Taxing “Right”

As part of the lame duck session of congress that has been thankfully concluded, an extension of existing tax rates was passed to avoid what would have been the largest, as a percentage, tax hike in US history. The reason this piece of legislation went unresolved until just about the last minute (tax rates were set to increase 1 January 2011) was because there was argument about which tax rates to extend and which to raise. With both houses of congress and the presidency controlled by democrats the usual class rhetoric was employed to gin up support for raising taxes only on “the rich”. Much has been said in regard to the “progressive” tax system in this country (the more earned the more as a percentage is paid) and the dangers in increasing the differences in brackets and the reasons for why democrats did not vote to raise taxes with so much control, what was striking about the argument was the way in which democrats insisted on how “right” they were about raising taxes on only “the rich”.

In announcing a “compromise” the president was at his meandering best, calling the extension of tax rates a compromise and the right thing to do then bemoaning the extension as a “giveaway” to “the greedy rich” and “morally wrong”. The president continued to note that he knew he was right because the majority of the public was on his side. In this, the president demonstrated the folly of only listening to people who agree with himself. National polls have shown time and again that a majority in the United States supported the extension of tax rates at all levels. That result is in and of itself miraculous as nearly half of the country’s working adults pay no income taxes at the federal level. Those who describe the extension of tax rates as a “giveaway” are the type to make claims on the incomes of others by believing that the earnings of “the rich” belong to the government first. Who’s greedy again?

Another line in the same theme is the idea that the extension of tax rates cost the government too much. Again, more claptrap assuming that the government’s claim on income comes first. The first thing ignored by proponents of raising taxes is that all of this “revenue” is completely theoretical based on projections. Obscured by politicians was the fact that in their theoretical fantasy land, the extension of tax rates on the other brackets actually “cost” the government more than the extension of the highest bracket. Never discussed is that these projected numbers are completely theoretical. Because our tax system is a monolith of holes and legalese spread over thousands of pages nothing is certain. And what is certain is that there is a relationship between rates and revenue raised where rates can only get to a certain level without actually lowering revenue. The point is that higher rates on “the rich” or anyone for that matter may not actually bring in greater revenue. One certainty is that “the rich” have the resources to better understand and use the holes in the tax system to ensure that revenue does not increase and kudos to them.

In the rhetoric of a democrat politician, they’re always right and “the rich” never pay their fair share. It’s advantageous that their righteousness relies on the unknowable and that class warfare works to their benefit by giving voters a distraction from their shoddy shell game policies. There is no true “right” way to go about taxing, circumstances are always changing. How making claims on the success of others, punishing those despised for no good reason is “right” escapes logic.