been otherwise. Meanwhile, the rich got richer, but I doubt they increased their overall happiness by more than 10%. If the goal of life is happiness, including health and physical security, I benefited the most from the government during my journey through the middle class, during which time I paid far less than I do now in taxes. Now that I'm in the top 1%, and paying at the top tax rate, even if I doubled my income tomorrow, it wouldn't have much impact on my happiness. So while a functioning government allows the rich to stay happy, it allows the middle class an opportunity to substantially increase their happiness.  I'd call that roughly a tie.

How about safety nets? Compared to the rich, the middle class have a far greater risk of someday becoming poor. That risk is magnified if they have relatives who might need assistance too. But arguably, safety nets also prevent the poor from forming marauding gangs of cannibals preying on the rich. If I didn't pay taxes to provide safety nets for the poor, I'd spend a fortune on a private militia to defend my house. Benefit-wise, I'd call safety nets an equal benefit for all.

In discussions such as these, I like to call upon my automobile analogy. You can argue all day long whether a car's engine is more important than its wheels, but unless you have both, the car is useless. It might be true in some technical sense that one class of citizen benefits more from taxes than another. But from 30,000 feet, it looks to me as if you're arguing whether the engine or the wheels are more important to the car.

So far, we've acted as though we can compare one average rich person to one average middle class person. That makes sense when discussing the present. But the future is infinitely larger than the present, and therefore should be weighted more heavily in this discussion. That brings us to the question of birthrates. If the middle class person has two kids, and the rich person has one, the benefits of a stable government flow disproportionately to the family with the most offspring. Keeping two people alive is better than keeping one person alive. So if it's true that birth rates decline with income, it must be true that the middle class get more FUTURE benefits than the rich from their tax dollars today. But the bottom line is that whoever has the most kids, regardless of income, benefits the most from the government. If fairness were a real thing, taxes would be based on your number of offspring, not your income.

I look forward to your disagreement.

 
Rank Up Rank Down Votes:  +82
  • Print
  • Share
  • Share:

Comments

Sort By:
Feb 10, 2012
Rich benefit in roundabout way, because the entire system defends them - not from the outside inference, but from the rest of americans who in the best of !$%*!$%*!$%*! would strip them naked, covered with tar and feathers and kicked out of country, without their riches.
 
 
Feb 3, 2012
Yeah, it must be really distracting from the other comments...
 
 
-1 Rank Up Rank Down
Feb 3, 2012
Somebody completely bored with our side conversation? ;-)
 
 
-1 Rank Up Rank Down
Feb 3, 2012
I'm not doing any donwvoting, so who is downvoting us?
 
 
-1 Rank Up Rank Down
Feb 2, 2012
"I've already pointed out that I agree, there aren't any good modern examples of large nations operating voluntaristically."

I don't remember that and couldn't find it in skimming your comments, but maybe I missed it.

"But that isn't an argument against it."

Once again, I'm not trying to argue against it.

"No, all that you have done is repeat your "why doesn't it exist yet if it is so great" fallacy. "

If you answered it the first time and I missed it I apologize, but I was just looking for examples.

"That's just a stupid argument."

I've lost track if this is the third or fourth or fifth time I've said I'm not trying debunk voluntarism. :-)

"Skepticism that is based on ONE argument. "Why doesn't it exist yet.""

Skepticism isn't based on anything, it's the default position. If you told me your wife is super hot, I would be skeptical, simply because there has been no convincing evidence presented, not because I have some reason to think she's not. And skeptical doesn't mean "I think you're wrong".

"Actually just go to reddit, and search for the vforvoluntary subreddit."

I bookmarked that and will check it out.

PS if you're a woman, substitute "husband" for "wife"
PPS if you're a lesbian, never mind
 
 
-1 Rank Up Rank Down
Feb 1, 2012
>Perhaps you could drop a reference to some other writing that you like. Are there descriptions of these systems functioning on a national level? I know I could try googling, but I'm not sure what to look for.

Okay, now you're just being a jerk. I've already pointed out that I agree, there aren't any good modern examples of large nations operating voluntaristically. But that isn't an argument against it. I was talking about references to theoretical writings (with historical examples on a small scale as well as sociological writings). Apparently, you aren't even reading what I'm typing, so it is all moot anyway.

>Actually I invited you to continue the conversation. I'm not sure how you got the exact opposite from that.

No, all that you have done is repeat your "why doesn't it exist yet if it is so great" fallacy. That's just a stupid argument. History is about human development, not repetition of systems.

