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Advancing Austrian Economics, Liberty, and Peace

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Making Economic Sense
by Murray Rothbard
(Contents by Publication Date)

Chapter 60
Babbitry And Taxes: A Profile in Courage?

There is no question that the media darling of the early 1988 presidential election season was former governor Bruce Babbitt of Arizona. As time neared for the Iowa caucuses, pundits for virtually every organ of the Establishment media weighed in with serioso think-pieces about the glory and the wonder, the intelligence and especially the high courage of a great man who suffered the misfortune of looking like Ichabod Crane on television.

Gloomily, the pundits figured that the Iowa masses would lack the perception and the wisdom of being able to look beyond the TV surface and see the statesman lurking underneath. Fortunately perhaps for America, the pundits proved correct, and the number of voters for Bruce Babbitt barely exceeded the number of his ardent fans in the national media.

Of what does the great courage of Bruce Babbitt, as trumpeted by the media, consist? The answer is his intrepid valor in coming out, frankly and squarely, for higher taxes to slash the federal deficit. The similar gallantry of Mondale in 1984 is then recalled. Set aside the palpable fact that Mondale had a lot more to lose, in contrast to Bruce Babbitt, who began close to zero percent popularity in any case. The interesting question to ask is: what kind of "courage" is this?

It used to be thought that heroism and "courage" meant being willing to go out into the lists, candidly and unafraid, to battle the mighty and despotic powers-that-be. Can we really call it "courage" when a Mondale or a Babbitt frankly calls upon the eager state apparatus to increase still further its already outrageous and parasitic plunder of the hard-earned money of honest and productive American citizens? Whooping it up for higher taxes is the moral equivalent of some Ugandan theoretician of a few years ago publicly urging Idi Amin to pile on his looting and his despotism still further, or of a Mafia consiligieri advising the capo to add an extra ten percent to the "protection fee" imposed on neighborhood stores. We can think of many names for this sort of activity, but "courage" is surely not one of them.

It might be objected that, after all, a politician who urges higher taxes is not only imposing suffering on other people; he himself as a taxpayer will also have to bear the same deprivations as other citizens. Isn't there, then, a kind of nobility, even if misguided, in his plea for "belt-tightening" common sacrifice?

To meet this question, we must realize a vital truth that has long remained discreetly veiled to the tax-burdened citizenry. And that is: contrary to carefully instilled myth, politicians and bureaucrats pay no taxes. Take, for example, a politician who receives a salary of, say, $80,000; assume he duly files his income tax return, and pays $20,000. We must realize that he does not in reality pay $20,000 in taxes; instead, he is simply a net tax-receiver of $60,000. The notion that he pays taxes is simply an accounting fiction, designed to bamboozle the citizenry into believing that he and the rest of us are on the same moral and financial footing before the law. He pays nothing; he simply is extracting $60,000 per annum from our pockets. The only virtue of United Nations' employees is that they are frankly and openly exempt from all taxes levied by any nation-state--which simply makes their position the same as other national bureaucrats, except uncamouflaged and unadorned.

The same principle, too, applies to sales or property or any other tax. Bureaucrats and politicians do not pay them; they are simply subtracted from the net transfer to themselves from the body of taxpayers.

Unfortunately in current American politics, we are trapped between purveyors of false choices: the "courageous" who call for higher taxes, and the supply-siders who say that there's nothing really wrong with deficits, and that we should learn to relax and enjoy them. It seems to be forgotten that there is another tried and true, and perhaps far more "courageous," way of slashing the deficits: cutting government spending.

It would seem embarrassingly trivial to mention it, except somehow this alternative has gotten lost down the Orwellian memory hole. "But where would you cut?" asks the cunning critic, hoping to get us all bogged down in the numbing minutiae of whether $50,000 should be cut from a grant to some New Jersey avant-garde theater group.

The proper answer is: anywhere and everywhere; only wholesale flailing away with a meat axe could possibly do justice to the task. An immediate 50% across-the-board slash in literally everything; abolishing every other government agency at random; a line-by-line reduction of the budget to some previous president's--the further back in time the better; all these will do nicely for openers. The important thing is to adopt the spirit, the mind-set; and a balanced budget will be the least of the wondrous results to follow.

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