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No representation without taxation
Amity Shlaes
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TEXT OF COMMENTARY
Kai Ryssdal: Those famed secret Swiss bank accounts are going to be getting a little less secret. The Swiss finance minister said today he's going to loosen up secrecy laws to keep Switzerland off a European black list of tax havens.
Back here at home it's not tax havens so much that politicians are worried about, it's tax increases. President Obama's going to have to deal with criticism from both sides of the aisle in Congress as he works out his budget plan for next year. Commentator Amity Shlaes says the discussion can't forget the lower ends of the tax charts.
Amity Shlaes: Taxation without representation. That's what our nation's founders rebelled against. Subjects in the colonies were sending money home to the crown without getting say in their own government. The course of U.S. history can be seen as progress by those who are taxed to get representation. Think of women with the 19th Amendment.
Along the way we began to pay out money to groups that paid no income tax at all. There's Medicare, of course, for senior citizens, even if they never worked; welfare for the poor and struggling, at least through the 90s. And, more recently, there's the earned income tax credit, a break for low income workers. The credit was designed to make people want to work and to offset their heavy pension payments for Social Security. The result of expanding it, however, is that many people who work don't pay income tax. Instead, they get money back.
Do we want to help weaker citizens, especially in downturns? Totally. In fact, both parties have plans that relieve yet more taxpayers of their burden. Republicans like payroll tax holidays. And the Obama administration is zeroing out the income tax obligations of yet more citizens.
But a tipping point does come when too many are paying out and too few are paying in. Maybe that tipping point is now. Today, households in the bottom half of earners pay only 4 percent of the income taxes. One tiny group, the top 1 percent, pays close to 40 percent.
This can slow the economic recovery we're waiting for. Top earners won't want to keep producing if their burden gets much heavier. But the more important problem is a problem of civics. All presidents talk about the need for community. We strengthen that sense of community when everyone has to pay some taxes. Like jury duty, paying taxes reminds you that you are part of something; it reminds you of what you owe, not just what's owed to you.
The mood of the skeptics today is just the reverse of the mood at the Boston Tea Party. Then, we said no taxation without representation. Today, try flipping that line: No representation without taxation.
Kai Ryssdal: Amity Shlaes is a senior fellow at the Council on Foreign Relations.
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Ronald Reagan had a great explanation for his theory of trickle down economics. As Lawrence points out, during the 50's, when Reagan was an actor, the top marginal rate was 91%. Reagan figured he could make 2 movies a year, working approximately 8 months, and take the rest of the year off to sit on the beach.
After all, why should he work those 4 months for only nine cents of every dollar earned?
But what he discovered is that while he could afford to lie on the beach or enjoy his ranch, the people also employed by the movie industry, the grips and set builders, etc. didn't have the luxury of a high income that allowed them to take those four months off as well. They had to find other work, lower paying to get by until the high earners got back to making movies.
It makes perfect sense to tax productive people who drive the economic engine at a lower rate to keep them motivated to keep working, therefore keeping all the other people dependent on them for their jobs working as well. This is why we've had decades of prosperity since Reagan's "war on the middle class."
It is hard work to own a business, with no small amount of risk. While you all are arguing over "fat cats" on Wall Street, you have to remember that truly rich people like Teresa Heinz Kerry only pays about 12% of her $5mil. annual salary, while people making between $250,000 and $500,000 (many small business owners) pay around 40%.
A flat tax would help with that disparity and would motivate risk takers (ie. business owners) to take greater risks which would help with employment numbers. But that will never happen because politicians don't want to give up the power that progressive taxation gives them and Democrats in politically powerful positions don't appear to pay their taxes anyway, so why do they care about tax rates?
We need to take all the 401k, Roth, IRA money the rich have because that is where the money is at. The poor are not poor because they did not care about education, because they did not plan for a future, because they were content to underachieve, because they rested on government hand-outs. they are poor because the government under Bush refused to take the money the rich had and give it to poor. It was so unfair. We should take all the money and businesses the rich have and give to the gov't to spend wisely. We should then take the ex-rich and send them overseas or have them work cleaning houses or cutting grass for the poor. See how they like it.
