The Income Tax Conspiracy
In politics, it is useful to toss a pithy slogan to one's partisans like a bone to a junkyard dog. The beauty of slogans is that they tell us what to think before we decide for ourselves. In dispensing with the bothersome chore of thought, they make it easy for us to memorize sound-bytes from the evening news and feel like political sophisticates. Sen. Tom Daschle (D-SD) and his pals know this trick well. No sooner did President George W. Bush conclude his fine speech last Tuesday than the Democrats tossed us a meaty slogan from their political banquet: The Bush tax-cut plan is unfairly biased towards the wealthy. Sound familiar? It should; we have been sucking the marrow out of it for nearly a week now.
But the problem with swallowing these political bones is that if we don't pause to reflect, we might end up choking. There seems to be a tacit agreement between both parties that if the Bush plan really does target benefits to the rich, it must be rejected. Republican responses instead focus on denying the Democrats' slogan and telling us how good their tax-cut will be for middle-class families. Bush himself anticipated the Democrats' slogan and used last week's speech to shrewdly showcase the middle-class family of Steven and Josefina Ramos. And Bush is, of course, correct: His plan gives a well-deserved break to families like the Ramos'.
But that's only half the story, and even the staunchest Republicans aren't giving us the other half. The greatest virtue of Bush's tax cut is precisely that most of its benefits do go to the wealthy. For years, people in the top tax brackets have had to contend with a system that is unfairly biased against them. They deserve everything President Bush is offering them, and much more.
No one since former President Ronald W. Reagan has had the courage to openly make this argument the centerpiece of an economic agenda. It doesn't sit well with our egalitarian sensibilities. But it's true: those citizens whose incomes place them above the lowest marginal tax bracket are doubly penalized. First, they pay a greater amount than low-income Americans simply because they earn more money. This disparity would be true even under a flat tax. But we do not have a flat tax, and therein lies the second penalty. The financially fortunate pay a higher percentage on each dollar above the lowest bracket, topping at a plunderous 39.6 percent.
This argument probably seems a restatement of the obvious, which raises another important point. We have had a progressive income tax for so long that we accept it as a given. Here's the thinking behind our current income-tax system: the rich can afford to pay more than the poor, and since we need to finance our endless array of spending programs, we may as well take the rich for all they're worth. But universally accepted or not, it's a mistake not to ask whether this thinking is right. Yes, the wealthy can pay more than the poor. Any equally-applied tax system will require them to do so, and that's fair enough. But what justifies us in going further? What gives us the right to say that, because some people are good at making money, they ought to be penalized for it? Imagine such logic applied to academics. Some people aren't as bright as others against whom they compete. We should therefore make the academically gifted do some of the disadvantaged students' homework. Would you want to take such a class? Harvey C. Mansfield probably wouldn't be the only one complaining.
Regardless, the debate about President Bush's tax plan will continue along its current lines. Republicans won't voice the real issue, and they don't need to, because the tax cut will pass anyway. Even so, we should pause and consider the force of the ideological argument underlying Bush's plan. In the meantime, since everyone is in the business of coining slogans, let me offer one of my own: Stop taxing people for being good at what they do.