The Nolan Chart Is A Little Off

Not too long ago I was happily surfing the web and found “The World's Shortest Political Quiz.” Only a few minutes later I came across something equally interesting – a chart produced by Libertarian David Nolan. It takes personal and economic freedom and charts them out according to a person's political beliefs.

At first blush, it looks correct. I was quite pleased that someone had plotted out that kind of information. But as I considered its meaning, a glaring problem began to reveal itself.

I think, and I'm sure almost every present day and former communist comrade will agree, that personal and economic freedoms are corollaries so inextricably linked that they deserve to be included on the same axis. You can't have much personal or economic freedom if, as in a communist country, the government supplies you with everything they think you need, and taxes you at a “marginal” tax rate of 100%. So I emailed Jean-Francois Minardi, a Senior Policy Analyst at The Frasier Institute. They sponsor the Economic Freedom of the World project.

He was kind enough to respond right away, and told me that he isn't aware of any chart like the one I was considering. So once my googling was over, and I was convinced that I wouldn't duplicate anyone else's work, I decided to make my own chart.

Here's what I came up with. It includes Dick Armey's flat tax low estimate of diminishing government returns, starting at about 15%. It's important, because he's a former public policymaker, Ph'd Economics Professor and has written several books on the subject. I also included Economist Arthur Laffer's diminishing returns estimate of 40%.

For the record, my own estimate of the pivot point between liberty and socialism was a marginal tax rate of 41%. But there isn't much sense in watering down the chart in small increments, so I've kept my conclusion out of it (I'd rather just take credit for the whole chart).

And the last element is the point at which I think socialism is a certainty. It starts at the confiscation, organization and redistribution of 51% of the GDP of a given economy. I suppose anyone can argue the semantics of what socialism is, isn't, what it represents, and at what point it begins. And there are in fact countries in existence today that have marginal tax rates over 50% and still have democratically elected leaders – like Norway (That's probably not a good example, since they're a constitutional monarchy).

But I did find a large problem in an already existing chart. And it's something that I thought needed more attention. So here's my take on it. Hey, there's no sense in complaining about a problem if you're not willing to offer some kind of solution to fix it. Right?

In case you're wondering... the U.S. corporate tax rate currently tops out as the second highest in the world at 39%, while the federal income tax rate is as high as 35% - depending on your income. And this is only those two taxes. This does not include the sales tax, death tax, state income tax, social security and the myriad other payments you make to government all the time. And I don't need to mention to my readers the bailout programs, the "stimulus" program(s?) or the other very large and very public expansions of government that are being carried out in Washington as I write this.

This post reminds me of a book written in 1963 by Murray Rothbard. He called it: "What Has Government Done To Our Money?". But with the current state of affairs in Washington, I think it's about time for a new book title. How about something like: "What Has Our Government Done To Our Government?"