Getting the Ideology Out of Tax Policy Debates
By Alan Stewart Carl | Related entries in 2008 Election, Barack, Bush, TaxesAfter reading this anti-Republican rant from David Sirota, I’m going to make a bold suggestion: can we stop talking about which class is stealing which other class’ money and start addressing our tax code without the ideological blinders on?
Sirota makes the typical and typically contorted argument that the Republicans have let the rich steal from the middle class. This requires some sleight-of-hand number crunching that “proves†middle-class Americans suffer under a higher tax burden. Even if that was 100% true, the rich aren’t stealing money from the rest of us. They are simply holding onto greater percentages of what they’ve earned. Unless you believe being wealthy is inherently immoral, you can’t call a successful man a thief for wanting to hold on to his own income.
Sirota’s class warfare rant is, of course, in response to the Republican class warfare rants about Barack Obama being a socialist who will steal your money and give it to those who are earning less. While it’s true that Obama’s tax plan does involve some minor wealth-redistribution trickery, it is not some twisted scheme designed to sap America’s prosperity and turn us into the second coming of the Soviet Union. It’s a mainstream Democratic tax policy that, if the polls are to be believed, is acceptable to around half the nation.
Both sides are getting overheated and are in danger of missing the point. At the end of the day, a tax policy should do two things. 1) collect enough revenue to pay the government’s bills. And 2) spread the burden fairly so that no one’s tax liability inhibits their ability to improve their life.
That’s it. You can bring all the ideology you want to the equation, but I think that tends to make the issue harder to address and the real problems harder to solve.
So I ask of the middle class: do the taxes you pay under Bush inhibit your ability to improve your life? Are you giving so much back to the government that you are left with no money to invest and no money to spend on bettering your competitive edge (via schooling, relocation, job training, etc.)? And mind you, it doesn’t count if you decide to spend your money on a plasma TV or a trip to Las Vegas rather than investing in a class at the local community college. If your answer is an unqualified yes, then I’d suggest we need to look at ways to alleviate the tax burden. If your answer is no, then stop being jealous of the wealthy.
Now, let’s ask the wealthy: is there anything in Obama’s tax policy that would inhibit you from investing in your future or would realistically burden your ability to better your competitive edge or improve your career/business? It doesn’t count if the slightly higher taxes merely cause you to fly business class instead of first class. If the answer is yes, then, by all means, oppose Obama’s plan and, if he’s elected, push him to revise that plan so it is not unnecessarily burdensome. If the answer is no, then suck it up.
This is America. There is more than enough wealth for anyone committed to earning it. But no one wins when we start accusing each other of stealing wealth. Tax policy has become too infused with partisan ideology.
This entry was posted on Friday, October 24th, 2008 and is filed under 2008 Election, Barack, Bush, Taxes. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.
October 24th, 2008 at 12:27 pm
It’s only maybe “stealing” in the sense that the GOP for a few decades now have spent considerable amounts of energy selling the whole “trickle down” idea, where if we help the rich people get richer, they’ll spread that wealth down to all the people who work for them.
That hasn’t exactly happened, as is illustrated by the growth in average income rates for executives vs. employees. It’s not so much that the workers have been stolen from as much as they’ve been lied to.
And then along side of that, the Bush tax cuts seem really really irresponsible when viewed alongside the huge increases in spending that the government has gone through over the past 8 years. It just totally comes across as a gift to the rich, who were never hurting in the first place.
October 24th, 2008 at 1:15 pm
Read the fair tax book. This income tax is nothing but a vote purchasing, lobbyist infested morasse that engenders class warfare.
Ask yourself this: If we all pay the same taxes at the same time on the same thing, what will politicians have to turn to next?
-Social Security
-Medicare
-Defense
-Government spending
Everyone would favor lower taxes and people would actually have an incentive to build real wealth.
October 24th, 2008 at 1:15 pm
Its just a response to true stuff.
Who said anything about Obama having designs to sap America’s prosperity? Obama really believes you improve prosperity by using the power of government in order to force wealthy people to give wealth they have created to the less wealthy in the form of cash payments.
What you are saying, in other words, is while it is true that Obama favors a socialist income-redistribution scheme, he is not a socialist because he does not want to hurt people while doing it.
October 24th, 2008 at 1:37 pm
Alan, thanks a lot for your intelligent commentary on tax policy over the last week or so. You’re a rare, rare voice of clarity these days.
I think, not surprisingly, that nobody’s got it right. I think a progressive system is important — which means rolling back a lot of the regressive Bush-era reforms. On the other hand, I’m pretty nervous about overdoing it with “refundable” tax credits. I think, as you’ve written, that taxes should be for raising revenue.
