The progressive tax system is based on envy, the “resentful awareness of an advantage enjoyed by another joined with a desire to possess the same advantage.” As earlier chapters have explained, the modern U.S. tax code was imposed in response to so-called progressives agitating against the natural inequality in wealth distribution. Basing public policy on envy teaches people to nurture their natural tendency toward this vice, instead of to resist and rise above it. It encourages everyone to think himself a victim and perpetuates resentment because there will always be something to envy.
At the same time that it validates this vice, progressive taxation discourages the virtuous behavior that creates wealth, such as work and saving. That means it also discourages the discipline that these things require. By diminishing the likelihood of prosperity and its endurance, progressive taxation obscures the importance of vision, forethought, and careful planning needed to achieve it. By making immediate consumption cheaper than saving, it discourages sacrifice and delayed gratification. This discouragement affirms the human temptation to seek immediate desires over long-term good. The urgent and absolute nature of tax planning decisions blunts the exercise of wisdom, reason, and discernment by forcing people into sub-optimal decisions. By seizing the fruits of hard work, tenacity, and facing challenge, progressive taxation encourages laziness. As these attitudes insinuate themselves into the culture, people become less disciplined and more easily swayed by immediate desires.
Because it discourages people from pursuing virtue, progressive taxation also robs both individuals and society as a whole of its benefits. Virtue carries natural rewards, often including prosperity. Hard work refines people by requiring discipline and building character. Work keeps people active, sharpens their minds, and provides fulfillment. To discourage it means to discourage people from improving themselves, from contributing all that they can to their families and communities, and from pushing their own limitations.
Virtue brings other benefits, such as greater freedom from worry, self- respect, and the trust and confidence of others. Virtues become habits when practiced regularly, building healthy families, healthy communities, and healthy nations. While virtue is not a guarantee against hardship, people are almost universally better positioned to meet difficult times if they have developed strong character, built their nest eggs, and established good reputations. A nation that treats the fruits of virtue as sinister is a nation in moral peril because it lures its citizens away from the behaviors that promote moral well-being.
Progressive taxation also corrodes the family, one of the institutions responsible for inculcating virtue. That’s partly because of what has come to be called the “marriage penalty,” a consequence of the progressive tax structure that requires some couples to pay higher taxes simply because they’re married.
The marriage penalty, or marriage tax, is the amount that a married couple pays in income taxes beyond what they would pay if they were not married. In 1996, 21 million American families paid an average of nearly $1,400 in marriage penalties, according to a major study conducted by the Congressional Budget Office. According to another estimate, this means that an average couple married forty years would pay an extra $56,000 in marriage taxes.*
The progressive tax structure is the primary cause of the marriage penalty. Tax units with higher incomes are taxed at higher rates and loseeligibility for credits and deductions. (A tax unit is the entity taxed—either an individual or a married couple.) Since marriage combines two tax units into one, a married couple’s combined income can mean that their joint tax liability is higher than the sum of what their individual tax bills as single filers would be.
The marriage penalty violates the very essence of what America stands for. Equality under the law is a fundamental American ideal. By treating married couples inequitably, the tax code makes a mockery of this ideal. . . .
By setting up tax preferences like these, the state lures its citizens into specific moral choices. Thus it intervenes in the individual’s or family’s own moral decision-making process and accustoms them to seek moral guidance from the government. Making virtuous choices becomes easier with practice, and governmental behavior-steering interrupts this practice.
Within the scope of appropriate behavior, there are many varied choices that one can make, and the best decision is often driven by personal or family circumstances, making it inappropriate and even foolhardy for the state to try to place its imprimatur on one decision over another. For instance, is it better to purchase a larger house or a second car? Should one prepare for the future by saving money or by returning to school? There are no universal moral absolutes regarding these questions. When government intervenes in these decisions by sanctioning some behaviors over others through tax preferences, it has again reached beyond its proper function as a minister of justice. Allowing it to do so gives it too much power, permitting it an unwarranted measure of control over citizens’ lives and, by altering the costs and benefits of differing decisions, steering them into choices that they might not otherwise make.
The complexity that results from the tax code’s myriad forays into social engineering creates a further intrusion in daily life. Time, money, energy, and other resources are wasted on mundane, tax-related record-keeping, planning, and calculating and re-calculating. For many families, especially those in the middle class who cannot afford professionals to shoulder the paperwork burden that their government has imposed upon them, tax-related activities consume already scarce resources, and elbow out more precious pursuits, like spending time together, reading and learning, and enjoying the arts.
As it edges out the ordinary, progressive taxation also kneecaps the extraordinary. By blunting the rewards of creativity, ingenuity, and excellence, the tax code sanctions unimaginativeness and mediocrity. Society loses the artistic accomplishments that feed the soul as well when punitive tax rates discourage creativity. As Laura Ingalls Wilder, author of the much-loved Little House books explained, “The more I wrote the bigger my income tax got, so I stopped.”
Government’s presumptuous claim over private wealth is especially offensive in view of its failure to assume any of the risks or make any of the sacrifices necessary to build wealth. It becomes even more offensive in view of the positive harm that it does this pursuit through its interventionist and often irrational regulations. The government adds insult to injury when it presumes to benefit itself from the very success that it has consistently undermined. Through progressive taxation, government seizes the fruits of its citizens’ hard work. It reduces citizens to chattel of the government. It exposes the lie of any claim that the citizen must pay taxes in exchange for the governmental services that he uses, for the intent of progressive taxation is to make some pay others’ way through the administration of an increasingly powerful and bloated bureaucracy. Citizens’ lives are reduced to uncompensated servitude to the state.
Progressive taxation assaults human dignity. Giving in to vice is a violation of human worth. It infantilizes people by rewarding those who would run to the government to impose an unnatural economic egalitarianism, rather than work hard, make wise choices, and reap the rewards of higher economic wealth and stronger character. It teaches people to believe that they can’t make it without a government handicap. Perversely, this rationale only makes sense if those who have achieved economic wealth truly are superior, for otherwise there would be no need to temper their success in the name of some sort of outcome-based economics.
By fueling resentment in this way, progressive taxation undermines a nation’s pursuit of the common good. It pits people against one another, encouraging citizens to view each other with the eyes of suspicion and judgment, looking to see whether someone else has more, always feeling aggrieved by the success of others. Instead of a unifying quest for the common good, policy-making becomes an adversarial competition, where special-interest groups propagate the mistaken notion that somebody must always win, and somebody must always lose.
Progressive taxation promotes moral disorder. Its perverse incentives encourage the behavior that damages society. The resulting chaos leads to unrealistic expectations of civil government to restore the order that its policies have overturned. When it tries to do so by imposing further unwise law—typically intended only to quell consequences, rather than to correct causes—it exacerbates existing problems and creates others, all the while expanding itself, increasing the dependency of its citizenry, and weakening other institutions, such as the family.
Progressive taxation elevates government above morality. It transforms the government from protector to social engineer, empowering it to forge a new kind of moral order. At the same time, it diminishes government’s proper, noble role as enforcer of justice.
America’s experience with progressive taxation teaches some edifying moral lessons. Ultimately, it teaches that natural order and justice prevail. Greed—individual and governmental—resentment, redistribution, and government expansionism backfire.
*Jerry Weller, "Q: Is the GOP plan to remove the marriage penalty a good one?" Insight, June 8, 1998, 24.