Americans Hate Taxes, Don't They?
Joseph J. Thorndike is a contributing editor with Tax Analysts. E-mail: firstname.lastname@example.org.
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Americans hate taxes. Right? Like most generalizations, this one has an element of truth: Polls and election results seem to confirm a widespread antipathy toward taxes. But Americans are not uniquely antitax. People in other countries dislike taxes, too. And Americans are not inherently antitax. At various points in our nation's history, we have accepted a growing tax burden as the price of a growing government.
But we can be forgiven if we tend to overlook this history of tax tolerance. For almost 40 years, American politics have been gripped by a sustained tax revolt. Or more precisely, by a sustained political dynamic fueled by antitax activism. Many of the most palpable effects have been felt at the local and state level -- hardly a surprise because subnational taxes were the original focus of grass-roots tax resistance in the 1970s. But antitax politics have been alive and well in Washington, too.
Indeed, since the early 1990s, antitax politics have had quite a run, unchecked by even the lip service once proffered to the notion of fiscal responsibility. Since the mid-1990s, Republican leaders -- in Congress and in the White House -- have blithely ignored the long-term implications of their big-spending, low-taxing agenda.
For various reasons, Democrats have been unwilling to join the party. While not exactly pro-tax, they have been at least tax-tolerant. Maybe that's because the nation's biggest fiscal problem -- the soaring cost of healthcare -- threatens a key Democratic priority: Medicare. If progressives want to preserve this cornerstone of the modern welfare state, they will eventually have to find a way to pay for it (or for whatever version of nationalized healthcare/insurance that replaces it).
But first, Democrats must find a way to challenge the antitax politics that have powered the GOP ascendancy of the late 20th century. If Democrats hope to cement their recent electoral gains -- and build a durable majority that supports a progressive agenda, rather than one that simply opposes a regressive one - - then they need to make an affirmative case for government. And the taxes that pay for it.
A recent essay collection, 10 Excellent Reasons Not to Hate Taxes (The New Press, 2008), tries to assemble exactly that case. The book, edited by Stephanie Greenwood and with an introduction by Tax Notes columnist David Cay Johnston, includes short contributions from a range of liberal thinkers, all trying to link political debates over taxation to larger arguments over the role and importance of government. In other words, these writers take seriously the old saw about taxes and the price of civilization.
Many of the essays, including some of the most compelling, seem designed to make the case for adequate tax revenue, whatever its source. For instance, an essay by several staffers at Demos, a New York City think tank, argues for public funding of political campaigns and increased support for election administration, including voting technology. Worthy reforms, to be sure, and crucial for a flourishing democracy. But both could be paid for with any number of regressive taxes. The essay is really a call for more taxation, not progressive taxation.
In fact, it's apparent that many contributors to this collection understand the notion of "progressive" tax reform to mean "liberal" tax reform. To be sure, all of the contributors seem to endorse, at least implicitly, the notion that taxes should be levied according to the individual's ability to pay. But many seem more interested in using the tax system to achieve a variety of social goals -- broader access to high-quality education, for instance, or sweeping reductions in greenhouse gas emissions.
Several essays in the collection, however, specifically address the need for progressive tax reform. Mathew Gardner, state tax policy director for the Institute on Taxation and Economic Policy, outlines the importance of personal and corporate income taxes to the overall progressivity of the federal tax system. Chuck Collins of the Institute for Policy Studies offers a rousing defense of the federal estate tax, both as a matter of equity and as an element of societal well-being.
One of the best essays comes from Susan Pace Hamill, a law professor at the University of Alabama. She offers a well-honed moral argument, drawing on a variety of texts, teachings, and religious traditions to argue that progressive taxes are a moral imperative.
But Hamill is less convincing when she tries to explain why taxpayers sometimes resist progressive tax reform. In 2003, for instance, Alabama voters rejected a sweeping plan to make the state's tax system more progressive. How to explain the defeat? "Perhaps racked with anger and emotion, and without the ability to distinguish the lies and distortions of the opposition from the truth, the very people who would have been helped the most by this plan voted against it," she suggests. "Alabama's immoral tax policy has rendered many of our people unable to improve their own situation using the tools of democracy."
Liberals need to be careful with this sort of argument. To begin with, it's condescending, casting voters in the role of gullible dupes. But even more troubling, it fails to take seriously the appeal of arguments against progressive tax reform -- or against any sort of tax reform at all. If liberals want to mount a challenge to antitax politics, they need to understand and engage that appeal, not simply write it off as some sort of tragic mistake.
It's true, many Alabama voters ignored their economic self-interest when they voted against the reform plan. But why shouldn't they? Hamill wants rich voters to ignore their self-interest, after all, and she offers a variety of moral and ethical arguments to win them over. Shouldn't poor voters have the same freedom to transcend economic self-interest when pulling the lever in the voting booth?
Of course, maybe poor voters are being duped. Certainly, misinformation and misdirection run rampant in most tax policy debates. But that doesn't mean that antitax arguments are simply nonsensical, unworthy of serious consideration. If the past 40 years have made anything clear, it's that the politics of tax resistance are real and powerful. Liberals won't make their case by dismissing them -- or the voters who occasionally embrace them.