October 24th, 2008 at 2:03 pm
Other than a moment of anger here and there, my point is never that the rich are stealing from the poor, or the middle class. Indeed, as someone in the upper middle class, I don’t complain that I am paying too much.
The people who have consistantly whined for the past 30 years they are paying too much are the RICH.
The problem is that the Rich are not paying their fair share, as three decades of tax policy have resulted in ever shrinking tax burdens and ever increasing benefits.
Meanwhile, the people who have been in charge of creating this pro-rich tax policy have also been in charge of obscene increases in federal spending. Oh sure, now that the GOP are seeing they are about to get hammered in the upcoming election they are all born again fiscal conservatives, but this is nonsense.
The GOP has been in loved with deficit spending for years now because it gives them an excuse to cut federal programs they don’t like (and yet they somehow seem quite comfortable deficit spending for programs they do like).
I am perfectly willing to pay what I am paying and even a little more if the government is willing to pay down the debt and put it’s fiscal house in order. It is the GOP that lives in the fantasy world of deficits don’t matter unless the Democrats are in charge. I also want the rich to start giving something back for all of the benefits they have and repaying for all the damage done in their interests.
That’s not progressive, that’s fair.
October 24th, 2008 at 2:06 pm
Bra-effing-o!
October 24th, 2008 at 8:21 pm
gerryf,
I’ve heard the “rich are not paying their fair share” argument, but it doesn’t hold up.
Below are the numbers from the Congressional Budget Office and the source:
http://www.cbo.gov/ftpdocs/57xx/doc5746/08-13-EffectiveFedTaxRates.pdf
2008 projections:
Top quintile of tax payers (20%) are responsible for 76.8% of the income tax liabilities. The average income for that top 20% is 183K. Perhaps you don’t mean the 200K group that has been the popular definition of rich. Perhaps you mean the top 5% earning on average 380K. They pay 49.9% of the tax liabilities.
So I’ve got to ask, if that isn’t enough, how much more should they be paying?
October 24th, 2008 at 9:07 pm
Alan, I absolutely agree that the rhetoric has gotten out of control on both sides. I even posted about it a few days ago.
However, I don’t agree that we should only consider whether we are being unduly burdened by the tax code. If I’m understanding your argument, if I’m not really suffering because of the taxes I’m paying, then I can’t say I should pay less. So if I’m a rich person that makes $3 million, the government can take a least 2.5 million of that, because honestly I wouldn’t really be suffering with a half a million. I could even still take first class (to use your example).
The point is that we need to consider what could have been done with that money, and we need to realize that how someone else is taxed affects all of us, not just that person (money is only worth something because of it’s ability to be exchanged). Even a marginal increase (from 36% to 39%) means a lot of money that could be used for other purposes–creating jobs, investing in businesses that create jobs, giving to charity, and yes, even buying goods and services (which helps support businesses that create jobs). So no, a rich person will not suffer if we increase their taxes. But I’m not worried about rich people. I’m worried about the economic impact that raising taxes on the rich might have on me and the rest of the non-rich.
So I don’t see how you anyone (even with ideology put aside) can say that raising taxes on the rich will help the economy. To Obama’s credit, he says he will delay his tax increase on the rich (which I take as an admission that his tax increase will hurt the economy), but I don’t see it as a good idea to raise taxes just as we are coming out of a recession either. And in the meantime, his tax credits would run up the deficit until he implements his tax increase of the rich, which means his tax policy would not meet your first requirement for tax policy–that it would balance the budget. (To be fair though, I don’t think McCain will be able to live up to his promise to balance the budget in 4 years).
October 25th, 2008 at 11:13 am
Jimmy,
Income tax redistribution is not socialism, government control of production and distribution of goods is socialism. Please see the second theory of welfare economics, which involves a lump-sum _redistribution_ tax. And note welfare economics is not the economics of welfare, but how to maximize the benefits of economics for everyone.
It is fine if you are against Obama’s tax plan, you should make an effort to understand the fundamental concepts of capitalism vs. socialism though.
Nice post Alan.
October 25th, 2008 at 1:05 pm
I would agree with that. I should have left a broader definition of “burdensome.” I don’t really want to get into spending (which is a WHOLE other problem), but I’d argue that if someone wants to take 75% of a millionaire’s income, they better be able to prove that what the governmet is going to spend that money on justifies nationalizing so much wealth. When a government controls too much of a nation’s spending, the economy loses its vitality and creative drive.