Thursday, June 18, 2009

Tax Wars

Writing in the American Prospect, Matthew Yglesias writes that Progressives Need To Stop Worrying and Just Love Taxes. (I caught the story at at Reason)

Yglesias astutely points out that Obama succeeded in part because he adopted some of the anti-tax rhetoric of the right, promising tax cuts to the vast majority of Americans.

To some, Barack Obama's successful 2008 presidential campaign points the way out of the box. As Obama described his plan while debating Sen. John McCain, "If you make less than a quarter of a million dollars a year, your taxes will not go up; if you make less than $200,000 a year, your taxes will go down." In other words, there's no reason to fear tax hikes because you won't be paying them -- someone else will.

Obama did not change the framework so much as find a way to survive within it. A platform of no tax increases for the bottom 95 percent can win elections, but it reinforces rather than debunks the right's fundamental view of the tax question -- that public services aren't worth paying for -- and merely suggests that the correct answer is to get someone else to pay for them.

But then, being quite honest, Yglesias goes on to point out that this rhetoric of tax cuts will not sustain a progressive agenda in the long term.

This is, to be sure, better than the alternative, which is to provide no public services at all. And amid a cataclysmic recession, there are sound macroeconomic reasons to eschew any kind of tax increase until recovery is underway. Still, it's hard to see how a long-term progressive agenda can be financed with the revenues raised through this method. A March report by the Congressional Budget Office showed that the administration's proposed budget would lead to unsustainably large deficits in which interest payments would steadily grow as a slice of the budget pie.

All in all, it's an interesting piece and I give Yglesias a lot of credit for his honesty. There's something to be said for pushing this idea that government programs and services actually cost money. Just look at any town or municipal government today and you'll see large numbers of peoples who want both A) lower taxes and B) the same level of services if not more. I've written about it time and time again on this blog, in any number of contexts, but there are substantial numbers of people out there who basically just want more for less. For some of these folks this is about class warfare- let the rich pay for it- but for others the thought process probably doesn't even go that far.

And let's be honest, this isn't a liberal or conservative problem in particular, as the rhetoric of both sides over the past thirty has fueled the fire. On the left all we here about is what the government can do for us without ever hearing what it's going to cost us. And from the right, all we hear about are tax cuts without ever hearing what programs and services are going to be sacrificed. Liberals have avoided raising taxes and conservatives have been even worse about spending.

It shouldn't be too surprising that I completely disagree with Yglesias's position on higher taxes, but I would say he's on to something when he encourages us to think about what our taxes are paying for. Yglesias thinks this should make each and everyone of us happy to write a big fat check to the IRS every year, but even for the biggest liberal in the world this doesn't make logical sense. Say for instance you are a big time liberal and you are concerned with increasing services for the poorest and most vulnerable citizens. That money could come from raising taxes, but there's no reason it couldn't also come from cutting wasteful or unnecessary programs. I just can't see how, if given the choice, any anti-war liberal would chose A) increases taxes to pay for programs for the poor over B) end the war in Iraq, bring the troops home, reduce military spending, and siphon the money that had been for the military to pay for programs for the poor.

Far too much time has been wasted debating Yglesias and his ilk over taxes. Case-in-point, the right beat the anti-tax drum repeatedly during the Bush years as the federal government grew larger in scope and larger in dollars. What limited government types need to do is to continue to present the numerous ways in which government mismanages money and the numerous areas government shouldn't be involved with in the first place. Taxes are abstract whereas government expenditures are clear and precise. Taxes are, without a doubt, a winnable battle, but winning the battle over lower taxes means little if there's no battle over the scope and size of the government.


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