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It seems that when Chief Justice John Marshall was preparing the opinion for McCulloch v. Maryland he tapped into an eternal truth. “The power to tax is the power to destroy,” he wrote on behalf of a unanimous Supreme Court. Those words are no less true in 2014 than they were in 1819. Taxation appropriates money from one person or group of people in order to give it to others. There is no way to escape taxes. But there is a way to make taxes somewhat fairer. One way is to make taxes flatter and expand the tax base.
Soak the Rich Taxes
If the power to tax is power to destroy, then the power to tax progressively is the power to destroy some and buy off others. A state with power over a progressive taxation system can put the middle class and the wealthy in effective thrall, and use them to benefit its own ends. This is exacerbated by exploitation of the tyranny of the majority which can lead the majority of less wealthy and have-nots to demand more and more services and paying for them by inflicting ever more onerous taxes on the wealthy while diminishing their own burdens.
Furthermore, so long as the tax burden is disproportionately leveled on the few, no one can see the growing size of the state. When a citizen outside the tax base, or on a low rung of a progressive tax system, experiences an increased income through expanded redistribution from wealthier citizens, they only experience the net benefit and not the cost. That creates the perverse incentive to support further redistributions. On the other hand, with a flatter and broader tax, everyone feels the growth of government spending. They can also better understand the costs associated with it, driving them to have more realistic preferences and to make more rational demands of the state rather than treating the rich as a perpetual piggy bank.
Taxation should not be about trying to engineer a more equal society. The purpose of taxes is to furnish necessary services people need to become competitive free agents in the economy. Overly progressive taxes take unduly from some to give to others in the hope of fostering greater social equality. Yet such efforts can only be harmful, as they breed resentment from rich toward the poor for taking undue amounts of their wealth for their consumption, and feelings of entitlement from the less well-off who feel the wealthy owe them the money they pay (and thus feel happy to levy ever more odious taxes from them).
Society is best served by promoting a system of taxation that fosters equality of opportunity, by providing essential services to which everyone contributes in accordance with their ability to pay. This is better serviced through a system of flatter taxes (even if they are still a bit progressive). That would promote a system of proportionality in taxation, rather than progressive taxes that focus unduly upon the contributions of the few to the many.