A Philosopher's Blog

Stimulus Checkup

Posted in Ethics, Philosophy, Politics by Michael LaBossiere on May 25, 2011
Screenshot of Recovery.gov, which went live af...

Your money at work, their taxes unpaid.

The stimulus, as readers no doubt recall, was a massive federal money dump into the economy. The hope was, of course, that it would keep the moribund economy going and perhaps even jump start it back from the brink of death (or revive it as an undead monster).

Given how the political system works, it should hardly be shocking to learn that $24 billion stimulus dollars (which could be referred to by their proposed street name of “Stimmy d”) went to 3,700 contractors who owed a combined total of $750 million in back taxes. Naturally, it should be pointed out that only 5% of the 80,000 contractors who got a hit of “Stimmy D” are known tax cheats.

As is to be expected, the tax cheating varied. The most impressive example was a company that received over $1 million in stimulus money while it owed over $2 million in taxes. That is certainly a case of bi-winning: the company was winning by not paying its taxes and winning by getting federal money.

From a moral standpoint, the contractors that take money from the state (that is, from the taxpayers and China) should pay their taxes. After all, if they expect to get their “fair share” of stimulus dollars, then they should be expected to pay their fair share of taxes. To use an analogy, if I expect to partake of the food at pot-luck party, then I am obligated to contribute.

It also seems reasonable to expect the folks who handed out the stimulus money to check on the tax status of the recipients. After all, this seems like it would be easy enough to check. It also seems eminently reasonable for the state to determine if a company owes it money before giving it money.

It could, of course, be argued that these companies needed the money precisely because they owed so much in taxes. This, of course, assumes that they were not paying their taxes because they had run short of money. In these cases, the stimulus plan could be seen a form of company welfare-the state taking care of the poor companies that cannot take care of themselves. However, this does not seem to hold true in most cases.

It could also be argued that these companies were holding their own Tea Party revolution by not paying their taxes. Perhaps they believed they had been taxed enough already. They clearly did believe that they taken enough already since they gladly accepted the stimulus dollars. However, changes in taxes should probably be attempted via legal means first. If those fail and the taxes are unjust, then perhaps it is time for some tea partying.

Given how these things usually work out, I expect there will be some token wrist slapping and some of the less connected companies might be made into examples. However, this sort of thing is business as usual. To a degree, what I found most surprisingly was that the percentage of tax cheats was so low and that the cheating amount was so small.

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  1. T. J. Babson said, on May 25, 2011 at 9:54 pm

    “It could also be argued that these companies were holding their own Tea Party revolution by not paying their taxes.”

    The thing is, the Tea Party folks are the ones who actually pay their taxes (even though they grumble about it).

    It is far worse, in my view, to be the Treasury Secretary and a tax cheat (Geithner) or be the Chair of the House Ways and Means Committee and a tax cheat (Rangel).

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