Progressive Taxation

[one...two...tree 2,762]

At this time of year it seems there are only two things certain in life, taxes and anxiety about taxes. Instead of the perennial talk of a simplified tax form, how about a simplified understanding of the progressive values that underlie our tradition of progressive taxation?

Such an understanding won't move the tax deadline. But it might eliminate some of the anxiety. Understanding the hidden truths behind progressive taxation might also lead to more coherent -- and more just -- tax policies.

Progressive taxation -- taxing the wealthy at higher rates than the poor -- is a moral issue. Like many moral issues, it sparks heated debate. The debate is borne of conflicting worldviews, values, and understandings of values. But as we at the Rockridge Institute have written, when progressives understand the values and ideas that underlie their positions on issues, they can articulate arguments authentically and with greater persuasive force. These arguments will appeal to those whom we call biconceptuals -- the great majority of Americans whose worldviews borrow in various ways from both progressive and conservative values.

America's government has at least two fundamental functions, protection and empowerment. Protection includes the police, firefighters, emergency services, public health, the military, and so on. Empowerment includes the infrastructure needed for business and everyday life: roads, communications systems, water supplies, public education, the banking system for loans and economic stability, the SEC for the stock market, the courts for enforcing contracts, air traffic control, support for basic science, our national parks and public buildings, and more. We are usually aware of protection. But the empowerment infrastructure, provided by taxes, is usually taken for granted, hidden, or ignored. Yet it is absolutely crucial, a fundamental truth about America and why America provides opportunity.

This is a basic truth. That is what framing should be about: revealing truths and allowing us to reason using them.

Taxes are part of our common wealth, what we all share. Protection and empowerment serve the common good. Because of our common wealth, we are all protected and America's empowering infrastructure is available to all. That is a fundamental America value: the common wealth should serve the common good. It benefits everyone.

Citizens are financially responsible to maintain this common wealth. If we shirked this responsibility, we could not maintain our roads, fund our schools, protect ourselves from military threats, enforce our laws, and so on. Equally importantly, we could not create prosperity for ourselves, because we would have no protection of our intellectual property, no oversight of our markets, no means to enforce our contracts, no way to educate most of our children.

Several main progressive values support the idea of progressive taxation. One is the belief that the common wealth should be used for the common good. Another is responsibility, the responsibility that citizens have to pay for the benefits we receive from our common wealth. And still another is fairness. These values intertwine on the question of progressive taxation.

Few people dispute this responsibility at some level. Disagreements generally arise over the amount and the relative apportionment of the responsibility. Differing concepts of fairness drive this debate. While many progressives say it is only fair that those who earn more pay a higher percentage of their earnings as taxes compared to those who have difficulty making ends meet, conservatives respond by asserting that it is unfair to "punish" the financially successful by making them pay more.

An important point often lost in this debate is an appreciation that the common wealth, which our taxes create and sustain, empowers the wealthy in myriad ways to create their wealth. We call this compound empowerment -- the compounded use of the common wealth by corporations, their investors, and other wealthy individuals.

Consider Bill Gates. He started Microsoft as a college dropout and has become the world's richest person. Though he has undoubtedly benefited from his unusual intelligence and business acumen, he could not have created or sustained his personal wealth without the common wealth. The legal system protected Microsoft's intellectual property and contracts. The tax-supported financial infrastructure enabled him to access capital markets and trade his stock in a market in which investors have confidence. He built his company with many employees educated in public schools and universities. Tax-funded research helped develop computer science and the internet. Trade laws negotiated and enforced by the government protect his ability to sell his products abroad. These are but a few of the ways in which Mr. Gates' accumulation of wealth was empowered by the common wealth and by taxation.

As Warren Buffet famously observed, he likely couldn't have achieved his financial success had he been born in Bangladesh instead of the United States, because Bangladesh had no banking system and no stock market.

Ordinary people just drive on the highways; corporations send fleets of trucks. Ordinary people may get a bank loan for their mortgage; corporations borrow money to buy whole companies. Ordinary people rarely use the courts; most of the courts are used for corporate law and contract disputes. Corporations and their investors -- those who have accumulated enough money beyond basic needs so they can invest -- make much more use, compound use, of the empowering infrastructure provided by everybody's tax money.

The wealthy have made greater use of the common good -- they have been empowered by it in creating their wealth -- and thus they have a greater moral obligation to sustain it. They are merely paying their debt to society in arrears and investing in future empowerment.

This is the fundamental truth that motivates progressive taxation.

It is a truth that undercuts conservative arguments about taxation. Taxes provide and maintain the protecting and empowering infrastructure that makes our income possible.

Our tax forms hide this truth. They do not indicate the extent to which taxes have created and sustained the common wealth so you could earn what you have. They make it look like the empowering infrastructure was just put there by magic and that the government is taking money out of your pocket. The most likely truth is that, through the common wealth, America put more money in your pocket than it took out -- by far.

But this situation is threatened by conservative tax policy. Through unfair cuts in taxes paid by the wealthy, through payment for the invasion and occupation of Iraq, and through borrowing abroad to pay for the tax cuts and Iraq, the common wealth is being drained and the infrastructure allowed to fall apart. We need to return to a fair tax policy that recognizes financial responsibility incurred by the compound use of America's empowering infrastructure.

