Don't Look Here, Look There!

I guess liberals are starting to realize that the US has the most progressive tax system in the world.

I remember not too long ago when Greg Mankiw made the same point to see a pretty shrill reaction from the liberals. (He has a post cited, and I'm pretty sure I read stronger reactions, particularly on Ezra Klein's site, but now I don't seem able to find them).

Then Ezra Klein responds that though it's true that 47% of people don't pay any federal income tax, we should ignore that statistic and focus on total taxes (federal income, federal payroll, state income, state sales, everything). 

There are several reasons why that idea is misguided. First of all, when we as a nation discuss taxes, we invariably are talking about the Federal marginal income tax rate.  Can you remember any discussion of payroll tax rates?  Bush Tax Cuts were about marginal income rates, returning to the Clinton era rates--marginal income rates.  These are the rates everyone focuses on! 

We focus on them for a reason.  The federal income taxes pay for all the programs that are meant to benefit us collectively as a nation--defense, infrastructure, research.  The payroll taxes are designed to fund our retirement.  Ostensibly, these taxes are a type of insurance.  They were designed and promoted on an individual basis (the more you pay into Social Security, the more you get out.)

States, on the other hand, are operated independently of the Federal government.  As far as I know, governors and Congressmen don't cooperate to determine the best overall rate.  If they did, then maybe Ezra Klein would have a point.

But they don't. So national policy-makers discuss what they can change, which are the marginal rates for federal income.  Klein would have legislators in DC say, "Well, 35% is high, but some states have low rates so we're not going to change it."  I think that's wrong.

We're talking about what liberals call "public goods." Goods that they believe only government can provide.  That's what income taxes pay for.  Is it really unfair to ask at least 75% of the population to contribute something?