Obama and Other Peoples' Money

Nothing really new here, but what I really want to get at here is the whole idea of "fair share'.

In a combative set of remarks, the president vowed to veto any package that cuts into Medicare without raising "serious revenues" from wealthy Americans and corporations. He effectively dared Republicans to follow through on their no-tax-hike pledge as the deficit committee works under a strict timeline to find at least $1.2 trillion in deficit savings by Thanksgiving.
"We can't just cut our way out of this hole. It's going to take a balanced approach," Obama said. "It's only right that we ask everyone to pay their fair share."

Emphasis mine. First, ask this question: why does the government constantly need more money? There are a few reasonable answers, mostly involving inflation; the rest are all about the growth of bureaucracy and thus the size of government itself.

Next, define "fair share" in society. This is not commonly questioned, and most people (2/3 of Americans according to some poll I glanced at) support fleecing "rich" people. I "quote" the word rich because that's slippery these days too, and for tax reasons the definition will be arbitrary.

Put these two concepts together and it leads you in the direction of asking what people are expected to pay for, and (hopefully) why? Is my misfortune yours, and if so, what are the limits on that? People get (rightly) bent out of shape when some connected business people get bailed out by government, meaning by your tax dollars. Of course, in the US right now we have something different, businesses being saved for the unions employed there, but this elaborate vote-buying scheme still uses taxpayer money.

If you work in the ever-shrinking private sector, do you want your taxes going up to preserve bloated union salaries and benefits which have driven work out of your country and damaged your prospects? A bit less evocative than the Robin Hood-esque desire to despoil the rich, but no more "fair" than bailing out magnates.

All over the world, the Socialist state is in trouble, and has been for years. It has been proven that the welfare state is not sustainable (you'll eventually run out of other peoples' money), but Obama seeks to imprint that on the US. Here in Canada the fight continues, but we have realized that we must periodically purge the Public Service to prevent the service creep that would bankrupt us a la Greece.

I'm not sure what I think is fair, but flat-rate taxes combined with consumption taxes on non-essentials comes close. Say a minimum 5% and maximum 25% Income tax rate and a 15% VAT; rich people tend to spend more and can better afford to lose 25% of their income, but how fair is that?

If you make a household income of <$100K (most people) you don't have a lot of margin these days, and there is limited blood in a stone. Thus the temptation to squeeze the better-off, but what are they being asked to contribute to? Infrastructure, Public Health (as opposed to Health Care), Research and Defence are common goods, certainly, but do rich people use them any more than anyone else? Next, health care; do rich people have preference in a Public health care system? I bloody hope not, and if not why should they pay more for it? It's "rich people" paying for the best available treatment which advances medicine, not the stretched Public system, but that's not on most peoples' radar.

In case there was any doubt, I am significantly less than rich and have no vested interest in the top marginal tax rates, but the underlying principle at work here concerns us all. That principle is Expectations.

What is reasonable to expect of government services? Canada is founded on "Peace, Order and Good Government", which is pretty vague but not fundamentally different from the Preamble of the US Constitution:

We the People of the United States, in Order to form a more perfect Union, establish Justice, insure domestic Tranquility, provide for the common defence, promote the general Welfare, and secure the Blessings of Liberty to ourselves and our Posterity, do ordain and establish this Constitution for the United States of America.

People get the (democratic) governments they deserve, so I suppose the People are the arbiters of "fair". Of course, the way these things work, a mere plurality of votes will establish who's in charge, so a LOT of people will be potentially discomfited by decisions as the rest are swept along by dangerous simplifications. The second and third-order effects of tax and policy decisions are never the concern of the short-lived government, but they should concern you, the tax-payer, as you'll be living with the (mostly) unforeseen consequences when the chickens come home to roost.