As we saw yesterday on the Deep End, the idea that the rich pay more than their fair share of tax is wrong. Taking all taxes into account, what people pay as a percentage of their income is remarkably even across income groups.
But what if we also take benefits into account? Surely, those disproportionately go to those on lower incomes. Well, yes, they do. But, as James Surowiecki argues in the New Yorker, social security isn’t the only kind of welfare:
Surowiecki provides various examples of corporate welfare:
Other examples include all sorts of subsidies and sweeteners to agriculture, such as “the sweetest boondoggle in business: an import quota keeps American sugar prices roughly twice as high as they otherwise would be, handing the industry guaranteed profits.”
Other transfers are cleverly disguised – for instance, as tax breaks, which may selectively lower taxes for some, but effectively mean higher taxes for others. Then there’s regulation – which can be as unfairly advantageous to some businesses as any direct subsidy:
The list could go on and on, but Surowiecki’s space is limited. So, while government guarantees and bail-outs for the banking system get a mention, there’s nothing on another rich seam of state-facilitated profiteering: public procurement, where official carelessness is lapped-up by contractors in the defence, construction and pharmaceutical sectors.
Though Surowiecki uses the issue of corporate welfare to bash Mitt Romney, one might ask what Barack Obama has done about it – and the answer to that is ‘very little’. But then that’s what you’d expect from the liberal left. While the cosy relationship between big government and big business undoubtedly helps the rich to get richer, it also helps extend the influence of the state deep into the heart of an ostensibly ‘private’ sector. Thus the lack of action from the progressive camp comes as no surprise.
The real mystery is why, with honourable exceptions, the right seems so relaxed about it.