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America’s Social Contract And The Measure of Our Commitment

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(Note: contains some material from prior posts)

by Brian T. Lynch, MSW

A key element in America’s social contract is the idea that government derives its authority from the consent of the people. So the question should occasional be asked, is our mutual consent to be governed wearing thin? There is evidence to suggest a growing restiveness in certain populations. Some symptoms of declining consent include gridlock in congress marked by an inability to pass any legislation on a simple majority vote, the resurgence in states’ rights activism, calls in some states for secession, citizens arming themselves in fear (or perhaps the  hope) of armed resistance and wide spread efforts to manipulate elections.  Perhaps the best, most quantitative way to judge the degree to which we  consent (or commitment) to self-government is by our willingness to pay taxes.

The attitudes we have towards paying taxes, and the extent to which people and organizations will go to avoid them, is an underappreciated index of our consent to be governed. Just as taxation without representation was a rallying cry leading up to the Revolutionary War, the Tea Party and many other popular reform or resistance groups today rally around taxes as a central point of contention. Objectively speaking, the Tea Party’s opposition to taxes makes no sense since their complaint corresponded with the lowest federal tax rate since the Eisenhower administration. It isn’t until we understand that our attitude towards taxes is a barometer of our consent to be governed that the Tea Party’s tax objections become clear.

For the sake of discussion it is helpful to identify different segments of the population that are particularly opposed to taxes. But keep in mind that our personal attitude towards paying taxes is just as valid an indicator of where each of us falls on this measure of consent.

Let’s begin with those who see themselves through the lens of American individualism. They value self-reliance and see this as a patriotic duty. They tend to think less of those who are more collaborative, more dependent or less successful. They tend to discount the contribution of the public commons to their own welfare and don’t often recognize how massively interdependent advanced societies really are. They believe that less government is best for everyone. These folks are less willing to contribute to tax supported government services other than for military defense. They are ideological individualist. This group may include some libertarians and on the extreme fringes may also include some anarchists or survivalists.

There are those who are suspicious or uncomfortable with American pluralism. These folks tend to live in parts of the country where there is little diversity or just a single predominate minority group.  However, folks who hold this belief can be found everywhere. They believe a disproportionate amount of their taxes go to support other ethnic or cultural groups whose members don’t share their same values or work ethic. They may fear that these other groups are taking advantage of government largess. As a result, they are more resentful of paying taxes and more critical of what they see as wasteful government spending. These folks are pluralism-adverse and at the extreme fringes  this group may include racists or hate groups. A highly nationalistic subset of this pluralism-adverse group believe their government has already broken faith with them and is threatening their liberty. For them, paying taxes is akin to paying tribute to a foreign potentate. The most extreme of these consider themselves to be soverign citizens.

There are some religious fundamentalists who believe all secular government is evil. Some fundamentalist sects focus on The Book of Revelations and an apocalyptic view of the world in which governments plays a role in the rise of the false prophet. For these groups anything that expands government is evil as well, including increased taxes. They are usually considered to be on the fringe of the Christian community, but they have an impact beyond their numbers.

Then there are those who believe taxes compete or interfere with commerce and free markets. They believe that taxes reduce the capital available for businesses investments. They fear that more taxes will lead to more government regulations and further hinder commerce. They don’t see government spending as simulative for the economy. For them, the provision of government services to those who aren’t successful contributors is an unfair redistribution of wealth. Members of this group are more likely to have higher incomes and a sense of entitlement. They may pride themselves in their ability to avoid paying taxes. At the extreme fringes of this group members tend to see society as being made up of the have and the have nots, the makers and the takers. They are often contemptuous of taxes and government.

Next, there are the disaffected and those too self-absorbed to care much about government. For this group all taxes are an annoyance to be avoided.  This is a large and diverse group that is often underrepresented in our national conversations. They include many who are poor, but also many who are middle class folks working hard just to make ends meet. They tend to be swing voters when they vote and their grasp of politics and government policies are more maliable. The underground cash economy is significant for them.

