Sojourners continues its long tradition of fostering envy and class warfare by publishing a post today by Chuck Collins of the Institute for Policy Studies entitled “Moral Measure of a Tax Plan” that slams the deal now moving through Congress.
First, a word about the deal: I tend to support it, just because I don’t think it’s a wise move to raise taxes on anyone in a recession, and especially not on those who are the primary engines of job creation when was is needed is increased employment. Nevertheless, I’ve seen arguments from both the right and the left that make a solid, if to me not quite convincing, case that this deal is not the way to go. I have no problem with someone opposing it for good reasons. Unfortunately, Collins (and apparently Sojourners) don’t have any.
He starts off this way:
In 2010, the moral measure of tax policy choice is: Does it further concentrate wealth and power in the hands of a few? Or does it disperse concentrated wealth and power, and strengthen possibilities for a democratic society with greater equality, improved health and well-being, shared prosperity, and ecological sustainability?
Does it move us toward Plutocracy, or Peace and Plenty?
Well, that’s clear cut, isn’t it? Collins assumes that higher tax rates on those making $250,000 a year will lead to “greater equality, improved health and well-being, shared prosperity, and ecological sustainability,” to “peace and plenty.” Whereas, not raising those tax rates leads to concentrating ever greater wealth and power in an oligarchy, and leads to “plutocracy.” Seems like a bit of an overstatement, considering the rise would be from a 35% rate to a 39.4% rate? Is that difference really going to be the difference between the Kingdom of God and The Iron Heel?
President Obama’s “Tax Compromise” fails this moral test. By extending the Bush tax cuts for the wealthy and instituting a significantly weakened estate tax, more wealth will flow into the hands of the richest one percent — and within that to the richest one-tenth of one percent.
Most of us are aware of President Obama’s willingness to trade away his campaign promise to let the tax cuts for high-income households expire. This will cost $60 billion next year, and if it is permanently extended, an estimated $700 billion.
The language here is instructive. If tax rates are kept the same as they have been for the last eight years, it will “cost” the government $700 billion in revenue. The thing is, that money doesn’t belong to the government. It belongs to the people and families that earned it. That means keeping the tax rates the same doesn’t actually “cost” the government anything. It simply means it must live with lower revenues.
But Obama also backed away from his position on the federal estate tax, our nation’s only tax on substantial inherited wealth. The president’s original proposal was to freeze the estate tax at 2009 levels (wealth exempted to $3.5 million, 45 percent rate). He now supports the Kyl-Lincoln amendment that would raise the exemption to $5 million ($10 million for a couple) and drop the rate to 35 percent. The cost difference between these two measures is at least $100 billion over ten years.
Right. Once again, $10 billion a year (against a deficit of $1. 4 trillion) is going to make the difference between financial Armageddon and the new Eden. The truth is that I think the estate tax is itself immoral. Leaving aside its economic impact, which may or may not be significant, the estate tax 1) penalizes those who wish to give what they have earned to their children; 2) taxes assets that have already been taxed at least once as income, and possibly again as capital gains; 3) says that the state has a greater claim on family assets than a family has, despite not having done anything to foster the creation of those assets. In addition, it also undercuts the incentive to build up wealth that can be used in investment, given that the investor knows that much of whatever he has will be taken by the state if he should die, rather than left to others who can continue his work. If the state wants to tax assets, let it levy taxes on the living, not on the dead.
Does it matter how wealthy the wealthy are?
For the last generation, this richest one percent, with some admirable exceptions , has been using its considerable wealth and clout to push for public policy changes that have further concentrated wealth.
As wealth concentrates, a hyper-organized segment of this wealth-holder class uses its wealth, privilege, and power to change the rules of the economy to further concentrate wealth and privilege. The logical progression of these policies is a society governed by wealth, a modern high-tech version of the Gilded Age of 1900.
This is great rhetoric, but it betrays both an ignorance of economic conditions during the Gilded Age and fails to offer any evidence that wealth concentration is, of itself, harmful either to the economy, the polity, or the population as a whole.
