Social Equity and Fiscal Federalism

There is no single or simple definition of social equity. Each individual's notions of what is fair and equitable are tempered by his background and social position. The authors were sharply reminded of this one evening while watching William F. Buckley's televised interview of Governor Ronald Reagan on "Firing Line." Mr. Buckley and Mr. Reagan exchanged anecdotes about welfare recipients who were manipulating rules of eligibility to their personal benefit. Each believed citizens were being unfairly taxed to support such unethical people. During the second half of the program, students asked Governor Reagan if tax avoidance through manipulation of tax loopholes also ran counter to his conception of an equitable and fair society. The governor had paid no state income tax in the two previous years because of capital losses in the stock market, even though he has substantial real estate holdings and a gubernatorial salary of over $50,000 a year. But Reagan could not see any connection, in a moral sense, between equally legal manipulations of tax loopholes and welfare regulations to one's own advantage. Why should he pay taxes if he had no "taxable" income?