One of the weirdest phrases around taxes, used by all sides of the discussion, is the idea of the “fair share”. Everyone should pay their fair share, do the rich pay their fare share, and so on. This also manifests itself in this talking point “i can’t support any tax system where most people don’t pay their taxes” - in other words, “America’s working poor aren’t paying their fair share and they should be”.
And taxes in the US are a colossal clustermess. I think it would be hard for anyone to argue that the system we have in place is a good one. A huge percentage of the US population pays no taxes. Massive corporations use well-known and simple loopholes to ensure that their corporate taxes are deferred in perpetuity. Even in our industry, a company like Microsoft would rather spend $2B in offshore funds purchasing Minecraft (from an EU company) than bring it back to the US and, well, pay their fair share. So yeah, it’s a mess.
The idea that this can all be fixed just by increasing percentages of certain brackets doesn’t really hold up to me. Especially since as far as I can tell all these proposals come from people who want to raise every bracket except their own. And it’s hard to take those proposals seriously. It’s extra hard to take proposals to reduce wealth and luxury taxes seriously, with decades of study showing that does nothing for the economy or for the working classes.
To me, a fair share means a tax system with a few basic principles. First, taxing people who are already being taxed by historically meager minimum wage laws or other punitive institutions that we’ve allowed to bankrupt our nation is morally and ethically repugnant, but also essentially a double tax. Their wages are already half what they should be. The idea that we need to collect taxes on top of that from people that can’t even pay rent or buy coats for their kids sickens me. It should sicken you too.
The only ethical solution to a tax system where most poor can’t pay taxes is not to levy more taxes, but to elevate the poor so they can participate. Things like affordable health care are an essential part of this long-term process. Accept nothing less.
Second, there are two types of flat tax proposals. One is that everyone just pays the same tax bill each year. The other is that everyone pays the same tax rate each year. Both have fundamentally the same problem, which is different amounts of money mean different things to different people. At my current level of personal income, $20 isn’t a super consequential amount of money. For a lot of people it’s the difference between eating that day or not. It’s ridiculous to pretend that $20 to one person is the same as $20 to another person. Any institution that pretends $20 is always $20 is fundamentally absurd. Look at any other field of economics - I can get 30 soup dumplings for about $3.00 in Shanghai. The same meal might be $40.00 at a restaurant in LA. The dumplings are the same. The taxes are the same.
Ironically, the only way to make a flat tax system not absurd is to introduce the notion of brackets, tiers of income where the taxes are close enough to the same.
Third, though, is personal income tax is only one piece of a very big pie. Simple and well-known loopholes that allow American companies to simply never pay taxes have to be closed. My company pays taxes through the nose. The idea that Apple or Google or Amazon don’t have to do that on account of them … what? Being bigger? Having more expensive liars? Is absurd. That this is justifiable because they’re just “playing the game” or “optimizing” or whatever is, again, morally and ethically repugnant. Lionizing accountants while our urban infrastructure literally rots is an abominable practice and narrative.
Finally, on the subject of narratives, there’s often a strong sort of side commentary or under-current or explicit over-current that poor people are lazy, they’re dodging taxes on purpose, or rich people only got rich by working hard, and they pay all the poor people’s bills, and so on and so forth. These are primarily moral arguments, meant to establish the inherent goodness of the wealthy and the inherent degeneracy of the poor.
Essentially, the story is that the rich are the real victims, oppressed by the poor. Even though real wealth is often managed entirely outside the normal income tax system, through a variety of other drastically reduced taxes, charity loopholes, and so on, playing by different rules, and using different processes. Even though wealthy employers could increase their workforces wages instead of giving themselves bigger bonuses, and enable their employees to participate in the extant tax system more effectively. Etc etc.
There’s a contradiction there that I think mirrors a lot of other policies espoused by both parties - we can’t regulate climate change because regulations are costly (except climate change is costly too), we can’t regulate health care because freedom or something (but without regulated health care small businesses have less freedom), we have to regulate abortions (but we’re not going to produce a safety net for the mothers or children after the birth). Etc etc.
The contradiction is always the same somehow - the rich are victimized by the poor. Massive energy companies are victimized by people that just want potable water. Health “care” conglomerates are victimized by small business owners. Upper middle class “Christians” are victimized by poor women. Etc etc.
This is fundamentally unprincipled. I prefer T. Roosevelt’s attitude toward taxes and morality - he believed welfare made people lazy, but he also believed inheritances made people lazy. He often proposed cutting or interfering with welfare benefits, but he also often proposed that the government simply collect all of an inheritance above a certain size. He understood that handouts were handouts.
And the same way we often ignore corporate tax loopholes, we have to remember that there are billion dollar industries controlled by the wealthy classes receiving millions of dollars in subsidies (aka handouts). Part of that is paid for by the taxes of the working poor. How we justify this is utterly beyond me.
Now I’m not advocating for dissolution of social safety nets, nor necessarily advocating that we admire T. Roosevelt as a person. Social safety nets allow us to take the kind of risks that build the kind of society we need for the centuries to come. But I’m intensely dissatisfied with our narrative about wealth and taxes that celebrates and protects inherited wealth while simultaneously demonizing welfare for the poor. This is hypocritical at best. To target systems that simply try to offset the other injustices leveled at the American working poor and to ignore systems that disproportionately benefit the wealthy establishment is an insult.
To summarize:
- taxes in the US are a disaster, sure
- that doesn’t mean we should double-tax the poor
- flat taxes are economically absurd
- corporate loopholes have to go away
- handouts are handouts
- targeting programs like medicare while we ignore corporate tax loopholes and outrageous subsidies is a statement of intent that we should take seriously