Redistribution vs. Paternalism
By Arnold Kling
Tim Worstall argues that big government is not compatible with only taxing the rich.
For the fact is that the rich don’t have enough money to pay for all of the things that are being demanded from the State. We can see this quite clearly in the US in the way that things like Social Security and Medicare are funded. They are not paid for out of general tax revenues, not funded by the rich paying more than the poor. Quite the contrary, the poor pay more as a portion of their income for them than do the very rich…I doubt whether Bill Gates even notices his FICA deductions while someone on $10 an hour most definitely does, especially as it’s the only tax he is paying.
If you want government to be redistributive, then you want to tax the rich without taxing the middle class. But, Worstall argues, if you want government to be paternalistic, with broad-based programs like Social Security and Medicare, there is not enough money available from the rich to fund such programs.
Notwithstanding the arithmetic, I think that some people believe that we can always enlarge government by raising taxes on the rich.
For Discussion. Does Worstall overstate the incompatibility of redistribution and paternalism?