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Empey is a fourth-year student at the UCLA School of Medicine.

By Douglas Empey

Doug Lief’s column “Business is doing its business on everyone else” (Daily Bruin, Viewpoint, Feb. 20) invites a few comments regarding taxation specifically and free market economics in general.

Amid various musings ranging from sock puppets to the evil of corporations, Lief offers his view that the president’s proposed tax cut is unfair to the common people. He invites us to be disgusted that the plan “gives $50,000 to the people on the top, but only $1,600 to the average taxpayer.”

Before condemning such a pernicious plan concocted by “Republicans and businessmen,” Lief should consider that these figures result from the fact that wealthy Americans pay more taxes than those of us of more meager means. Tax cuts result in higher lump-sum savings for the wealthy for the simple fact that their marginal tax rates are already so high.

For example, data from the Internal Revenue Service for the 1998 tax year show that the top 5 percent of income earners paid over half of the income tax revenue received by the federal government. Furthermore, the bottom 50 percent paid only 4.2 percent of the total income tax collected (Wall Street Journal, “Progressive Plunder,” Feb. 6, 2001). Lief’s assertion that the proposed tax cut is “Robin Hood being run in reverse” is simply comical given the markedly progressive nature of American marginal income tax rates, a system made even more inequitable by the Clinton tax increase of 1993. The current tax scheme is more like Robin Hood running out of control.

And yet, the Gephardt-Daschle-Bonior wing of the Democratic Party, in good populist fashion, continues to give the impression that the tax cut will leave the poor with an onerous tax burden while the rich get by without paying their “fair share.” The numbers simply show this to be false.

The fundamental unfairness and bureaucracy of the American income tax system underscores the need for significant tax reform, including the abolition of the IRS and the institution of a national retail sales tax in its place. Such a system would prevent demagogic politicians from wielding the income tax as a weapon of class warfare, unneeded wealth redistribution and social engineering. But I digress – this is a subject for another essay.

All of this bears upon the broader philosophical issue of the role of the government in our economic system. Since the early 1980s, the world has undergone a revolution in which the welfare and state-interventionist economic models have fallen out of favor. Such systems simply do not produce the wealth and living standards of the free market, which includes the deregulation of capital markets, the elimination of tariffs and quotas, and allow the people to keep their income and invest it in privately owned factors of production.

Oh yes, there are still holdouts who cling to the old ways (like Cuba and some in the American media and academia). But as journalist Thomas Friedman has stated in his recent book on globalization, “The Lexus and the Olive Tree,” “Ideologically speaking, there is no more mint chocolate chip, there is no more strawberry swirl and there is no more lemon-lime. Today there is only free-market vanilla and North Korea. ... In the end, if you want higher standards of living in a world without walls, the free market is the only ideological alternative left.”

President Bush’s proposed tax cut, in addition to providing a needed fiscal stimulus, is simply one small aspect of a growing economic conservatism which recognizes the benefits of diminished government intervention in private wealth and the free market. Much of the rest of the world is seeing these benefits. Will we?

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