What is a proper share of income that should go to government? The answer to that question depends on who is answering it. Small L libertarians will argue for amounts in the range of 5 – 10% Strict libertarians make a case for virtually no taxes, arguing that most everything government does can be done better by the private sector. Services provided by government should be funded by user fees and not taxes.
At the other extreme, progressives argue that high percentages of private income should go to government because of income redistribution schemes. They also trust government to spend money better than citizens might do. As a result welfare states command large shares of income in the form of high taxes.
There is no correct theoretical answer to the question. Empirically, we know that government will take and spend whatever they can get away with. Whatever this take, it is never enough. Government always wants more! When times get tough, people must sacrifice. Government never has a recession. It just grows and grows. In our current Great Recession, Washington, DC is thriving. Like a tick on its host, it just gets bigger and bigger.
At what point do producers decide it is no longer worth the effort and “Go Galt?” Government will not stop taking until the host upon which it feeds dies.
Doug Ross provides an estimate of how much productive effort is now taken by government.
total taxes – even for the most modest of middle-class incomes – around a shocking 50 percent
A middle-class taxpayer’s income is subject to a 25 percent federal income tax. Then there is the federal Social Security and Medicare payroll tax of 13.3 percent in 2012—5.65 percent of that is removed from the employee’s paycheck, and the remaining 7.65 percent is paid by the employer. (In reality, the employee pays the entire 13.3 percent, because the employer’s portion of the tax does not affect the cost of labor: The employer would pay the employee 7.65 percent more if there were no employer’s portion of the payroll tax.)
So the 25 percent federal income tax plus 13.3 Social Security and Medicare payroll taxes equals 38.3 percent going to federal taxes in 2012.
And then there are state taxes. According to the Tax Foundation, the average state’s income tax rate for the middle-class taxpayer is 4.82 percent, which brings the total to 43.12 percent in federal and state taxes. And it’s going higher, thanks to the nearly $500 billion in tax increases for 2013 that some have called Taxmageddon. In January of next year, the federal income tax rate for middle-class taxpayers is scheduled to rise from 25 percent to 28 percent, and the payroll tax is scheduled to rise from 13.3 percent to 15.3 percent. This drives the marginal tax rate based on the aforementioned three taxes to 48.12 percent. Add in state and local property, corporate, excise, and other state and local taxes, and the percentage of each additional dollar that is taxed hovers around 50 percent.
…It is outrageous that any dollar earned by a middle-class taxpayer would go as much to taxes as to supporting the taxpayer’s family. The government didn’t earn the taxpayer’s paycheck and shouldn’t be entitled to it.
Oh, but this bloated, unconstitutional, bankrupt leviathan is a bargain at half the price!