Tuesday, January 12, 2016

On who should pay taxes

A retiree is making the news by submitting a petition to make it easier to be exempt from property taxes. Good for him. He should get it. The best tax (and the only moral one) is no tax. 

Unfortunately, the article frames this no brainer as debate: if an elderly person is exempt, then a younger person must pay more in taxes. Some person, Peter Francese, thinks it’s “wrong.” (We don’t know what he means by that. Is it immoral? Is it mistaken? Who knows?) He is seen as an authority on this topic because he tracks population and demographics, and he claims that this forces young people to “subsidize” old people. 

He is completely wrong. In no way whatsoever does a tax cut for someone constitute a subsidy from another tax payer. If person A pays less in taxes, he is simply keeping his own money. To say that this is a subsidy is a blatant error of simple definitions. What Francese must mean is that if old people do not pay as high a tax, young people must pay more to make up the difference. Why, oh why does Mr. Francese not entertain the simple solution: cut government spending? If he is so concerned about subsidies, he should (must) support cutting government spending. It is the receivers of government money who are being subsidized: the public schools, the police (and their pensions), town bureaucrats, public works, etc.  Mr. Francese should support an end to the subsidies to these politically connected groups. 

At the end of the day, all the talk about the numbers is irrelevant. Whether the exemptions are $50k or $60k is completely arbitrary and politically determined. Taxes and government spending can and should be cut, drastically. If you want to reduce the former, you must lower the latter.

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