For 30 years, congressional leaders who care about the poor have cut deals to win victories for working families such as family leave, increased minimum wage, expanded health care, and earned income tax credits. But the price of these victories has always been very expensive tax cuts for the wealthy and corporations. Under Clinton and Bush II, you couldn’t accomplish a legislative priority for the non-wealthy without a big bone to the wealthy or corporate class — another capital gains tax cut or corporate loophole.
Right. And for the vast majority of the last thirty years, the economy has boomed, with the result that more and more people have moved into the middle class and even upper class. Those other items Collins mentions as if they were mere scraps from the wealthy’s table are also no small matter–one result, for instance, of the expanded earned income tax credit is that only about half of all Americans are now paying any income tax at all, while the proportion of the total income tax paid by the richest 1% and 10% has gone steadily higher. Oh, and one other thing: taxes for the highest brackets was raised during Clinton’s first term.
Compromises have also been central to Obama’s political strategy. In order to get a stimulus package to save the economy, Congress allocated one-third of $780 billion for tax breaks to corporations (and still didn’t get one GOP vote).
In order to get broader health-care coverage for the uninsured, lawmakers surrendered the “public option” that would have forced competition and cut into the power and profits of the health industry cartel.
Let’s all repeat together: it isn’t competition when one side controls the formulation of all of the rules of the game (not to mention can print money ad infinitum). The idea that the “public option” (which might have been a good idea on the merits) was a way of bringing about more “competition” is a fraud, plain and simple. It was, and is, meant by advocates such as Collins to be a means to drive private insurance companies out of business, thereby creating a single-payer system by default. Again, that may or may not be a good idea, but please, let’s not pretend that it was supposed to serve the interests of a free market.
There are only a few ways to intervene to reverse course. They all require moral leadership and an engaged citizenry to clearly say: “We want an economy that serves everyone, not just the wealthy.”
The first intervention is through progressive income, wealth and estate taxes. We urgently need to re-institute a progressive estate tax. Instead of cutting a deal to institute the Republican estate tax proposal that greatly weakens the law, Congress should press for the Responsible Estate Tax Act which would chip away at concentrated wealth.
Collins doesn’t offer an argument for why a progressive estate tax is more moral, he simply assume that anything that reduces “concentrated wealth” (the immorality of which he also doesn’t bother to argue) is good. He may be right, but I’m suspicious of anyone who simply asserts that something destructive should be done to people he assumes are doing something immoral, especially when that something being pushed is state action.
The second intervention is through robust campaign finance reform that closes the nexus between wealth and political power. Anything that puts a speed bump between wealth and political influence helps the disproportionate influence of the wealthy.
Presumably that will also include provisions for preventing labor unions, particularly government employee unions, from seeking to influence elections also, since they have spent as much or more than corporations or rich individuals in the last three election cycles. But I jest. Of course Collins wouldn’t advocate that. Instead, what he seeks to do is simply squash the free speech rights of those he considers immoral.
The third intervention is to mobilize the silent faction of the wealthy elites that actually see their stake in the common good. All in the wealth-holding class are not actively lobbying to protect their power and privilege. We need a progressive counter-weight to organized defenders of power and privilege. With its several thousand business leaders and wealthy individuals advocating for policies to broaden prosperity and opportunity, the Wealth for the Common Good network is an inspiring start. They can counter the deep mythology around wealth creation and deservedness that often justify tax cuts for the wealthy and support the positions of engaged citizens.
He throws this in both because he has co-written a book with Bill Gates and because he knows that there are at least as many rich people backing liberal and progressive political candidates and causes as there are conservative ones. See, Collins isn’t against the rich per se; he’s against the rich who stand in the way of his leftist agenda. Plutocracy is just fine, as long as it’s a leftist plutocracy. Oh, and about that agenda: Collins is a “senior scholar” at the same place that employs Phyllis Bennis of the U.S. Campaign to End the Israeli Occupation, and which has been perhaps the farthest left think tank in Washington for decades. If there is any policy organization inside the Beltway to which the label “socialist” can be rightly applied, it’s the IPS. That’s the direction Sojourners would have us go. But then, I reckon you already knew that.