15.4.19

A TAX DAY REFRESHER COURSE.

In the course of a meditation on assorted attempts by the Democrats to further attenuate the power of the states, and of the public, John Hinderaker makes a point that merits further discussion.  "The United States is just that, a union of states, not of atomized individuals. The states are important. Under the Constitution, all powers not delegated by the states to the federal government remain with the states and their subdivisions, local government units."

You read it here first.  "The powers not delegated to the United States by the Constitution, nor prohibited by it to the States, are reserved to the States respectively, or to the people."

He goes on to note that ever since the self-styled progressives sought to substitute Governance by Wise Experts for emergence, that Constitution has become an impediment to what they perceive as progress.  "Liberals have long disliked federalism and would like to erode the powers of the states, which often stand in the way of their grand schemes. Ideally, for liberals, the states would cease to exist except as administrative units of the central government."

I suspect that's the logic behind complaints, ever since Congress capped the deduction for state and local taxes on federal taxes, constituting "double taxation."  The intent of setting up a United States with a division of federal, state, and local governments with enumerated, and, in the case of the federal government, limited powers, is that local governments would collect taxes to pay for local services, state governments in like manner collecting taxes to pay for the services provided under their powers, and the federal government would collect taxes to pay for the services the Constitution authorized.

But if you look on state and local governments as simply operating units of the national government, then perhaps if one operating unit collects more taxes, another operating unit ought not collect as much.  That's what a coalition of rent-seekers sailing under the Americans Against Double Taxation banner would like to have you believe.  They don't call themselves rent-seekers.  "Americans Against Double Taxation is a coalition of state and local government organizations, service providers and other stakeholders dedicated to protecting the state and local tax deduction."  Scroll down, though, and it's rent seekers everywhere you look.

The Tax Foundation notes that there are, indeed, enumerated, separated, and limited powers at work.
In a federal system, moreover, individuals receive services from federal, state, and municipal governments. Each layer of government can be viewed as providing its own package of services, which one would expect to be “priced” separately. When two taxes levied by a single government, or similar types of governments (for instance, multiple states), fall disproportionately upon the same income or economic activity, this represents a clear case of double taxation. When different levels of governments levy taxes for discrete sets of services, the rationale for a deduction for taxes paid is far weaker.
The elaboration is here, should you wish.  Note:  "Six states—California, New York, New Jersey, Illinois, Texas, and Pennsylvania—claim more than half of the value of the deduction."  That is, tax hells that chase productive people away.

The economist in me says there's no reason to put "price" in scare quotes.  Taxes are the price we pay for the failure to civilize our society.  We don't have to rely on government to do that.  The Framers trusted us.  "The enumeration in the Constitution, of certain rights, shall not be construed to deny or disparage others retained by the people."

Finish filing your taxes, then brace yourself to your duties, and Secure the Blefsings of Liberty to Yourfelf and Your Posterity.

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