George Lakoff is the author of Don't Think of an Elephant: Know Your Values and Frame the Debate' (Chelsea Green). He is Professor of Linguistics at the University of California at Berkeley and a Senior Fellow of the Rockridge Institute.

[mawilson 2,133]

Kind of a moot point, since we already have progressive taxation and it's not going away.

[beameup 0]

Really, where do you get this ######?

[Hilarious Clinton 452]

How about a flat tax and treat everyone the same.

[almaty 19]

tax the rich is indeed a good way .................instead of letting them hire high palced tax lawyers to hide behind gop driven tax laws.....

while the middle class supports all

[homesick_american 1]

How about a flat tax and treat everyone the same.

Because a flat tax is regressive and the poor would be particularly hard-hit. The average wage earner in the US would see their tax bill skyrocket. Pardon the language, but #### flat tax. It's total carp.

[Hilarious Clinton 452]

How about a flat tax and treat everyone the same.

Because a flat tax is regressive and the poor would be particularly hard-hit. The average wage earner in the US would see their tax bill skyrocket. Pardon the language, but #### flat tax. It's total carp.

I disagree. Right now the wealthiest use many loopholes to avoid paying taxes. At 10% of my GROSS earnings I would pay less than I do under the current progressive system.

-------------------------

Flat tax

Family-Friendly. All flat tax proposals have one “loophole.” Households receive a generous exemp­tion based on family size. For instance, a family of four would not begin to pay tax until its annual income reached more than $30,000.[6]

http://www.heritage.org/Research/Taxes/bg1866.cfm

[GaryC 7]

tax the rich is indeed a good way .................instead of letting them hire high palced tax lawyers to hide behind gop driven tax laws.....

while the middle class supports all

Not true. The top 10% of wage earners pay 65% of the taxes. They are already taxed more than anyone else. But class envy says we should tax them more. Go figure.

http://www.irs.gov/pub/irs-soi/04in06tr.xls

[Hilarious Clinton 452]

tax the rich is indeed a good way .................instead of letting them hire high palced tax lawyers to hide behind gop driven tax laws.....

while the middle class supports all

Not true. The top 10% of wage earners pay 65% of the taxes. They are already taxed more than anyone else. But class envy says we should tax them more. Go figure.

http://www.irs.gov/pub/irs-soi/04in06tr.xls

Another inconvenient truth? The left wants the richest 10% to pay 100% of the taxes I guess.

[Heracles 417]

How about taxing illegal immigrants for a change..

It is also a good idea to tax anyone without proper work authorization the highest tax rate. This way they can work as long as they like but will have to pay the highest tax rate as a penalty..

[Mr. Big Dog 10,747]

How about a flat tax and treat everyone the same.

I like it. One flat rate on every dollar earned. No exception, no loophole, no excuse. No other taxes.

Won't happen. Wanna know why? 'Cause the ones making the laws and writing the codes (those ain't your lower income folk, btw) won't let that happen. They (the wealthy and mighty) fare better as it is.

[GaryC 7]

How about a flat tax and treat everyone the same.

I like it. One flat rate on every dollar earned. No exception, no loophole, no excuse. No other taxes.

Won't happen. Wanna know why? 'Cause the ones making the laws and writing the codes (those ain't your lower income folk, btw) won't let that happen. They (the wealthy and mighty) fare better as it is.

I would vote for anyone that would support a flat tax. It sounds like the best way to go. No loopholes, no deductions and no shelters. You earn a buck and you pay the persentage. That way the ones that make more pay more and the ones that make less pay less. But everyone pays something.

[Scott & Lai 12]

tax the rich is indeed a good way .................instead of letting them hire high palced tax lawyers to hide behind gop driven tax laws.....

while the middle class supports all

Not true. The top 10% of wage earners pay 65% of the taxes. They are already taxed more than anyone else. But class envy says we should tax them more. Go figure.

http://www.irs.gov/pub/irs-soi/04in06tr.xls

Now, now, Gary, don't confuse people with facts

[KansasDragon 1]

Maybe everybody should buy a copy of the Fair Tax book.

It provides a reasonable way to keep tax burden low on those who do not have a good income, and the consumption based sales tax taxes the wealthy at a greater degree, since they consume far more.

It's a very interesting book that covers all the bases of keeping taxes virtually zero on low income individuals.

The Fair Tax Proposal was created by a group of Professors, and Economists who were commissioned to do a study to find a new simpler tax form, that would promote economic growth, with a zero effect on tax revenues.

It would be a really great way to change from an income based tax filled with thousands of loopholes and problems, to a easy to understand, straight forward sales tax.

[mawilson 2,133]

I disagree. Right now the wealthiest use many loopholes to avoid paying taxes. At 10% of my GROSS earnings I would pay less than I do under the current progressive system.

What are these loopholes that everyone keeps talking about?

I'm in the 33% Federal tax bracket and if there is a loophole I can use, I'd definitely like to know.