>I explicitly stated voluntaryism (is that a word?) is an interesting idea, so why are you looking for me to make an argument against it? I'm not opposed to it and I'm not trying to prove you wrong. I'm simply approaching the idea with some skepticism, which I think is entirely justified.

Skepticism that is based on ONE argument. "Why doesn't it exist yet."

As for theories on voluntaryism, check out anything written by Rothbard, Hoppe, Molyneaux, etc. Actually just go to reddit, and search for the vforvoluntary subreddit. Their is a list of voluntaryistic authors as well as their works.
 
 
-1 Rank Up Rank Down
Feb 1, 2012
Aren't we living through disorder and uncertainty NOW?
 
 
-1 Rank Up Rank Down
Feb 1, 2012
"Also, it isn't like I was saying that I want to blow up the capitol tomorrow."

Are you referring to my use of the word "chaos"? I didn't intend that to mean it would be accomplished by a violent overthrow. I meant it seems like any transition from status quo to voluntary law would include a period of disorder and uncertainty.
 
 
-1 Rank Up Rank Down
Feb 1, 2012
"I could go into a longer explanation, but I don't want to drop several textbooks of information onto this one blog."

Perhaps you could drop a reference to some other writing that you like. Are there descriptions of these systems functioning on a national level? I know I could try googling, but I'm not sure what to look for.

"You have yet to even understand how such systems work or even why they work so well, and you are already pushing for the end of the conversation"

Actually I invited you to continue the conversation. I'm not sure how you got the exact opposite from that.

"simply by pointing out that other systems are currently more dominant, which isn't an argument against voluntaryism. "

I explicitly stated voluntaryism (is that a word?) is an interesting idea, so why are you looking for me to make an argument against it? I'm not opposed to it and I'm not trying to prove you wrong. I'm simply approaching the idea with some skepticism, which I think is entirely justified.
 
 
-1 Rank Up Rank Down
Feb 1, 2012
>Perhaps it could, but it seems to me like a period of chaos would ensue before something reasonable could emerge if we were to undertake such a transition. And if such a system is viable in the modern world, why doesn't it exist somewhere? Or does it?

See. Also, it isn't like I was saying that I want to blow up the capitol tomorrow. That isn't how you effectively bring about a voluntaryistic society, in the same way that blowing up churches isn't the best way to bring about an atheistic society. The destruction of churches isn't the end of deism, and the destruction of government isn't the end of the initiation of force.
 
 
-1 Rank Up Rank Down
Feb 1, 2012
>I also never said we should stick with the status quo. After all that, you still haven't explained what makes you think a voluntary system of law can work for a country such as the US. Intuition?

It can work for any person who is capable of understanding mutually beneficial exchange and relationships.

My point was that naturally occurring spontaneous order is a huge part of our lives, and if you think that it can't be transferred to governance, you're kidding yourself. I could go into a longer explanation, but I don't want to drop several textbooks of information onto this one blog. That's like asking, "What makes you think that democracy will work in the colonies?" in the 1700's.

Your question was, "if it works, why doesn't it exist yet?" I already pointed out how ridiculous a response that is. You have yet to even understand how such systems work or even why they work so well, and you are already pushing for the end of the conversation, simply by pointing out that other systems are currently more dominant, which isn't an argument against voluntaryism.
 
 
-1 Rank Up Rank Down
Feb 1, 2012
"IF you've never experience voluntaryism or spontaneous order at any time in your life, I can't imagine what kind of an existence that you've had."

I never said anything like that.

"I don't think that such a system could exist tomorrow, but that doesn't mean that we should stick with the status quo for ever."

I also never said we should stick with the status quo. After all that, you still haven't explained what makes you think a voluntary system of law can work for a country such as the US. Intuition?

I'm not saying it's impossible, I'm saying it's an interesting idea and I'm wondering if there's evidence it could work. I haven't seen any yet.
 
 
-1 Rank Up Rank Down
Feb 1, 2012
A new humanity is emerging. A new philosophy is emerging.

There was a time when crop yields were so low in Europe that slavery was the only way to keep everyone fed, and support a military/government. The people who ended slavery, simply were invaded by those who didn't. It took some technological and cultural development before we reached the point where people could truly become free, but that doesn't mean that it isn't possible.
 
 
-1 Rank Up Rank Down
Feb 1, 2012
>Perhaps it could, but it seems to me like a period of chaos would ensue before something reasonable could emerge if we were to undertake such a transition. And if such a system is viable in the modern world, why doesn't it exist somewhere? Or does it?

You know, there was once a dilbert cartoon where the PHB was refusing to try an employees idea simply because, "if it was such a good idea, how come other companies weren't doing it?"

