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GIVING THE PEOPLE BACK THEIR OWN MONEY


Herman

One of today’s most

favored rightwing justifications of a massive tax reduction is the idea that

taxes are a form of government theft, which take from individuals the fruits of

their labor or rightful ownership, and without reasonable cause. As President

Bush put it, the surplus "is not the government’s money, it’s your money;" New

York Republican congressman Thomas Reynolds’s version is, "America,

this is your money and you know how to spend it best." Exceptions are made for

taxes to pay for the police and courts–that is, law and order and the

protection of property–national defense, which is protection of domestic

property from foreign threats, and the maintenance of global law and order–and

to a degree, public works and education. As rightwing ideology has spread more

widely and deeply, there has been growing debate over whether the market can’t

handle public works and schools as well or better than government, at least to

the extent of contracting out the work and school operations.

 

The idea that the

government has a responsibility toward people in distress, which peaked during

the Great Depression and its World War II aftermath, has also come into

increasing disrepute with the growing power of the market. The concept of a

"welfare state" was always anathema to business and the rightwing, and with

their steady advance over the past several decades it has been under increasing

attack. The welfare state took a heavy hit in the Reagan era, and has been in

further decline since. The weakening labor movement, globalization, and the fall

of the Soviet Union have all contributed to the continuing erosion process. The

Bush II call for a new "war on poverty"–by the private sector–while allocating

minimal resources from the budget surplus toward that end (even cutting back

numerous programs like the "Gear Up" mentoring program for poor kids, and funds

for community health centers, job training, and low income housing) is only a

step in an ongoing trend. (It is in a direct line from Clinton’s post-Personal

Responsibility Act "Summit" calling for a new voluntarism to replace federal

support, and his well-publicized "poverty tour" in which he expressed much

sympathy with "their pain" but again called for a private sector response.)

 

The intellectual–not to

mention moral–base of the new tax reduction rationale is not strong. Contrary

to business and rightwing ideology, a good case can be made that government

should be increasingly important as a participant and provider of services in

the modern economy. This can be argued on the basis of at least three major

considerations. One is that a large government role in spending and taxation

helps stabilize the economy; a small and weak government and very large and

poorly regulated private sector make for instability (and a small and weak

government does not regulate well). A second reason is that with increases in

income the public’s demand shifts more and more to a desire for security, and as

illustrated by the effective Social Security and Medicare-Medicaid system (and

superior government-managed medical payment systems in Canada and Europe), a

dominant government role is essential for the effective organization and

provision of such services for the general population. A third consideration is

that externalities become increasingly important in an interdependent, densely

populated, technologically advanced and chemicalized world. And by definition

the market fails to deal with externalities, so that government production or

effective regulation is called for in those cases on basic economic reasoning.

 

Business does not

recognize these reasons as legitimate, however, because its members think

short-term, their own bottom-line interests come first and virtually

exclusively, and they like to externalize their costs. And rightwing

intellectual rationales follow in the wake of business interest. This includes

the course of development of economic thought, with the prominent Chicago School

and its branches managing even to put up a "theoretical" case for the market

being able to cope with externalities. But "taxes as excessive impositions" is

part of the language of economics more generally (see David George, "The

Rhetoric of Economics Texts," Journal of Economic Issues, 1990.)

 

Business and its rightwing

supporters ignore the fact that every business depends on educated workers, an

efficient transportation network, and a well developed and properly regulated

market and financial system, all of which depend heavily on efficient government

service. Furthermore, over the years the government and general taxpaying public

have paid enormous sums in corporate welfare: subsidies to businesses of all

sorts–from farmers to drug and pharmaceutical firms to computer manufacturers

and software providers–underwriting their research bills, absorbing their

risks, bailing them out, and helping them sell goods at home and abroad. And if

the beneficiaries of this government and taxpayer largesse make large salaries

and stock market gains as a result, maybe the public has some claim to those

parts of "the people’s income."

 

More broadly, the idea

that it is the "people’s own money" that the government is taking away fails to

recognize the societal base of earning power, which is why an ordinary citizen

in this country earns much more than one in Mexico: there is a different level

of accumulation of capital, of infrastructure, of technical knowledge, of

education and other institutional conditions, that have a long history–and a

difference in average output follows that is independent of individual effort

and talent. If the society contributes heavily to an individual’s productivity

and ability to make money, it has an important basis for claiming a share of

income as payment for that contribution.

 

There is also a vast

difference between income that is the fruit of work and that from property

ownership. The value of property is often very much a function of societal facts

and trends, like the growth of cities that causes land values to skyrocket.

Henry George’s economics and proposal of the "single tax" was rooted in the

belief that these increments to wealth were based solely on strategic position,

were unearned, and were therefore eminently taxable. Huge incomes from "work"

itself are very often correlated with strategic position (e.g., control of a

corporation and ability to fix your own salary and options) or anti-social

activity (stock market speculation, currency trading, organizing and funding

takeovers and buyouts a la Michael Milken).

 

Milton Friedman once

claimed that income inequality was a function of chance: who happens to work

real hard, gets the breaks, makes the right decisions, etc. But this rests on a

misleading usage of "chance," as it implies an equal chance for each newborn

baby, when in fact societal factors like property holdings, connections and

position of parents, and race, make for an unlevel playing field on a systematic

and structural basis. Progressive taxes and spending oriented to serving those

who don’t do well would partially compensate for these inequalities of

opportunity.

 

Another line of rightwing

argument for tax reduction has been that taxes fund activities that the taxpayer

might not agree with, so why should they have to pay for them? The rightwing

never allows that this might apply to their own favorite forms of government

expenditure, like "defense," although it is a notable fact that except in times

of war and international crisis (often artificially stirred up by war managers),

most of the public wants less "defense" and more education and other public

services (see Steven Kull, "Americans on Defense Spending," School of Public

Affairs, University of Maryland, 1996). So the use of tax money to help fund

family planning is illegitimate because the rightwing disapproves, but taxes for

more police and a fatter and very wasteful military establishment are fine

because its members find such spending legitimate. But, in effect, they deny the

right of a democratically elected government to spend money for services desired

by a majority of the populace. This is covered up by an argument that they apply

selectively and that the "liberal media" fail to laugh into oblivion.

 

One last problem with the

"giving people back their money" is that "the people" don’t want it back. Polls

have regularly shown that the general public does not give tax reduction primacy

in its priority schedule on handling the supposed future budget surplus. (In a

May 2001 Gallup poll, only 4 percent of the respondents put "taxes" at the top

of their economic concerns; a March 2001 ABC/Washington Post poll found that

only 22 percent rate tax cuts as more important than spending on health care,

education and other civilian programs.) But just as there are worthy and

unworthy victims, there are worthy and unworthy citizens and opinions on the

budget. In a plutocracy such as we live in, the general public’s opinions are

unworthy, the opinions of Kenneth Lay of Enron and other major funders and

friends of the Bush campaign are worthy and flow into the media and political

decision-making process. (This was dramatically evident in the NAFTA debates of

1993 where the public was against the agreement, the elite minority for it, so

it became law.)

 

Clinton and Gore gave

heavy weight to worthy opinions in guiding their "moderate" business party,

which served business very well but did not give it everything it wanted right

away. The "extremist" business party now in power is more inclined to give

business everything it wants right now, as far as this can be done without

completely discrediting the party as a straightforward agent of business, or

actually causing the corporate capitalist ship to founder. For this gang, the

short-term perspective of business, grab-and-run, becomes the order of the day.

The important people want their own money back, along with anybody else’s they

can get their hands on, and this business party is trying to help them get it.

 

 

 

 

 

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