Tuesday, July 19, 2011

No New Taxes?! (Take 2)

The GOP's obvious allergy to any sensible tax structure, combined with their claimed infatuation with the Constitution, has to rank near the top of the list of the most ridiculous things I've seen in my short, happy life. One of the crucial driving forces behind the creation of the Constitution at the outset was the government's need to collect excises and levy taxes on individual citizens when necessary. Under the Articles of Confederation, Congress had little recourse in the collection of revenue beyond reliance on the good faith of the states. The country was up to its eyeballs in the debt we'd incurred in the birthing and administering of this new experiment in democracy, and we needed to be able to service this debt if we were going to remain viable as a nation. So a small group of insignificant troublemakers—shameless "big government" types with names like George Washington, James Madison, Benjamin Franklin, Alexander Hamilton, and John Adams—began to push for a stronger central government to oversee commercial and fiscal policies directly, and thereby maintain the stability of the U.S. economy.  The result was our Constitution.

Bizarrely, we have a surprising number of people in Congress today who purport to be rabid for the Constitution, yet utterly fail to recognize the necessities that gave rise to it—necessities that remain in force today. In many respects these intellectual poseurs are anti-constitutionalists. Because it's still true: you cannot pay down the debt without raising revenues. In fact, I believe Alexander Hamilton may have said it best back in 1780: "Without revenues, a government can have no power. That power which holds the purse-strings absolutely, must rule."

Of course you don't want to raise taxes on those who would be rendered destitute by it, or in a way that will adversely impact the health of the economy.  One of the more thoughtful early comments on this comes directly from noted anti-federalist Patrick Henry: "the oppression arising from taxation, is not from the amount but, from the mode — a thorough acquaintance with the condition of the people, is necessary to a just distribution of taxes." That's why progressive taxation is such a vital idea. People who insist that the rich will stop spending if you raise their income tax a bit are—how to put this delicately—talking out of the wrong end of their digestive tracts.  That is to say, such utterances smell funny for pretty much the reason you'd expect. One of the more robust behavioral findings of the last few decades is the recognition that the spending habits of the astronomically wealthy don't change much at all when you slightly decrease the rate at which they're growing astronomically wealthier. In fact, pretty much the only thing that changes under those conditions is the size of the bequests that they leave to their broods.

Surely the ones who have benefited most disproportionally from the way our economy is structured and regulated are the very ones who both (a) owe that system the greatest debt of gratitude and (b) ought to bear the greatest responsibility for its continued stability. Eisenhower understood this, as did Nixon and Ford—and to some extent even Reagan and Bush the Elder—so it's not really a traditional Republican blind spot. This is a madness of relatively recent vintage.

In any event, I certainly have little time for anyone who claims to worship at the altar of the Constitution, yet asserts that raising taxes is anathematic to the American way of life. Even in terms of history alone, that one is a non-starter.