A Detour on Taxes - Why I Don't Feel Represented

This debate on taxes is so frustrating for me (as evidenced by the volume of posts on the subject) because I do not feel represented. The debate does not purport to address any of my concerns, yet somehow risks making them more grave.

Inequality of Wealth
I don't really care that some people make more than I do. That's to be expected and applauded. Similarly, I make more than some others. That too is to be expected and applauded. However, like most things, when taken to an extreme, inequality is bad for our society. Taken to extremes, extreme wealth inequality generally leads to a police state (see Saudi Arabia) or a violent revolution (see the French Revolution). I don't much like the idea of either one.

We are at a time in American history where the inequality of wealth between a tiny sliver of the population and, almost literally, everyone else is at historical levels. The wealthiest 1% own more wealth than the bottom 90%.

As the graph shows, we have not had wealth inequality like the present in nearly a century, and I think we all know how well that worked out. Note also that this graph stops four years ago, in 2013. Who thinks that this 40-year trend in wealth inequality has reversed in the past four years?

Given these facts, why is it that the entirety of the debate is on lowering the top bracket, lowering the corporate rate, and eliminating the inheritance tax? As discussed previously, the inheritance tax doesn't even kick in until one person has $5.5m to devise; it seems to me, based on the graph above, that someone who stands to inherit the first $5.5m is doing pretty well and does not need an extra helping hand from the government; there are plenty of other causes that could use the extra money, and a trust fund baby doesn't top my list.

"Pro-Growth" Tax Reform

Mike Pence, Paul Ryan, and Co. like to label their tax cuts for the wealthy as "pro-growth." Taking them at their word (a dubious assertion, given that there is precisely zero evidence that cutting taxes at the margins spurs long-term growth in any way . . . more on that below), I am still skeptical of their plans.

Since the Great Recession, 85% of this nation's economic growth has accrued to 1% of the population. If the vast majority of this growth is going to go to the very wealthy, the vast majority of the benefits of this tax plan are going to go to the very wealthy, and the middle class (i.e. $50,000 - $150,000/year/family) is going to pick up the tab, someone please explain why I would support this plan.

Further, these claims of "unleashing" the economy are highly dubious. The Reagan wannabes (looking at you VP Pence and Speaker Ryan) assure us that if they only get to cut taxes for the wealthy, those wealthy people will invest in the economy, thereby juicing the economy and leading to increased rewards for everyone. While we're at it, I've got a great piece of beach-front property in Nevada I'd like to sell you.

If cutting taxes worked so well to boost the economy, why doesn't Mike Pence talk about the economic boom we had following W's tax cuts in the early '00s? Why do they have to resort to the early 1980s to find an example that supposedly "worked"?  The simple answer to this is:

Thus, there is little evidence to support that the Bush tax cuts had a significant effect on growth. In addition, contrary to the argument that the tax cuts would pay for themselves being made at the time the tax cuts were enacted, the deficit ballooned as a result of the tax cuts.

Pressing Needs

This country has them. Lots of them.

Let's start with education.

Public education is chronically underfunded, notwithstanding some people's insistence that school teachers are some kind of "Lucky Ducky" getting over on taxpayers, with a cushy job, short hours, and long vacations. I can speak of my own teaching experience and point out that this characterization is wholly inaccurate. Most teachers I know work no fewer than 10-12 hours/day (in line with most professionals). Further, that they only have 185 "work" (contract) days per year probably understates the number of weekends they work and certainly overlooks the fact that they are laid off every summer. Incidentally, I would note that construction workers are able to collect unemployment when they get laid off in the winter; teachers are not able to collect it when they are laid off in the summer. Interpret that as you will. Nonetheless, public education is chronically underfunded.

Next, lets talk about higher education. The UNCF was spot on when they said that a mind is a terrible thing to waste. Well, we are now in a situation where plenty of capable young people are unable to get the education that will enable them to thrive economically later in their lives. This is classic "penny wise and pound foolish" behavior. How much possible economic growth are we foregoing? Further, how much social solidarity are we destroying by increasingly making college the purview of the born-wealthy few? Do we really want a society where the only people who can ever afford to become doctors and lawyers are those born into wealthy families? Also, what about the social solidarity, economic opportunities, and societal opportunities that are lost when we saddle our young people with mortgage-sized student loans? All of the anecdotal evidence in the world doesn't change the fact that college could be paid for with a summer job for my parents' generation; a summer job, school year job, and modest loan for my generation; and now requires a veritable mortgage, regardless of how much you work.

When we discuss the issues with education, I think it is a fair question to ask whether giving a tax break to the wealthy, who (as illustrated above) are doing better than ever in America, is a good priority. I think it isn't. I'm not an elected official.

Readers of this blog also know my feelings about healthcare. It is unbelievably expensive and out of reach for more and more people. I understand that hospitals don't turn people away if they need emergency care. What is often left out of that discussion is what is done for people with chronic symptoms, not acute problems. Also, what are the financial consequences of that "willingness" of hospitals to provide emergency care to the acutely in need?