Again, violence and coercion has been very popular and effective. That doesn't make it the best way to do things, though.

People live voluntaryistically in most spheres of their lives. IF you've never experience voluntaryism or spontaneous order at any time in your life, I can't imagine what kind of an existence that you've had.

I don't think that such a system could exist tomorrow, but that doesn't mean that we should stick with the status quo for ever.
 
 
-1 Rank Up Rank Down
Jan 31, 2012
"Why can't "our" society operate as a collection of smaller organizations? WHy can't people subscribe to specific court systems of their choosing?"

Perhaps it could, but it seems to me like a period of chaos would ensue before something reasonable could emerge if we were to undertake such a transition. And if such a system is viable in the modern world, why doesn't it exist somewhere? Or does it?
 
 
-1 Rank Up Rank Down
Jan 30, 2012
Why can't "our" society operate as a collection of smaller organizations? WHy can't people subscribe to specific court systems of their choosing? I doubt this would be all that more complicated than our current network of nonsense.
 
 
-1 Rank Up Rank Down
Jan 30, 2012
Phantom, polycentric law sounds like chaos in a society as large as ours, but OK. :-)
 
 
-1 Rank Up Rank Down
Jan 30, 2012
>Bounty hunters apprehend bail jumpers. You cannot call a bounty hunter to come deal with a bar fight or to report a crime.

Bars have private bouncers for this. I didn't mean to imply that our current police officers were exactly like bounty hunters. I was tired when I wrote that post. My point is that police officers should be restricted in all of the same ways that private citizens are and policing should largely be privatized.

>They cannot make traffic stops, and on, and on, and on

If roads were private, I'm sure they would hire their own security who would have the right to stop you and even punish you for misusing their owner's property.

>Do you think I should be able to break into your house and look around for evidence because I'm fairly sure you committed a crime?

No, and I don't think that the police should be able to either, without permission from a judge. If you have permission from a judge, you would be acting as an agent of the law just the same.

>By your rule of thumb, there can't be any courts that have more authority than any other group of citizens.

That's different, as a person can't expect their property rights to be protected by the same authority that they rebuke. I'm also a big believe in polycentric voluntary law.

>By "everything police can do" I hope it was clear I meant everything they're allowed to do, not everything it's possible for them to do.

But police shouldn't be viewed as a group of people who are "above the law." They are the agreed upon enforcers of the law and protectors of private property, which may give them special privileges and standing, but they themselves should be treated as regular citizens when they make mistakes or commit violent crimes. Police officers aren't allowed to do anything out of the ordinary that a regular citizen can't do in certain situations (as with my example of the bouncers in a bar breaking up a fight).
 
 
-1 Rank Up Rank Down
Jan 30, 2012
RavenBlack, that's a great point. Even so, it still points to these numbers being out of whack in that there's a gap that leaves some people barely making it with (somewhat) comfortable people living on assistance on one side, and comfortable middle class people living on professional salaries on the other. Not that just !$%*!$%*! the numbers is really a fundamental solution to the problem.
 
 
+7 Rank Up Rank Down
Jan 30, 2012
I think this discussion is complex and anyone can cherry pick numbers to prove that their perspective is right. Scott aims to keep this discussion pure and factual but immediately fails by leaving out elements "for the sake of simplicity". That's not how it works. Everything is connected. You limit your argument to what the rich get out of government services but thats a very limited perspective. Without the sweat of the middle class (and increasingly the foreign poor), nobody can get rich because nobody can produce or consume your goods.

Furthermore, the subjective term "fairness" is considered irrelevant. Yet the entire point of this post, and many previous posts is to defend what is fair for the rich. At least that's how it comes across to me. And I don't get that. If there's any country in the world where it is comfortable to be rich, it would be the US. The rich in the US don't have a problem. At all. They're getting richer. Even if you could factually argue that they should pay less tax, which you can't, they still don't have a problem. Even if you'd double their taxes they don't have a problem. I come from a country where the rich are taxed up to 52% (used to be 60%) and they're doing just fine. They're still getting richer whilst the middle class is suffering.

Is it fair for them to pay 52%? Maybe, maybe not. It's irrelevant, as you said before. So to me it boils down to what kind of society you want. A divided society with your theoretic idea of fairness applied, or a more equal society that is less fair (in your view, but not mine).

To each their own, but I think the stats on equal vs inequal societies are pretty clear on what is preferred. Bottom line: the middle class is under attack, not the rich.
 
 
 
Get the new Dilbert app!
Old Dilbert Blog