Why is it controversial to

propose an end to double taxation?

The centerpiece of President

Bush's economic package is elimination of the tax on dividends. No one

disputes that this is a double tax. A corporation pays taxes on its profits.

Then if it distributes the after-tax profits to its shareholders, they

pay taxes on that income. Corporate profits are taxed twice merely because

they change locations.

The outcry against repeal of

this outrage is deafening. Why? Because low-income people won't pay less

tax as a result. Never mind that many low-income people already pay no

income tax; in fact, they get cash handouts through the dishonestly named

earned income tax credit. (How does one get a credit on taxes not paid?)

So, somehow, it's unfair to

eliminate a tax if less-productive people don't directly benefit, but

it's not unfair to tax something twice. A strange notion of fairness,

indeed.

Such a notion can be based

only on the view that all wealth belongs to the government, whose job

it is to distribute it "equitably." Maybe that's why Sen. Lincoln

Chafee (R-R.I.), objecting to Bush's plan, said, "I can't see us

giving away any more of our revenues." They certainly aren't Senator

Chafee's revenues. So what's he talking about?

That's the typical attitude

in Washington. To enact a spending measure, you need merely claim that

someone is in need. No proof is required; certainly it does not have to

be shown that need justifies confiscation. But to enact a tax cut to let

productive people keep their own money, politically you shoulder an impossible

burden of proof.

Senate Minority Leader Tom

Daschle reacted to the tax cut by saying it would help the "wrong

people." No doubt he'd be appalled if it were pointed out that his

statement reflects a thuggish collectivism unworthy of an earlier America.

A tax cut lets people keep their own money. How can they be the wrong

people?

If Daschle wants to say that

the tax cuts should be deeper and include other taxes, then bravo! But

that's not what he wants. He wants tax cuts for people who don't pay taxes

and tax hikes for people who do. That's the logic of one who believes

that all belongs to the state. Daschle should move to Europe where his

ideas are more appropriate.

Some of the class warriors

claim that low-income people do indeed pay taxes not the income tax, but

the payroll tax for Social Security and Medicare. Don't those people,

they ask, deserve a tax cut?

Now this is progress. There

was a time not long ago when the socialist-minded among us denied that

Social Security and Medicare were supported by taxes. Those payments were

called "contributions." The "C" in FICA is for "contribution."

The defenders of Social Security and Medicare had a reason for this artful

use of language: they wanted us to believe that those programs were insurance

plans, not the welfare programs they really are.

But of course if you don't

remit those "contributions" to the IRS, you go to jail. If it

waddles like a tax and quacks like a tax, it's a tax.

These days it serves the tax-the-productive

crowd's interests to call those contributions taxes. It's the best shot

those folks have at parrying the sensible argument that tax cuts should

be restricted to taxpayers.

I'm all for cutting make that

"repealing" the payroll tax and the programs they finance. But

that's not what the class warriors have in mind. They would cut low-income

people's payroll taxes, but continue to provide Social Security and Medicare

benefits at the old level which means wealthier people would be forced

to subsidize them to an even greater extent than today.

That would make the welfare

nature of those programs even clearer. And that's why few people in power

are calling for a cut in the payroll tax.

There has also been the usual

handwringing about the "cost" of cutting taxes. So let's say

this one more time: cutting taxes doesn't cost people money. Government

programs do. Is that really so difficult?

[Sheldon Richman is senior

fellow at The Future of Freedom Foundation (www.fff.org) in Fairfax, Va.,

author of "Tethered Citizens: Time to Repeal the Welfare State,"

and editor of Ideas on Liberty magazine.]