Nobody Understands Poverty or Taxes

Bethesda Mansion
Bethesda Mansions: Your Tax Dollars at Work
Today I read something heart-rending. Melissa Chadburn’s account of how she spent her childhood in poverty, navigating bureaucracies, and abused by everyone, at every turn, is extraordinary. We should all read it. Everyone should be more aware of the plight of the poor in our country. If we leave it to the “experts” it will never improve. Chadburn has made it out of poverty, and her story is important.

She is an admirable person, and a tremendous writer. Unfortunately the entire article is shot through with a standard and misguided understanding of how poverty and tax policy work in the United States. Rather than blame the folks who crafted the systems that failed her, she seems to think it’s GE’s fault. She resents the fact that entities seek to pay the smallest amount of taxes legally possible. Through a literary alchemy I don’t understand they are meant to be exemplars of the spirit of greed. Its got something to do with kindergarten and reality TV.

Chadburn does some angry math in her article. Let’s do some more. The Federal budget in 2010 was 3.456 Trillion dollars on 2.2 trillion in Tax receipts. There are currently 46.2 million people under the poverty line. In tax receipts that’s $54,112 for every poor person in the country. In the budget, that’s $73,593. Many of those in poverty are looking after multiple poor children, so those in Chadburn’s magical anti-greed poverty-curing re-distribution machine should be doing pretty well.

As her article demonstrates, this is not the case. The money that gets funneled to the federal government mostly goes towards bombing things, our half-socialized and absurdly expensive medical system, and rich folks welfare like the social security system. This is where the money goes on paper. In practice, much of the money goes to government workers and contractors. These 14 million professionals use their expertise mostly to feed themselves. The security experts make us less secure, the poverty experts make us poorer. They do so subconsciously, but they do it. It is the only route to job security.

Chadburn movingly thanks the people who got her to where she is today. She thanks the teachers, the social workers, the bus drivers and the firefighters. This is an interesting list. With the exception of the social mobility enhancing military, none of these people got a dime from the federal government. These local officials could have done so much more for Chadburn and her family with another 50 grand per client. The money that could have made all the difference in the lives of Chadburn and millions of others has been building mansions for contractors in Bethesda, Maryland instead. How is that better? Why would we want to send more money to Washington to make more of this happen?

Even the way the federal government’s money is collected has perverse effects. The mortgage income tax deduction, and other policies, have inflated housing prices nation-wide to the point that Chadburn’s mother could never hope to afford decent housing. Viewed in this context, the money that HUD spends on affordable housing is hard to feel good about. The brutal and oppressive war on drugs is the most significant way our national government interacts with the disadvantaged, and it functions mostly to create poverty. All in all, the federal government provides a terrible deal to the poor. You should read more about Chadburn’s struggle. A lack of money going to Washington, DC is not responsible for it.

Prior to this post, Rob had a broader audience because he mostly just talked about the drug war.

Robert Morris

Robert Morris Tweets @TheFederalGovt, posts video as the More Freedom Foundation, and has written a quick pamphlet on the drug war that can be found here.

  1. explain what you mean by “the poverty experts make us poorer. They do so subconsciously, but they do it. It is the only route to job security”

    1. Sure.  You move to Washington, DC caring deeply about an issue.  You take a job at the Pentagon or the Department of Labor or something.  You get a mortgage and some kids, or just a lifestyle you enjoy.  You slowly become convinced that the only way your issue is going to improve is if your budget increases and you get more people working under you.  Maybe your issue is best served by the government’s paying for your Masters degree.  Everyone you know and work with endorses these views, and you become convinced of them.  The dollars that could have been ameliorating poverty in the inner cities end up going to your mortgage in Bethesda or Northern Virginia, making all of us poorer. 

  2. Never forget that there’s currently a warn on poverty as well, that LBJ started in 1964. As is typical of the government jokesters who declare wars on words and ideas: Poverty is exploding.

    The beltway is really just a giant bubble of successful and highly educated policy wonks.
    They may have anecdotes galore about the hard life, but they don’t
    really have that much personal experience in it (aside from their own moral
    poverty which always seems to bubble forth).