The political argument for higher taxes

Ezra’s got a really nice piece that convincingly makes the case for why we need more government revenue.  What interested me the most, though, was his argument for how Democrats need to bargain on this, and most notably, politically frame it:

To govern responsibly, Democrats cannot simply raise taxes on the rich and call it a day. That’s a world in which Republicans continuously force crises, refuse taxes, and extract deeper and deeper cuts. Already, Senate Minority Leader Mitch McConnell (R-Ky.) has called the GOP’s debt-ceiling brinksmanship “a new template” and promised that “in the future, any president, this one or another one, when they request us to raise the debt ceiling, it will not be clean anymore.”

But Democrats have another option. Just as Republicans planted a trigger for 2011 that ensures spending cuts, Democrats should use the Bush tax cuts as a trigger in 2012 to force revenue. Which is not to say they should campaign for raising taxes. They should campaign against an outdated, inefficient, unfair tax code as well as the Washington way of leaving hard problems for somebody else to handle.  [emphasis mine]

The White House should announce that it won’t extend any of the Bush tax cuts and will instead insist on a Gang-of-Six-esque plan that cleans the code, lowers rates for everyone, and raises $2 trillion or more in revenue. If the GOP refuses, the tax cuts will expire, our revenue problems will be solved, and Republicans will suddenly find themselves much more interested in tax reform. Sometimes, to govern like a Democrat — or even just to govern responsibly — you need to negotiate like a Republican.

Indeed.  Simply arguing for higher taxes is a no-win proposition.  Arguing for a more efficient, more fair tax code at least has a chance against the Republican no more taxes ever onslaught.  Tactically speaking, the Democrats would be fools not to use the leverage provided by the expiration of the Bush tax cuts.  That said, I’ve never put much faith in Democrats’ tactical abilities.

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About Steve Greene
Professor of Political Science at NC State http://faculty.chass.ncsu.edu/shgreene

9 Responses to The political argument for higher taxes

  1. jonolan says:

    Within the context of Federal income tax you can’t have a more fair tax code that tax the lower echelons more. The upper echelons are already taxed at near punitive rates white the lower echelons are barely taxed at all, if at all.

    So it’d be best to leave out the “fair” part of it unless you’re looking at a flat tax, which is completely fair but not a good means of raising the overall revenues, though from a Liberal’s / Socialist’s point of view it would make wealth redistribution less unattractive to the federal government.

    • Steve Greene says:

      Wow– that’s quite the low bar for punitive. The major point is, you get rid of a bunch of deductions and loopholes, that’s more fair– period. You do that successfully, and then you are able to lower rates while increasing revenues. Win-win. Unless you have a Norquistian objection the government ever having more revenue.

      • jonolan says:

        1% of the people pay 35-37% of the personal federal income tax revenues. 32-40% of the people pay none at all. That’s why I call it punitive, not because of the overall rates.

        And how is removing deductions, which will only increase the burden upon the upper echelons be more fair?

        As for revenue in general – no; I don’t want the feds to have any more revenue. I don’t want them to have, or have the perceived need, for as much revenue as they have now – at least in terms of generalized revenue.

        If they want more money, let them vote for special levies applied to specific uses like they used to. Even Liberals should like that one since it would dramatically cut down on foreign adventures.

  2. Mike Barr says:

    Jonolan, what number is the dividing line between punitive and non-punitive tax rates? (More specifically, the effective tax rate).

    • jonolan says:

      The problem is not the rate; it’s the progression of rates.

      • David says:

        hmmmm…so a flat 50 percent rate would be ok with you because it doesn’t meet your definition of “punitive”? surely you don’t mean this. And surely you understand that the top 1 percent pay a huge amount of the total income taxes because that’s where most of the wealth is now concentrated. And just as surely, you understand that nearly all who have no income tax liability pay into payroll taxes, which comprise about 40 percent of federal revenues.

      • jonolan says:

        50% would seem a bit high, but a flat tax would be the only “fair” taxation policy, if one is just going to specifically tax income.

        As for payroll taxes – Your caveat about it applying to those with tax liabilities negates much of your point and is burden born far more by employers than employees.

  3. itchy says:

    The fairness of taxation rates is not about how much you earn. You don’t pay for cars, bread, massages or real estate based on how much you earn. You pay based on how much it’s worth for you, how much of a benefit you receive.

    The top 1% are not only greedy cheats, they’re whiny bitches. Poor people benefit quite a bit from the government, but rich people benefit immeasurably.

    The government performs two huge premium services for the wealthy:

    1. It makes them richer.
    2. It protects their wealth.

    Without the government, rich folks would be paying much more than they do in taxes to grow and maintain their wealth. If they did get lucky and screw over enough people to earn the same amount, they’d have to constantly defend their possessions — from both the poor and from other wealthy thieves.

    Inevitably, their position would be short-lived — and that entire time would be spent in danger with millions ready to cheat, steal or kill to take it over.

    But instead, rich people get to legally misreport their earnings in ways that poor people cannot and then complain about paying an unfair share while they bask in leisure, knowing the U.S. government will keep the pitchfork wielders and competitors at bay.

    Funny that it’s unbecoming of the wealthy to complain about the price of a premium membership at a country club, but they whine like babies at the premium dues they owe to the U.S.

  4. Mike Barr says:

    Jonolan — I am not sure I follow the logic of your comment about payroll taxes. Don’t employers and employees contribute roughly equal proportions SS and Medicare? And even if it weighs more heavily on employers, this still affects wage earners. And I think as a proportion of income the tax burden falls more heavily on wage earners than people whose incomes come from other sources (investments and sop forth).

    And I would add to something Itchy said: Americans never take into account the vast sums of money we have spent in the past 50 years to organize and maintain many of the international economic, trade, technology, and other regimes that enable our businesses and citizens to become wealthy. Our military power and our economic hegemony enabled us to organize these regimes to favor our style of economy and political structures (not a bad thing — I am a Realist, and to the victors go the spoils). Protecting these regimes is ultimately why we do almost everything that we do – foreign aid, military interventions (a willingness to use force), a huge military that can project its power abroad, the UN, technological dominance, economic power, etc etc. Even if my details are no spot-on, I think it is fair to say that the business of government is to keep the world safe for business, which is the means to the end of providing prosperity, predictability, and security for its citizens. You can’t support this system on the backs of wage earners.

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