The impact of this growing reluctance by some citizens to pay income taxes is huge. According to a GAO report called  “HIGH-RISK SERIES, An Update”, the Internal Revenue Service estimated that the gross tax gap–the difference between taxes owed and taxes paid on time–was $450 billion for tax year 2006. The IRS estimated that it would collect $65 billion from these taxpayers through enforcement actions and late payments, leaving a net tax gap of $385 billion. This doesn’t include the loss of tax revenue due to the underground cash economy and foreign US cash transactions. These  create an additional tax gap estimated to be between $400 billion and $540 billion annually. There is also the tax gap created when wealthy investors hide their money in off shore tax havens. According to a study by the Tax Justice Network  the world’s super rich have at least $21 trillion secretly hidden away in tax shelters as of 2010. This is equivalent to the size of the Japanese and United States economies combined, according to The Price of Offshore Revisited report. Further, the amount of secretly hidden wealth may be as high as $32 trillion.

Arguably the most tax resistant groups, which also have the greatest fiscal and political impact, are businesses and corporations. The largest loss of tax revenue, representing the lowest level of consent to be governed, comes from the corporate sector. The shift in the percentage of total federal income taxes paid by individuals verses businesses has grown substantially over the years. Individual income taxes raised 41% of the total tax revenue in 1943 while business income taxes made up the rest, or more than half of the income tax receipts. Compare this with today where 79% of total revenues comes from individual income taxes. This shift in tax receipts from corporations to individuals cannot be explained by a shift away from C corporations (who pay the corporate income tax) to S corporations (who don’t). According to the financial site NerdWallet, the 10 most profitable U.S. companies paid an average federal tax rate of just 9 percent  in 2011. The group includes such giants as Exxon Mobil, Apple, Microsoft, JPMorgan Chase and General Electric. The Economist recently posted a graphic by the Bureau of Economic Analysis that depicts the decline in corporate taxes juxtaposed to the rise in corporate profits.

The inability of the federal government to collect taxes from the nation’s elite and its biggest corporations is a serious sign of trouble. It signals a real strain in our social contract and severly limits the ability of the government to serve its people. The problem is compounded by the fact that anti-tax sentiments are being exploited by wealthy business interests to ferment dissatisfaction and distrust of our government. A coalition of the most anti-tax, anti government constituents from the various tax adverse segments of society described above would look very similar to the Tea Party base of today’s Republican Party. The power we invest in civil government is the only check we have to balance the power of the largest corporations to do as they wish in pursuit of profits. It would be a mistake to weaken our commitment to good government now when it is under assault.

There are still many who believe taxes are the price we must pay for a just and robust society. Paying taxes is our civic duty and evidence of our commitment to one another. It reflects confidence that our government is representing us and upholding the social contract. The present IRS scandal over the targeting of Tea Party groups for selective scrutiny of their 503(c)4 tax status is really a minor but convenient distraction from the real tax crisis we face. We are facing a crisis of confidence in self-government. It is a challenge of our time to rekindle a popular passion for civil government that is truly of, by and for the people.



  1. Mel Talmadge says:

    This article completely ignores the values of the left or those individuals which feel America is inherently evil. It also ignores those individuals that feel guilty because they live in the world’s only super power; those that blame America for all the world’s ills. And those that feel that redistribution of wealth is not only necessary but mandatory. While aspects of each of the above groups may, to some degree, be true it is also true that there are extremists in America that fundamentally wish to change our society to a more socialist, European style country or, at least, non-capitalistic. The fact that this article completely ignores those parts of society renders it irrelevant in my eyes. If one cannot include ALL viewpoints then the remaining viewpoints are valueless and nothing more than leftist propaganda.