I have surveyed the comments and am surprised that no one seemed to notice that this is not really an argument about tax equity but the beginning argument about the end of democracy. If the common worker were paid real wages that met his or her needs, they would gladly pay taxes. But too many workers have not been making it, working forty hour weeks and still not having the money to keep their families. Thus the tremendous run up in mortgage and consumer credit debt, which has for thirty years delayed the reckoning we are currently facing. Because Ms. Shlaes does not face the problem of stagnant wages, she does not see the re-imposition of the medieval nobles-oblige. When the peasants face a moneyed and landed aristocacy, where else can society turn for its common necessities?
I too am amazed at how completely off point many of the commenters are. When not indulging in the left favorite past time (throwing ad hominems at those with whom they disagree) they see no problem with a voting majority paying little or no taxes while the voting minority pays them all.
Here is an idea. How about we weight the votes by taxes paid. Then, those who pay 40% of the taxes will have 40% of the votes. That seems just as fair as the current system and we know the left is all about fairness.
Rick
How about taking a break from the class warfare rhetoric for a minute and ask ourselves whether the U.S. Constitution lays out a vision of a federal government so huge and all-consuming that it is necessarily empowered to confiscate 50, 60, 70, 80, or 90 percent of a person's income, regardless of what that income is.
Guess what, folks, the 800-lb gorilla in the room is not Wal-Mart but Washington.
Willie Sutton robbed banks because "that's there the money is." For the exact same reason, we find locust-hordes of lobbyists in Washington -- because that's where the money is. The trillions upon trillions in tax revenue flowing into D.C. is the source of the problem, because (1) it removes the locus of political responsiveness from city and regional levels, where average people have a chance of more access and proportionate influence, to Washington, where only the extremely well-funded and slickly organized can afford to set up shop and lobby for their agenda, (2) it enables corrupt practices like the earmarking- for-campaign-contributions quid pro quo that is the lifeblood of Congress' daily way of doing business, and (3) it grows the federal government to a size and power which the Constitution never intended, and in fact expressly comes out against (Ninth Amendment, anyone?).
I'm not here to defend the richest of the rich. Frankly they don't need my help. I argue the way I do not because I think that empowering the government to take from the rich hurts the rich, but because I think empowering the government to take from the rich gives government the power to take from EVERYONE. And that kind of society becomes a blatant spoils system. If you think the rich are going to be the ones to lose badly under those circumstances, you are a terrible fool.
Is it all the rage to talk about fiscal responsibility and not keep in mind the moral and ethical obligation a society has to low-income families. This story completely missed the fact the EITC lifts more children out of poverty than any other federal government program. This discussion should have commented on tax brackets and included an analysis of how low-income families might be better served if their income was taxed at a lower rate.
It's amazing to me how many of the comments here completely miss Ms. Shlaes' point. Well, no it doesn't really, given the forum. Anyway, points of social cohesion and economic recovery have nothing to do with being a "shill for the fatcats" or feeling sorry for the ultra-rich. It's a matter of equity BEFORE the law, and in the end, of practicality.
Mr. Parrish Knight addresses the actual topic at hand, but I believe that the 100K / 25K question ignores the reality of markets, because that isn't the choice. The real choice is that if you work very hard to earn 100K only to see an increasing amount disappear, you aren't going to switch to a 25K job... but you very well may work a lOT less, and earn 90K for your decreased effort. The loss in productivity is the marginal difference that can really harm an economy.
The problem with socialism is that you eventually run out of someone else's money.
I agree with Amity Shlaes totally. There's too many deadbeat ignoramouses running around looking for a handout. You wealth envy idiots are a pitiful bunch of losers. We need to repeal the Sixteenth Amendment to the United States Constitution & abolish income tax forever & replace it with the fair tax. Everyone including poor winy losers will have to pay their fair share.
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