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.