    • DataHeart says:

      Perhaps I am naive. I can’t name a single leftwing group that thinks America is inherently evil. I mentioned anarchists. The think all government is evil, but they aren’t considered liberal or leftwing. I can think of several leftwing groups or organizations that aren’t happy with US foreign police, or Obama’s positions, or the excesses of our current brand of capitalism, but they aren’t voicing anti-American sentiments. Their beef is with American policy. There are also lots of groups on the left that want to reform government, but none that think America is evil. Even socialists aren’t anti-American as far as I am aware. At the turn of the 20th Century the entire mid-West was a hotbed of socialism, but these folks were just as patriotic back then as they are today. I am certainly not aware of any leftwing group that don’t want to pay taxes, which was the point of the discussion in my article. I’m not saying these groups don’t exist, but they certainly aren’t very prominent. So enlighten me. Provide me with some names or details about these groups so that I can look into them. I will gladly include them here if their disaffection with civil government can be measured by anti-tax sentiments.

      • Mel says:

        Funny how the left can never find anyone on the left who hold anti-American views but always have the wherewithal and intellect to research and identify those they feel are ‘radical right-wing extremists’. The reason you can’t find any is you don’t want to.

      • DataHeart says:

        Please provide me with a “left” group that is being funded by wealthy business elits (the third column of American politics) to espouse anti-tax, anti-government sentiments? I really WILL look into it fairly. I promise!

      • DataHeart says:

        Not hearing back from Mel, I took the initiative to search for those anti-American left wing organizations of which you wrote. I googled “left wing organizations” and http://www.discoverthenetworks.org/ came right up to the top. This “Guide to the Political Left” is rather amazing. It contains a very lengthy alphabetical listing of supposedly left wing organizations. In doing so, it lumps together such subversive left wing organizations as the AARP that, “Aims “to enhance the quality of life” for people aged 50 and older,” with Abu Nidal, a Middle-East, “Spinoff of the Palestine Liberation Organization… [that] Has killed or maimed more than 900 people in over 20 countries.” No wonder Mel is so upset. I now see why some states are passing laws banning sharia law. According to this web sites view, all international terrorism is a left wing conspiracy.

        Here is a little information provided by the web site about itself:

        “network, noun: 1. An openwork fabric or structure in which cords, threads, or wires cross at regular intervals. — American Heritage Dictionary, 4th Edition”

        What This Site Is About

        Welcome to DiscoverTheNetworks, a project of the David Horowitz Freedom Center. This website is a “Guide to the Political Left.” It identifies the individuals and organizations that make up the left, and also the institutions that fund and sustain the left; it maps the paths through which the left exerts its influence on the larger body politic; it defines the left’s (often hidden) programmatic agendas; and it provides an understanding of the left’s history and ideas.

        And this from the Freedom Center web site: The David Horowitz Freedom Center combats the efforts of the radical left and its Islamist allies to destroy American values and disarm this country as it attempts to defend itself in a time of terror. The leftist offensive is most obvious on our nation’s campuses, where the Freedom Center protects students from indoctrination and political harassment. Combining forceful analysis and bold activism, the Freedom Center provides strong insight into today’s most pressing issue on its family of websites and in the activist campaigns it wages on campus, in the news media, and in national politics throughout the year.

        In writing this piece I really tried to be non-partisan. I wanted to show how a thrid column of US politics, the wealthy elite business interests, are intentionally polarizing our politics to furment anti-government attitudes. I suggested that their success can be measured by the growing distain for paying taxes. Mel’s criticism that my blog piece didn’t include left wing groups that hate American has lead me right back to an example of where wealthy elite insterests have underwritten a righ wing extremeist web site that is posioning the well from which we all drink.

      • Mel says:

        I read this and your other email regarding your article. Yes, you found some of the left organizations such as the Tides to name one but then you slanted your comments the same as you did in your article – except in the reverse. Finding nothing wrong with anything done by anyone on the left and finding nothing right done by anyone on the right! Did you know that President Bush has done more during his term as president to remove or reduce the scourge of HIV/AIDS then any other person in America? Primarily in Africa? I see no reason to alter my opinion. You started with a bias that the right is always wrong and the left is always right and wrote your article and your responses to me accordingly.

