July 1, 2008

What's Fair is Fair

Back in April I wrote a post criticizing Vanderbilt University law professor Herwig J. Schlunk's 74-page paper advocating a state income tax. Dr. Schlunk emailed me a response yesterday, and I asked his permission to bring it to you verbatim. Click the "...read more" link below to see it, presented in its entirety, followed by one brief bit of additional commentary from me.

Schlunk writes:

Hi Bill

I just came across your blog on my Tennessee tax piece and was sufficiently amused that I thought I should drop you a note.

First, let me say that I am not trying to push Tennessee to adopt an income tax. I do think it would be prudent, UNDER THE RIGHT PREDICATES, for it to do so, but that is not the same thing.

Mostly, I want to take issue with what you call my three assumptions.

1. I do NOT assume that most or all government spending is good. Whether it is or is not does not actually figure in the argument (the argument works whether spending is efficient or inefficient). For what it is worth, I think that some government spending surely is good -- where good is defined as producing more benefit that the associated cost -- and some surely is not.

2. I do NOT assume that government spending must always go up. Indeed, one of my examples contains a scenario where the opposite happens. Again, whether spending goes up or down does not actually figure into the argument (the point of my examples is to show that the argument works under either scenario). Personally, my preference is for government spending to go up if and only if the spending is good -- see point 1 above.

3. I do not ASSUME that only a revenue-generating system that includes an income tax and a consumption tax is fair, I PROVE it, using my assumptions and my definition of fairness (this is the whole point of the piece). My definition of fair is that government should not in general take from one group of people and give to another. That is, I am not for redistribution. In the terms of the article: I am not advocating systematically taking from producers (via an income tax) and giving to consumers. But it is equally wrong to systematically take from consumers and give to producers. A tax system with only an income tax commits the first sin. A tax system with only a consumption tax commits the second.

Finally, the reason that I do not address the constitutional issue goes back to my very first point above: I am not actually advocating anything for Tennessee. The piece is a theoretical piece, it uses Tennessee primarily as an example. (Indeed, the next draft of the article has taken the name "Tennessee" out of the title, precisely to avoid this confusion.) Thus, what the piece actually is trying to say is that ANY state, and EVERY state, should -- in the best of all possible worlds (which means a world without any of the artificial constraints imposed by state constitutions and the like) -- raise the revenue it chooses to raise (whether that be a large amount of revenue or a miniscule amount of revenue, as per points 1 and 2 above) by means of a combination of an income tax and a consumption tax.

Best,

Herwig Schlunk

Schlunk's definition move beyond that debate to the essential core truth about tax fairness: a tax code that redistributes wealth is inherently unfair.

Of course, liberal government is (unfortunately) all about redistributing wealth these days. It taxes "the rich" - always a movable definition - to provide benefits to the not-rich, benefits only occasionally actually needed by the recipients but more often than not given as a political payoff, promise or perk designed to attract and retain votes for the liberals who redistributed the wealth. And too often such benefits actually lock the not-rich into dependence on government, thus robbing them of their inalienable right to pursue happiness and guaranteeing they will stay in the not-rich category. Such is inherently unfair, no matter what the tax code is that funds it.