Bryan Caplan  

Scion of Tax Consumers: My Calhounian Class Autobiography

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I was born into a family of tax consumers. My father was an engineer for a defense contractor during the last decades of the Cold War. My mom was a substitute teacher for the public schools, though she did spend a year working full-time at a Catholic school.

We were not entirely insulated from the market - my parents invested in real estate. My dad ran a small antique cars business on the side. But the large majority of our income came from government - federal, state, and local. And aside from a year of private school to avoid being bussed, my K-12 schooling was entirely supplied by the public sector.

My status as a tax consumer continued during my undergraduate years at UC Berkeley. Since I was a Regents scholar, I received an even larger subsidy from the state of California than the typical UC student.

During my Ph.D. program at Princeton, I spent four years employed by what one could technically call "the private sector." You would never know the university was private from being there, though. If anything, the lack of a bottom line and sense of entitlement were more prominent than at Berkeley. Once I graduated, I became an employee of the state of Virginia's George Mason University, which eventually gave me a job for life.

Since my wife is a corporate lawyer, most of my family income officially comes from the private sector. But few private sector professions profit as much from expansive government as lawyers do. Anyone can see that plaintiffs' lawyers for antitrust cases benefit from the existence of antitrust; a little reflection reveals that defendants' lawyers for antitrust benefit as well; on further reflection, it is clear that increasing the demand for antitrust lawyers increases the demand for lawyers in general.

So how much do I actually profit from expansive government? The question is harder than it looks, because you have to keep opportunity cost in mind. A bureaucrat earning $100k per year might be able to get an equal salary in the private sector. If tax cuts eliminated his position, his after-tax salary would actually rise as a result! In my case, though, it's hard to deny that I really am a net beneficiary. I greatly enjoy being a professor, so if government cut its subsidies for education, I wouldn't readily flee to a more lucrative occupation. In any case, I'm almost middle-aged; starting a new career at this point would be both costly and stressful.

How has my Calhounian class background affected my beliefs about the world? In truth, it's hard to see how it has. Even before I knew a thing about economics or libertarianism, I never thought of myself as playing for the "government team." My next book argues that government subsidies for education are a big waste of money.

Growing up, there were obvious - though mostly apolitical - differences in attitude between kids from rich versus poor families. But it's hard to recall any attitudinal difference - political or otherwise - between kids from "tax consumer" versus "tax producer" families. (Of course, my introspection is fallible - if I can find some good data, I'll followup with a few simple statistical tests).

Not convinced? Suppose someone from a rich family wanted to marry someone from a poor family. Even today, it is easy to believe that the rich parents (and maybe even the poor parents) would resist. "Were not snobs, but..." In contrast, suppose that someone from a rich entrepreneurial family wanted to marry someone from a rich bureaucratic family. It's hard to imagine anyone seriously pointing out the "divide," much less using it as an argument against a union.

Ultimately, then, while regular "class analysis" seems oversold, Calhounian class analysis seems almost irrelevant in modern America. Objectively speaking, tax consumers and tax producers may have a lot to fight about. But subjectively speaking, it's a rare person who even notices.

Comments and Sharing

COMMENTS (6 to date)
vintner writes:

This must vary a lot from case to case. I know a very entrepreneurial self-made manager at Intel who became engaged to a man from a very rich political family who worked as a state-legislature lobbyist. Her friends pointed out to her the unsuitability of marrying a politician, and the engagement fell through.

quadrupole writes:


Thinking about this, almost middle income family (say income around $46k) with two or more children is going to be a tax consumer. With education per pupil coming to around $10k per student per year these days, plus the happy $1k child tax credit. If Joe middle class is already getting back $22k just for his two kids (or about half his income), not counting any other ways Joe might be a tax consumer.

mrrunangun writes:

In contemporary America, few people are not tax consumers in some degree, more so when being educated or educating offspring, less so when not. Net tax producers are mostly the privately employed high earners, speculators, or high income rentiers, but even many of these benefit from govt money indirectly thru govt contracts awarded their employers, medicare and medicaid for the health sector, section 8 housing money and FHA or VA mortgages for the housing sector, etc.

Bruce K. Britton writes:

To complete your analysis, it seems that you need to specify how much taxes you ( and your parents ) pay, as well as how much taxes you consume. So there are 4 classes:

(1) those like you who pay taxes and consume taxes ( in the form of government payments and services);

(2) those who don't pay taxes and do consume payments and services;

(3) those who pay taxes and don't consume payments and services ( but is this class empty if you include services: everybody consumes national defense?);

(4) and those who don't pay taxes and don't consume services.

So if everyone consumes services, so classes 3 and 4 are empty, then classes 1 and 2 are differentiated by whether they pay taxes or not, or better, by how much taxes they pay compared to how much services they get.

If we remember that the IRS says 96% of federal income taxes are paid by the top 50% of the taxpayers, leaving 4% for the bottom 50% ( better would be total federal taxes, see Table in Picketty and Saez in Journal of Economic Perspectives, 2007), then most of the taxpayers are paying little tax for the services they get.

Bruce K. Britton writes:

In Calhoun's day, weren't nearly all the federal taxes excise taxes? They certainly didn't have income tax or payroll tax. So how does this affect the rationale for his classes today?

Buzzcut writes:

In terms of federal income taxes, it is not very difficult to be a tax consumer:

1) 3 kids (5 exemptions and 3 $1000 tax credits)

2) A big mortgage

3) high property and state income taxes

4) An income that puts you below the AMT threshold

I met these 4 requirements, and I got back more in my refund than was witheld in taxes from my paycheck. The third kid really made this happen, before she came along this year I was only getting back a little bit more than I paid. Now I'm getting back WAAAAY more than I paid.

Throw in the public schools, and I'm a huge tax consumer right now. Of course, when I was a DINK, there were years that we paid $13k just in federal income taxes. Maybe it all washes out in the end.

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