The original inspiration behind American democracy was the creed, “No taxation without representation.” Some still think it’s a workable idea: those who pay tax should vote and those who do not should be deprived of the privilege.
But just because you’re paying tax doesn’t mean you’re a net contributor.
Most people think they are net contributors because they pay income tax and don’t receive any welfare. Such people might need to pull out a calculator and check their numbersWhat about public schools, roads or the myriad of subsidies for industry, agriculture, health and so on? Even if they do not enjoy these benefits they still share in the public good provided by infrastructure, police and the defense forces. They also enjoy the indirect benefit of disease control, orphanages, the weather bureau and publicly funded scientific research. Like it or not, the state is spending a lot of money on your behalf. You think it’s on your dime, but you might be wrong.
Who are the real net contributors?
This site indicates that, in the UK, a household’s gross income would have to approach £40,000 in order to tip the scale. While there are various differences in taxation and spending schemes, this figure suggests that a US household might need to earn around $60,000 before it is well and truly off the public teat.
Remember, this income bracket means that the household contributes a puny amount. A study from the same paper asserts that the very rich, earning £150,000 p/a (US$230,000) are paying about 30% of all UK income tax. This group consists of only around 300,000 people, and even in the US they would probably not total more than about two million individuals.
Another article reports that the number of households (again in the UK, that’s where all the research seems to come from) that are net contributors is in decline, while those that do contribute are paying less than they used to once all spending and subsidies are accounted for. This BBC (!) video shows that that only the top 40% of earners are net contributors, and demonstrates that only those in the very highest income bracket are significantly so.
Did you drive on a public road today, or take medicine developed and prescribed by state educated professionals? Maybe you didn’t get mugged because the hoodlum who would have accosted you is locked up in an expensive prison. Anyway, thank a rich person.