Income and the Question of Rights
Do Individuals Have a Moral Claim to the Income They Generate?
JANUARY 01, 1997 by ROY CORDATO
Filed Under : U.S. Constitution
Dr. Cordato is the Lundy Professor at Campbell University in Buies Creek, North Carolina.
On C-SPAN’s Journalist Roundtable program, Victor Kamber, a Democratic Party political consultant, and conservative author David Frum were discussing whether Congress should pass an amendment to the Constitution allowing states to ban flag burning. As an aside, Mr. Kamber said that this would be the first amendment to the Constitution that actually reduced people’s rights. (He dismissed prohibition by pointing to the fact that it was repealed.) To counter this claim, Mr. Frum pointed to the Sixteenth Amendment, which allowed the government to impose an income tax. Amazingly, Kamber denied that the Sixteenth Amendment reduced anyone’s rights, claiming that it simply allowed the government to tax people’s income. The clear implication was that people do not have a right to their income, i.e., the fruits of their labor. Therefore, the Sixteenth Amendment, which allowed the government to coercively take a portion of individual income (presumably up to 100 percent), did not reduce anyone’s rights.
This entire digression lasted for less than a minute. Yet it can be viewed as defining the fundamental difference between contemporary liberalism and conservatism.
How one views the rights that people have over the income that their productivity generates can go a long way toward explaining positions that are taken on a large cross section of public policy issues. This includes not only budget and fiscal policy issues, but also most regulatory issues, which involve forcing people to use their incomes in ways that they would not freely choose. A person’s right to his or her income means nothing if it doesn’t mean having the right to choose how that income is used.
If Kamber’s view, that the person who generates or earns a particular amount of income has no moral claim to it, is representative of American liberal thought, then many issues fall neatly into place. For example, the overriding concern that many modern liberals have for tax fairness is driven by an underlying egalitarian ethic—no one should have a greater income than anyone else. Hence, it is always fair to raise taxes on upper-income people, and tax cuts that accrue to the wealthy will always be unfair.
Conservatives and especially libertarians might suggest that the egalitarian perspective itself is unfair because it disproportionately denies people the right to their income. But if income is viewed not as being the property of the people who earn it, but as a common pool resource, then there is no moral dilemma. The government’s job is simply to make sure that society’s economic pie is divided fairly. Wealth redistribution schemes, then, are never an issue of robbing from Peter to pay Paul, because the term robbery implies that Peter has a right to what is being taken.
A second example is the issue of corporate welfare. Historically, government welfare or relief has implied a transfer of income, via taxation, from people who have earned it to some subgroup that needs the income but has not been able to generate it through productive effort of its own. From this perspective, such programs as subsidies to farmers and government loan guarantees to businesses would all qualify as corporate welfare. However, in recent years, many politicians and political pundits have been referring to a new kind of corporate welfare, known as a tax subsidy. While it is not always precisely clear what constitutes a tax subsidy, a business is typically said to be receiving such corporate welfare if there are certain loopholes in the tax code that allow it to reduce its tax liability.
From the perspective of those who feel that people have a fundamental right to income that they have generated, i.e., that the Sixteenth Amendment was rights reducing, the expression tax subsidy is an oxymoron. As many conservatives are fond of pointing out, you can’t subsidize someone with his own money. But what if it isn’t his own money? What if none of his income, beyond what the government allows him to keep, is his own money? If this were the case, then the concept of a tax subsidy makes complete sense. Indeed, from this perspective, any amount of income that the tax system allows the individual income earner to keep and use for his or her own purposes is a tax subsidy.