Give me Taxes or Give me Death
“Taxes, after all, are dues that we pay for the privileges of membership in an organized society.”
—Franklin D. Roosevelt
Increasing taxes, even upon the extremely wealthy, is not (and has never been) a very popular position in postwar America. According to a 2009 Harris poll conducted for the Tax Foundation, 56 percent of Americans believe they are paying too much in taxes; about half are opposed to taxes on soft drinks and junk food, and almost two thirds of those polled said they favored a complete elimination of the Federal Estate Tax. Although conducted by the Tax Foundation—which hides an arguably anti-tax bias in claims of bipartisanship and coded language about transparency and simplicity—these figures are nonetheless pretty consistent with the overall public sentiment since the end of the Second World War. In Gallup polls conducted from 1947 to 2009 a small majority of Americans regularly said their income taxes were too high; a slightly smaller group agreed that their taxes were just about right; while an extremely small minority, between 1 and 3 percent each year (communists no doubt!) said they thought their taxes were too low.
While this overall hostility toward higher taxes might be obvious to anyone who has studied the ideological underpinnings of American capitalism, or, for that matter, anyone who has been paying any attention to the recent “Tea Party” movement, these figures actually reveal a counterintuitive truth. Yes, almost all Americans have historically been opposed to increasing taxes, but they have also been near universally ambivalent about the taxes they already pay, regardless of how much or how little. Indeed, the poll numbers show that even during the periods of highest taxation (1950-1963) the average percentage of Americans who said their taxes were too high remained pretty consistent: about 56 percent. Compare this to the period of least taxation (1970-1990) when the top marginal tax rate plummeted from 70 to 30 percent, and the findings are startling. Even during this second period, which saw one of the greatest decreases in federal taxes ever (and consequently some of the most devastating cuts to state and federal spending, including the near complete devastation of New York City), the average percentage of Americans who said their tax rate was too high actually increased, from 56 to 61 percent. In other words, a small majority of Americans inevitably tend to complain about their taxes no matter how high or low those taxes actually are.
It is tempting to see this behavior as a kind of virtue; after all, an independent and inherently suspicious and critical populace is vital for any democracy; but the sad fact is that, no matter what the tea-baggers say, this knee jerk impulse against higher taxation is not driven by any grassroots distrust of the government as much as it is by corporate lobbying and simple, uninformed, and misguided greed. People generally want to keep as much of their money as possible, and they falsely believe that they know best how to spend it. Yet in the rush to hold onto what’s theirs, they often fail to see the bigger picture.
This resistance to taxation is a serious problem, however, for the Right has been extremely successful in manipulating America’s ingrained resistance to higher taxes and has managed, over the course of the last forty years, with the help of several Democrats, of course, to completely overturn what was once a relatively progressive tax system. Between 1951 and 1963, arguably some of the most prosperous and productive years in American History, the tax rate for those making more than $400,000 hovered around 91 percent. Today the top marginal tax rate, regardless of whether one makes $500,000 or $500 million, is only 35 percent. Considering that greater and greater amounts of wealth are being consolidated at higher and higher income levels, the result is a system where more and more money held by fewer and fewer people is being taxed at historically low levels. And yet, if one believes the polls, the people are as unwilling as ever to accept the fact that low taxes on the rich not only lead to poor services and crumbling infrastructures, but are responsible for much of our current ill-health, inequality, and general unhappiness.
As Tony Judt points out in his new book Ill Fares the Land, there is a direct negative correlation between income inequality and such shared social goods as health, happiness, and upward mobility. Measured against several other developed nations, including the United Kingdom, Germany, and Canada, the United States has the absolute greatest income inequality of any of these nations, with the exception of Great Britain, whose income inequality is only slightly lower. Consequently, the United States has an almost exactly opposite rate of social mobility, by far the lowest of all of the countries compared. Indeed, according to Judt, the percentage of a son’s income that can be explained by his father’s income has grown dramatically in the United States, from a historic low of 10 percent in 1980, to a whopping 32 percent in 2000. And yet, amazingly, the populists still clamor to abolish the estate tax! When it comes to health, the United States, sadly, fares even worse. Among the twenty developed countries Judt compares, the Unites States has the greatest income inequality as well as the worst health (as measured on the index of health and social problems), despite the fact that the United States spends, per capita, far more than any of the other countries Judt compares.
Although these findings clearly reveal that there is something fundamentally wrong with America, what really matters here is the obvious correlation between the virtues of health, happiness, and mobility, and income equality. The fact is that the greater the equality of any society, the higher the rates of happiness and general welfare. Until we learn to embrace this fact, until we learn to give up our ignorant resistance to higher taxes, and begin the long process of creating a fair and equitable tax system, we will remain little more than slaves to a flawed and corrupt ideology.
All of these conclusions then, for anyone interested in a fairer, more equitable and humane society, provide both a sense of hope and despair, for they reveal simultaneously that increasing taxes will be difficult, but also that higher taxes, once passed, would likely not be met with any greater hostility than our current tax rate, especially if those passing them can make the necessary connections between happiness and income equality. The political implications of these facts, however, are enormous, for they suggest that any president or congressperson willing to do the right thing and increase taxes significantly would face a lot of potential opposition in the next election. If Barack Obama is serious about his legacy, he will take that risk and take it soon. The longer we postpone real tax reform, the less time there will be for the American public to get used to it.
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