For reason's that I'll explain below, I think that's an unsound idea. However, let me tell you a story about "J" first.
Almost every family has a J, it seems. My friend B, for example. His parents are well-to-do, his father having spent most of his career as a C-level executive for Fortune 500 corporations. B's brother J is 19 years old. He lives at home while he attends college nearby.
That is, that's what his parents thought he was doing. Turns out he had flunked out months ago, and instead was spending his days smoking pot bought with his income as a part-time Walmart clerk, and boffing his Brazilian girlfriend.
J's parents don't know what to do with him. Should they kick him out? Will he straighten up, and fly right? Or will he become even more dissolute? At least if he stays at home, they can keep an eye on him.
Whether he stays or goes however, one thing everyone agrees on: don't give him more money. Any money given him now would just go up in a cloud of pot smoke.
But giving money to J pales in comparison to what Stein asks us to do in his most recent column.
Stein, of course, wants to raise taxes on "the rich" and give it to the government.
He trots out the tired nags that liberals have ridden to power for the past century. The rich make too much money. They're not paying their fair share of the government bill. He writes:
"But if they are superrich, they derive special benefits from life in the United States that the nonrich don't. For one thing, they can make the money in a safe environment, which is not true for the rich in many countries. It is just common decency that they should pay much higher income taxes than they do. Taxes for the rich are lower than they have been since at least World War II — that is to say, in 60 years.
This makes no sense in a world at war, in a nation with so many unmet social needs, in a nation with so many people without health care, in a nation running immense and endless deficits."
First of all, nothing's stopping Ben Stein from voluntarily giving more money to the Federal government. Anyone think Ben Stein actually does this?
If he doesn't think that the government is the best place to voluntarily invest his money, that wouldn't change if the money were taxed instead. It's still not the best place to put his money.
After all, Stein's wealth is not sitting under his mattress. It's profitably invested in companies that produce goods and services that other people voluntarily pay for. I'm sure that Stein very carefully picks and chooses his investments. If he makes a mistake, he will personally feel the pain of loss. (And conversely, the thrill of gain.)
Yet if that money were extracted from him, that decision-making would no longer be in his hands, but in the hands of Congress. What reason do we have to think that they would invest the money better than Stein himself would?
Let's look at one example of how our money is currently being spent.
On August 10, 2005, President Bush signed the $286.4 billion transportation bill. (Bush, incidentally, has never vetoed a spending bill. So much for Republican thriftiness.) The bill was packed with more than 6,371 special projects valued at more than $24 billion. Alaska, the third-least populated state, got the fourth most money for special projects -- $941 million.
Because Alaska House representative Don Young chairs the Transportation Committee.
The bill included $223 million for the "Bridge to Nowhere", a bridge that would've connected the city of Ketchikan (pop. 8,000) with Gravina Island (pop 50, plus bears and deer). The bridge would've been longer than the Golden Gate bridge and would've stood taller than the Brooklyn bridge. Only after intense negative media attention did Rep. Young and Sen. Ted Stevens agree to release Alaska from the obligation to build the bridge. However, Alaska still gets the money, and they can still build the bridge if they want to. (6), (8)
In 2004, our federal government taxed U.S. citizens 1.88 trillion dollars. Thus, for every man, woman, and child in the U.S. the feds extracted $6,285. On a per capita basis, more is spent on taxes (state and federal) than on food and housing combined. How much more money does Stein think the fed needs? (2)
Yet despite collecting 1.88 trillion dollars in taxes, it wasn't enough. They spent 2,292 billion (19.8% of our GDP). As a result, the deficit increased by 412 billion dollars. (3)
If the federal government were held to the same standard as corporations, it would be in bankruptcy and its executives would be in jail for accounting fraud. (7)
Why does Stein want to give money to a shady, bankrupt debtor? If the Feds can't stay within a 1.88 trillion budget, what makes Stein think that they will stay within a even larger budget?
Stein claims that the rich aren't paying their fair share of the total tax burden. How does Stein know this? By what criteria does he judge fairness?
In 2000, the top 1% paid 25.6% of all federal taxes, the top 20% paid 66.7% of all federal taxes. The bottom 60% paid less than 16% of all federal taxes. (5) Yes, the rich in the U.S. enjoy many advantages by living here. But they're paying far more than anyone else in the country. If anyone is not paying their fair share, it is the bottom 60%, who enjoy almost the same benefits as the rich, but only pay for 16% of the cost.
And if 66.7% isn't enough, what percentage must the rich pay before Stein thinks that the rich are paying their "fair" share. Seventy-five percent? A hundred? How does he arrive at this figure?
Stein argues that we need to pay our police and troops better. Lockheed Martin was just awarded a $6.1 billion contract to build 23 VH-71 helicopters. (4) One of those $110 million dollar helicopters will become Marine One, the presidential helicopter.
Assuming total compensation worth $75,000, just one of those helicopters would pay for 1,400 soldiers for a year. At 5% interest rates, the total for the fleet would pay for 4,000 troops indefinitely. Sure, the new helicopters have a "fold-down stair [that] spares the president from ducking during photogenic entrances and exits." But perhaps that money would be better spent on troop salaries?
Even if Stein favors the spending patterns of the current government, what happens when the next Bill Clinton and Democratic congress win power? The tax burden will probably not go down. Instead of going to pay for troops and police that Stein favors, how does Stein know that money will not go toward funding regulatory agencies that stifle new businesses, counter-productive welfare programs, and asphalt for the roads of West Virginia?
Stein's both a father and an economist. As a father, I'm sure he recognizes that J's parents should demand that their son shape up and start spending the resources he's got more wisely before giving him any more.
I just wish that, as an economist, he expected the same thing of our government.
(1) Ben Stein, New York Times, May 7, 2006 "Everybody's Business" column entitled "You're Rich? Terrific. Now Pay Up."