Left Said:

“Nothing can be said to be certain, except love and war.” — Benjamin Franklin

“All is fair in death and taxes.” — Anonymous proverb

Wait a minute. Something tells me I didn’t quite get that right. Regardless, the permanence of these four institutions as part of the human condition — and the permanence of their unfairness — strikes and moves me. And given that I’m limited to 500 words, I’ll stick to the last one.

“Hold it right there, pilgrim,” you may say. “A liberal complaining about taxes?” Surprising, I know. But in the depths of a vast recession and soaring deficits on both the state and federal levels that threaten both governmental solvency and the social services that all but the most privileged among us depend on, new economic measures are at the forefront of everyone’s mind. Tax reform addresses both the recession and the deficit because it helps account for the social services that are even more necessary when job losses skyrocket, and because it concerns the very revenue required to lower the deficit.

Progressive taxation is the tax system currently implemented by the United States and, well, almost every other country in the Western world. This structure, which calls for increasing marginal tax rates as a household’s income increases, has been embraced by economic writers across the political spectrum for centuries. In fact, it’s supported by 81 percent of American economists. My favorite historical supporter of progressive taxation was this crazy fringe socialist writer called Adam Smith. You’ve probably never heard of him. In his book The Wealth of Nations, he wrote that higher tax rates for wealthier individuals are not unreasonable or unjustified because as a person’s wealth increases they spend less of it on basic living expenses.

Say we have two individuals, Jon and Phil. Jon makes $100 a month, while Phil pulls in $1000. Normally neither would qualify for paying income taxes, making below the federal poverty line, but for the sake of argument we’ll say they do. If both are taxed at 10 percent of their income, that leaves Jon with $90 and Phil with $900 to spend on groceries, rent, etc. Even if the price of groceries was substantially lower than it is today (since I’ve given Jon and Phil such ridiculously low incomes for the sake of simplicity), this is still an injustice for Jon because the hardship imposed on him by the income tax is more than it is upon Phil.

Right now, there is a gigantic loophole in the American federal tax code that isn’t generally referred to as such because it’s not a secret: the capital gains tax. Essentially, those of us who hold a paying job are subject to payroll taxes on our income, but income derived from investments and dividends is taxed at a significantly lower rate. This means that professional investors can actually pay a lower percentage of their income than any other taxpayer in America — literally. It’s supposed to encourage investment, but it’s an effective regressive tax.

Before I go, I have a question for those of you from households of less than $250,000 per year. Did you know that Obama cut your taxes? It’s true — look up “Making Work Pay” — and he’s trying to do it again by extending a payroll tax cut for middle-income Americans. Congressional Republicans oppose the extension because they say this could “increase the deficit.” These are the same people who refused to cut the deficit by increasing taxes on extremely wealthy individuals even a little bit. Now that’s class warfare.

Daily Nexus liberal columnist Geoffrey Bell thinks Adam Smith was right on the money.


In Response, Right Said:

History has proven that the liberal economic policy of raising taxes, especially in the middle of a recession, contradicts their greater goal of expanding government, and stunts economic recovery. This is clearly demonstrated by contrasting the rapid economic recoveries of the 1920s, 1960s and 1980s — when income taxes were cut drastically at every bracket — in contrast to the extremely slow economic recoveries under FDR’s New Deal — when real income taxation on the rich once reached 120 percent — and under President Obama. Additionally, in each instance when taxes were cut, revenues to the government increased. In fact, John F. Kennedy, often cited as a liberal icon, is known to have said: “The paradoxical truth is that tax rates are too high and revenues too low; and the soundest way to raise revenue in the long term is to lower rates now.” President Obama has thus far failed to learn this lesson — even when directly confronted with the facts by debate moderators — pushing onward in the name of “fairness.” This is just more of the same uncivil class warfare liberals use to divide Americans because of political envy.