      • DataHeart says:

        Thank you for you comments.

        I have to say I don’t find anything that is anti-tax, anti-government or unamerican about the list of activities the TIDES Foundation funds. Is there a particular activity on their list that you find dangerous or not in keeping with basic American ideals? This foundation appears to be a typical 501(c)3 charitable foundation, so if you feel my treatment of the Tides is slanted, please explain why you see it that way.

        I will admit that saying their issues are “scary” was a little cheeky. I am sorry if I offended you.

        On the other hand, the Western Center for Journalism is overtly partisan as their web site contains a reference a book that presents a negative view of a particular politician. This isn’t allowed by law and is enough to endanger the organizations tax exempt status.

        As for George W. Bush, I made no references to him at all. I agree with you that he did some good in the area of HIV and AIDS treatment. I also liked his immigration initiative even though it didn’t pass. He did other good things while in office as well. No one is all bad or all good.

        My concern isn’t specifically with politics on the left or right, but with the influence of the wealth corporate elites on both parties. These individual are not for the best interests of Republicans or Democrates or America. They are out for themselves. This is my slant, if any, that this small but influential group is driving our politics apart and causing gridlock in government for any legislation that doesn’t benefit them. It is this group that has the most to gain by shrinking governments and taxes, the only institutions left that can limit their absolute power. The measure of our attitude towards taxes, left, right or center, is a degree to which these moneyed interests are successful in loosing our commitment to self-rule and to each other.

      • DataHeart says:

        Wow, here is more on unAmerican left wing groups from right wing blogs. Who knew all this was out there?:

        Who Funds The Radical Left In America?


        By Steve Baldwin, Exclusive to Western Center for Journalism

        Very few Americans realize there exists a large network of far left philanthropists and foundations in America dedicated to destroying the American way of life, our Christian-based culture and our free enterprise system. They seek to remove America from its constitutional foundations and move it toward a European-style socialism. Much of this effort is coordinated by a little known group called the Tides Foundation and its related group, the Tides Center.

        Over the course of its 33 year history, the Tides network has given hundreds of millions of dollars to anti-free enterprise groups, gun control groups, anti-private property groups, abortion rights groups, homosexual groups, groups engaged in voter fraud, anti-military groups, and organizations that seek to destroy America’s constitutional basis. All told, over 100 leftist organizations have received funding from one of the two Tides groups.


        AND what types of anti-American activities does TIDES Foundation fund? This, from their website:

        Art & Film
        Civic Engagement
        Civil Discourse
        Community Development
        Disability Rights
        Economic Justice
        Economic Opportunity
        Environmental Sustainability
        Faith & Spirituality
        Food & Agriculture
        Health Services/Healthcare Reform
        Human Rights
        International Development
        LGBT Issues
        Native Communities
        Nonprofit Spaces
        Peace & Conflict Resolution
        Professional Development
        Racial Justice
        Reproductive Justice & Health
        Women & Gender
        Youth Development & Organizing

        Very scary stuff.

        AND what about the source web site, The Western Center for Journalism? Here is what the web site says about its current president:

        Floyd Brown is a political innovator, writer and speaker.
        His latest book, Obama Enemies List: How Barack Obama Intimidated America and Stole the Election, was released in January 2013.
        Time magazine wrote: “Brown has a stature among devoted conservatives that almost matches his physical heft (6 ft. 6 in. and 240 lbs.)”.
        Floyd is the president of the Western Center for Journalism, a nonprofit foundation dedicated to informing and equipping Americans who love freedom. The WCJ also trains “citizen journalists” to become effective online advocates for freedom.

        The Western Center for Journalism bills itself as a 501(c)3 tax exempt foundation, meaning it has been funded and is tax exempt, AND by law is not allowed to engage ANY political activity.

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