Glenden BrownThe Focus on Taxes Distorts American Politics
I have a relative who ran a successful small business for many years. At one point, this relative was struggling in the business and asked me what I thought should/could be done. After a couple hours of talking, I said, “You know, you keep saying ‘This is tax deductible’, and ‘That saves me money on my taxes’ but you haven’t said what would increase your business.” It was a watershed moment. My relative decided to give it a try and for six months didn’t worry about taxes - instead focusing on increasing business. It worked.
The focus on tax policy in US politics is the same problem. It distracts us from focusing on core issues, on real public policy and instead reduces everything to a matter of who is paying how much and pretends that no matter what your income, taxes are problematic. This leads us to discussions of such regressive policies as the flat tax. The idea that the wealthy should pay more is grounded in the notion that the wealthy have benefitted more from living in our society than have others.
Since at least Ronald Reagan, American politics has had an obsessive, never-ending, distracting discussion, about taxes and tax rates. Driven by the conservative obsession with cutting taxes at any given time, and using tax policy to force social change (school vouchers are nothing more than an ass backwards attempt to force public schools to change through tax cuts for rich people). Rumor has it the Shrub is going to propose a hideously complex and DOA plan to expand health care through (you guessed it) changes in taxation. The focus on taxes misplaces our attention and distracts us from the essentials of any public policy debate.
Focus on tax policy distorts the discussion about public policy in general. If - and this seems true - a majority of Americans want universal health care, then that concern should drive the tax policy. Conservatives assume that taxes are problematic, too high and inherently burdensome and from that stance attack any and all public policy changes as too expensive, too burdensome and inherently bad. Discussion of public policy begins with a fight over taxes. This fight over taxes creates a toxic atmosphere in which the substance of the policy is ignored and downplayed.
As an example:  Americans who have health insurance/care through their employer programs pay a personal premium out of each paycheck. Their employers also pay a portion of the premium. If both parties could pay less by having a universal, single payer system then they would opt to do so. It would mean a tax increase, yes, but a corresponding decrease in health care premiums. It’s a good situation. Except that a sizable portion of the American political establishment fights tooth and nail against any and all tax increases - even those that would benefit pretty much everyone. IOW, the policy favored by a majority, benefitting everyone, can’t get off the ground because of the distortions caused by opposition to taxation.
Opposition to taxes is rooted in the demonstrably false notion that only private industry is efficient and the free market provides egalitarian solutions to problems. Free market conservatives love to argue that without government, the free market will solve all our problems, but since that has yet to happen in history at any time or any place, I think it’s safe to say it’s not going to magically tomorrow. The free market argument also assumes the playing field is level - that as a consumer I can simply walk out the door of one business, go to their competitor and get a better deal. But individual consumers are massively disadvantaged compared to, for instance, health insurance companies. Insurance companies have resisted reforms that would allow individuals to gather together to purchase insurance as a group. In other words, the deck is stacked to punish individual consumers. The other assumption, that government is inherently inefficient, is demonstrably untrue - at least it was until Bush and his cronies went on their incompetency rampage through the Government; see the VA. I find the argument most flawed, however, in its assumption that only the profit motive creates efficient in organizations. Organizations can function incredibly efficiently if it is an intentional part of their insitutional culture - and that culture is created by good leadership no matter if the organization is a for profit or not for profit entity. Besides, our business world is rife with examples of unbelievably inefficient organizations - see GM for an example.Â
Government has one reliable source of revenue - taxes. As voters and citizens we have the right and the responsibility to demand that government use those tax dollars efficiently, effectively and in accord with the will of the people - what Bill Scher calls responsible, responsive and representative government.
January 23rd, 2007 at 12:26 pm
One thing Ronald Reagan did right was move things in the direction of tax simplification and fairness. Both are important, but having a simple, understandable system of taxation comes first because it becomes easier to see what’s fair and unfair. Too bad the Reagan-era tax reforms were later buried in an avalanche of special-interest legislation.
There is a story that Reagan came around when David Stockman showed the president a list of some of America’s biggest companies (including GE, for which Reagan had once been a spokesman) and told him that none of them had paid any federal taxes for years.
January 23rd, 2007 at 2:05 pm
Richard - one of the frustrations with Democrats in the 80s was their willingness to let Reagan get away with pretending his tax reform was anything other than tax increases. I still remember my parents talking about how the ‘86 reform would close a bunch of loopholes they had been taking advantage of. I once read that between 1983 and 1988 Ronald Reagan supported six sizable tax increases but marketed them successfully as “reform to close loopholes.”
I agree that a simpler, easier to understand system is important - it helps people know that they are being treated fairly and that someone wealthier isn’t finding a way to get out of paying taxes.
January 24th, 2007 at 4:06 pm
Glenden,
You said:
“Focus on tax policy distorts the discussion about public policy in general. If - and this seems true - a majority of Americans want universal health care, then that concern should drive the tax policy.”
It is an interesting dilemma. You may be right that a majority of Americans want universal health care but I’ll bet in nearly every poll a majority of American’s who pay taxes wouldn’t want the substantial tax increases which would be required to pay for it…even if they knew their insurance rates would come down or disappear.
There is a substantial amount of ambivalance in America to the idea that the best way to pay for what a majority of the people consider a public good is to forcefully take funds from everyone. It doesn’t mesh with what we consider fair. Most Americans describe themselves as supporters of small government because they understand the violence inherent in government taxation of citizens.
We should be arguing for even greater care and open discussion about the use of government funds instead of encouraging a more cavalier attitude on the part of those responsible for spending the tax dollars taken at gun point from our nation’s productive citizens both rich and poor.