Wednesday, December 1, 2010

What matters? The way we manage our lives together, part 2

While I am on the subject of what I think should matter in politics, I also oppose extending the Bush tax cuts. I agree with Pres. Obama on this and so favor extending the tax cuts for middle income people, but not for the very rich. Like many who favor such an extension, I think extending the cuts all the way up to those making $200,000 is too high. Dropping it down to somewhere around $100,000 seems more reasonable to me. It seems to me, especially given the Republican insistence on extending all the Bush-era cuts, that this is an issue the Democrats can seize upon and return, at least on one issue for one fleeting moment, to their proud roots of looking out for regular people- the kind of Democratic leaders revered in my house when I was growing up.

My reason for opposing the extension is two-fold. My first reason is the politico-philosophical reason of favoring less regressive taxation, which serves the common good and rejects such rationales as those employed today by Sen. McConnell, the Republican leader in the Senate, who insists, that “[w]e ought to treat all taxpayers the same.” Don’t get me wrong, I am not in favor of punishing people for being successful, but this is not what a fair tax policy does. Rather, it seeks the common good, which is not a mass redistribution of income, but a way of living together in a society that recognizes, at least to some extent, that I am my brother’s keeper, a society that, while recognizing the need for a social safety-net, must always safeguard against the tendency to foster dependence.


My second reason for opposing the extension of all the cuts, which the Democrats are only considering because they think doing so will do what their massive non-stimulating stimulus failed to do, namely stimulate the economy, is that giving tax cuts to the uber-rich does not have a stimulus effect, like giving cuts to middle income people does. Extending the cuts up to $200,000 a year, or $250,000 a year, would also result in the loss of $700 billion in revenue. I agree with Pres. Obama when he says it would “be unwise and unfair, particularly at a time when we're contemplating deep budget cuts that require broad sacrifice” to extend the cuts up that far. George H.W. Bush was quite correct to describe supply-side economic theory as “Voo-doo economics” while running against Ronald Reagan for the Republican nomination way back in 1980, which is not to say that a strong vibrant economy doesn’t produce more revenue at lower tax rates, it obviously does, but Arthur Laffer’s prognostications ultimately proved illusory. Besides, extending the tax cuts across-the-board, even to those making more than $200,000 per year, as the Republicans, who remain, even after the Tea Party uprising, the party of the very rich, will deprive us of revenue we’ll need to dig out of the hole we’re in, even with massive spending cuts, which are also needed.

It is in mentioning tax increases and spending cuts that complexity comes into play again. It is not either/or but both/and. The question becomes arriving at a mutually agreeable solution, which means compromise on both sides, something that implies nobody gets everything they want. Holding your breath until get everything you want, in addition to being infantile, is precisely what reduces our politics to net loss/net gain. In this era marked not only by ideology, but overly-simplistic ideology, we should all lament the collapse of the political center, those leaders capable of brokering compromise. Here in Utah the best example of this kind of leader, Sen. Bennett, was denied re-election for being, not a liberal, not even for failing to be a conservative, but for refusing to buy into the very narrow vision of politics now sweeping the country.

Maranatha

2 comments:

  1. I think a VERY strong case is already made that the common good is already served. We certainly should not treat all tax-payers the same. We don’t right now.
    According to the CBO, the highest quintile of income earners pay a bit over 80% of the total income taxes collected.

    http://www.heritage.org/research/reports/2009/05/the-rich-pay-more-taxes-top-20-percent-pay-record-share-of-income-taxes

    IMO, America already has a taxation system which recognizes that the rich are their brother’s keeper.

    Anecdotally, I have a friend who has a small business, employs less than 15 people, and files his business along with his personal taxes. He is struggling middle class as are many people, except that his reported income seems high, but this is not actual profit that he has.

    The “uber-rich” are really not those who are making 200,000. In more realistic terms, if that cut-off were placed somewhere in the 750k-1mil range, we would better serve the middle class.

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  2. Dan:
    Your friend’s situation certainly sounds complicated, which is not uncommon in our far too complex tax system, which is desperately in need of being simplified. Add tax reform to Social Security and Medicare reform. While I do not favor an outright flat-tax, I would be okay with flatter tax rates under a simplified tax code.

    On my reading and even that of former Reagan OMB director David Stockman, the numbers do not support extending the cuts all the way up to $200,000, let alone to $750,000. Part of the economic success achieved by Bill Clinton, engineered largely by Gene Sperling, is by targeting tax cuts to where they do the most good. It is precisely this kind of economic pragmatism we need to revive. I am not hard over on a set figure, as long as it does amount to regressive taxation.

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