Thousands of American tax records, many of them from some of the country’s very richest people, have recently been leaked by the IRS.
ProPublica, the left-wing news outlet, has declared that a “state actor” may likely be responsible for the leak, but this is pure speculation, and there is no reason to believe that that is the real origin of the leak.
Instead, a much more reasonable supposition is that an IRS employee strategically leaked the information to a sympathetic news outlet, probably with the approval, if not at the direction, of upper management. Those who remember Russiagate and the countless other media-generated pseudo-scandals of the Trump era know that the modus operandi of the deep state is to carry out attacks by selectively releasing information, generating media coverage that is helpful to one’s cause, and then disguising the whole move as a haphazard and random “leak.”
The Biden Administration’s colossal spending spree will not be affordable without gargantuan tax increases, especially on the richest Americans — and may not ultimately be affordable even with such tax increases. Thus, the government has to soak the rich, and it must manufacture public approval for that move. Show the people how little the rich pay in taxes, and you will stoke their envy.
It’s in light of this sort of demagoguery that we should understand these latest IRS leaks. But like all demagoguery, it reeks of lies and misstatements.
An Attack on the Economic Basis of Civilization
Aside from any of the many technical niceties that the ProPublica story uses to complain about how the rich pay taxes, it actually disguises one critical truth.
Rich people do not simply spend their money on conspicuous consumption, propaganda to the contrary notwithstanding. Rather, the vast majority of rich people’s wealth is tied up in various investments. Investment is the deferral of present consumption for the sake of a greater return in the future. In other words, if a rich man who owns a factory invests in a machine that will increase his factory’s productivity, he will forgo the ability to consume what he has invested, but the greater productivity from that machine will give him even more wealth in the future.
More importantly, it will give all of society greater wealth because it will mean that more goods can be produced, thus, lowering the price of each unit.
If the rich person had consumed his wealth, this would not be possible. If the government had taxed away his wealth, this would also not be possible.
This process of deferring present consumption for the sake of future returns is what makes civilization possible.
When the government attacks this process with confiscatory tax rates, it is attacking the economic foundations of civilization itself. That is the reality that demagogic appeals to envy like these IRS leaks seek to disguise.
It is true that the rich get up to all sorts of nefarious things these days, but this is nearly always because of the connections between the rich and the government, not because rich people are rich.
Thankfully, people don’t seem to be falling for it. Americans have an instinctive aversion to the idea of higher taxes.