Legal Commentary

The Case For Progressive Taxation

By Big Tent Democrat

Jon Chait writes:

The biggest change in American politics over the past three decades is that the Republican Party has embraced, with the fervor of religion, the conviction that that tax rates need only be high enough to fund their desired level of government spending, rather than the actual level of spending. (How this came to be is the subject of my book.) There really no solution to the problem of American fiscal policy until the GOP can reform itself.

(Emphasis supplied.) This is actually wrong. Republicans desire the actual level of spending but simply never want to pay for it (and never do.) The national debt and deficit is a result almost entirely of the profligate fiscal practices of 2 Republicans - Ronald Reagan and George W. Bush. Only one GOP President in recent history has been serious about the budget deficit - Bush 41. He was practically thrown out of the Republican Party. It is because of this that anyone who actually cares about deficits should always support higher taxes on the wealthy and on corporations. because that is the only fiscal measure that will actually cut the deficit. More . . .

Consider the Obama Administration's ridiculous SPENDING! FREEZE!! gimmick. Everyone knows it will do nothing about the deficit. Absolutely nothing. Why? Because 80% of federal government expenditures - Social Security, Medicare, defense, interest payments) are exempted from the freeze (indeed, they are de facto exempted always.)

Expenditures will NEVER go down in a serious way. Thus, the only way to bring down budget deficits is to increase revenue. And the only way to do that is to increase taxes.

Since we must increase taxes, the question becomes on who? The best policy is to increase taxes on the wealthy and on corporations. This is true for a number of reasons. First, taxing the wealthy as opposed to the middle class and the less well off has a smaller negative effect on overall demand. Since the wealthy have more disposable income, their demand is less elastic than that of the less well off.

Second, it lessens income inequality. Income inequality is more than just an intangible concern. Income inequality seeps into every aspect of our society and government. It effects the Common Good concept in deleterious ways. It creates a tiered society that breeds social resentments and harmful demagoguery.

Third, it is fair. the wealthy draw more benefits from our social contract than the less well off. The protection of property rights, part of our social contract, mostly benefits the wealthy. Since the primary function of government is to enforce the social contract, and since the wealthy are the biggest beneficiaries of our social contract, they should pay more for government.

Speaking for me only

Full post as published by TalkLeft on January 30, 2010 (boomark / email).