The Sixteenth Amendment - We're gonna tax ya

The Congress shall have power to lay and collect taxes on incomes, from whatever source derived, without apportionment among the several States, and without regard to any census or enumeration.

I'm no expert on the history of the US tax code, but I think that pretty much means the government is going to figure out a way to tax you no matter what. Before the sixteenth amendment there were questions about weather or not an income tax was constitutional. Due to not so unique feelings that the rich were consolidating too much power, the southern and western states ganged up on the north east to pass progressive income taxes.

The question is, what does the federal government do with that money? In comparison, what were the "rich" going to do with that money? The rich typically invest their money in companies, save their money which greatly increases the money supply in an economy, they may hire some people to do things which is always good, or they donate to a charity of their choosing.

The government on the other hand will typically fritter away other people's money in a way that is unaccountable, inefficient, unfair, and will usually have unintended consequences... For example

When the government goes around handing out pell grants and cheap student loans, its good for everyone right? Students get money for tuition and books and ipods, get their education, then go along paying back all that money and become good contributing members of society right? Not so much..

Colleges and Universities are in effect given a price target on tuition. Students are given the money at next to no effort on their own, they generally don't give enough thought to the fact that they are paying $599 per credit hour and the community college down the road is charging $50. In addition, more students are committing a lot of other people's money on degrees that are not really worth it. Sure art history is fun, but is it worth while to go $50,000 in debt for a degree in it? Of course it is when it's not your $50,000.

Private individuals and charities can spot problems like this and target their resources accordingly, doing so in the government is not so easy. And no, I'm not totally ignorant, of course the rich and corporations do illegal and unethical things some times. And of course they should be punished for those things, but forcing them to hand all of their money over to the government is not the answer.