Bankruptcy.

Here is an interesting graphic:

Two things stand out on this chart for me. The first is the sharp drop in bankruptcies in 2005. I believe the Bankruptcy Abuse and Consumer Protection Law of 2005 is responsible for that. An abjectly terrible law, in my opinion, but not relevant to today's discussion. Notice also the change in roughly 2010. Certainly the downward graph reflects our tepid recovery from the Great Recession, but I also think that it reflects the effects of Obamacare.

I could go on and on, but I believe my point has been made. This talk of cutting taxes on the high-end of the socioeconomic scale is simply indefensible, for reasons both practical and moral. That is why I do not feel as though I am well represented in this debate.

Social Issues and Movement Conservatism

It is my belief that Movement Conservatism (most memorably defined by Ronald Reagan as standing for the proposition that government is the problem, not the solution) has been the dominant force in American politics since approximately 1981. I was 4 when it came to prominence.

Notwithstanding the hysterics no the AM dial, neither Bill Clinton nor Barack Obama (the two democratic presidents in my adult life) is a wide-eyed socialist. Indeed, both of them generally sit somewhere on the left/right spectrum between Eisenhower and Nixon. Neither is as far left as FDR or LBJ.

Given that Movement Conservatism and its ideas have dominated our nation's politics for a generation, I believe that we should assess its strengths and weaknesses, and ultimately its level of success. Notably, to those who say, "real conservatism has never been tried," I would direct you to that pesky thing called "reality" that dictates what can and cannot be accomplished.

Ross Douthat, one of the NY Times' conservative apologists, recently wrote about what he characterized as "The Health Care Cul-de-Sac." Therein, he made the following observations:

What are the biggest threats to the American Dream right now, to our unity and prosperity, our happiness and civic health?

I would suggest that there are two big answers, both of which played crucial roles in getting a carnival showman who promised to Make America Great Again elected president. First, an economic stagnation that we are only just now, eight years into an economic recovery, beginning to escape — a stagnation that has left median incomes roughly flat for almost a generation, encouraged populism on the left and right, and made every kind of polarization that much worse.

Second, a social crisis that the opioid epidemic has thrown into horrifying relief, but that was apparent in other indicators for a while — in the decline of marriage, rising suicide rates, an upward lurch in mortality for poorer whites, a historically low birthrate, a large-scale male abandonment of the work force, a dissolving trend in religious and civic life, a crisis of patriotism, belonging, trust.

I tend to agree with Mr. Douthat. However, as I noted yesterday (really, Doug Masson noted it, to be fair), it seems to me that our economic stagnation is due to the fact that we have disincentivized work for so many people. When the boss holds, literally, ALL the cards and only gives raises when he absolutely has to, what is the point of working harder to improve oneself? When jobs are viewed as at the sufferance of the employer, how is one supposed to build a career on that? Jobs used to be stepping stones for careers. Now, upper management has succeeded in making nearly every job out there, save a select few, a veritable temp-to-hire position, where the hiring never actually happens. 

Further, we see employers bemoaning the supposed shortage of qualified workers. Well, what do you expect? If you don't offer any stability in the career, why would someone devote years of his life training for it? Why would someone devote years and thousands of dollars to learn, for example, advanced manufacturing, when the boss may or may not move the plant to Mexico (ahem, Carrier, ahem) to increase his already profitable business? Where does that leave the worker? Broke, unemployed, and in debt. 

Who blames the worker for avoiding that problem?

On to the second crisis we have: the degradation of our neighborhoods. I believe that this is related to the first. If the breadwinner is treated as temp-to-hire (and never hired), how is he supposed to find the time to run for school board or town council? He may lose his job tomorrow and find himself unable to make his mortgage payment the next day. Further, given the dynamic explained above that discourages people from bettering themselves, doesn't that same dynamic apply to bettering communities? 

I could go on and on, but I think that what this represents is a wholesale failure or, alternatively, an overextension of conservative dogma. If the dominant political dogma of the past generation has resulted in significant problems, perhaps its time to rethink the dominant political dogma. I would note to my conservative friends that its not always 1981; the answer is not always to cut taxes for the wealthy and do your best Ronald Reagan impression (Mike Pence does a pretty good Ronald Reagan impression, no?).

(Incidentally, I would say the same thing to my civil rights warrior friends: It is not always 1968. Racism is not the root of every problem.)

My point here is that when our dominant belief system, and all of its inherent assumptions, has produced some measurably bad outcomes, perhaps we need to rethink our assumptions. Is government the problem? Does cutting taxes result in more government? Should all employment situations be "at will" or should employees have additional rights? What about the "shareholder value" doctrine? Is creating wealth for shareholders the ONLY purpose of a corporation? If so, why do we grant corporations such expansive rights?

A few thoughts.