Are We Really Talking About Taxes?

I’m beginning to suspect that all the anger/righteous indignation/resentment directed at the subject of taxes isn’t really about taxes at all.

If Americans were really discussing the tax system, surely they would know more about it. And I’m not just referring to the ludicrous arguments being made by the televised talking heads in the wake of the healthcare decision. (Hint: the Supreme Court ruled that the imposition of a penalty for noncompliance was an appropriate exercise of Congress’s taxing power–they didn’t rule that the penalty was a tax.) I’m talking about far more basic information.

A recent poll of Tea Party folks found that 90% of them believed taxes had either gone up or remained flat under Obama; only 2% answered (correctly) that taxes had gone down, which they have for 95% of American taxpayers. Bill Maher noted the irony: members of an organization formed to oppose taxes and named after a historical group known for its anti-tax activism don’t know whether taxes have gone up or down.

Nor is this an anomaly. Discussion of taxes rarely include definition of the term. So people will assert, with a straight face, that “the bottom half” of Americans “don’t pay taxes.” This is hogwash–they pay lots of taxes. Poor people may not make enough money to owe federal income taxes, but they pay federal payroll taxes, gas taxes, sales taxes, utility taxes, property taxes (even renters pay property taxes, which are part of the rent)…In fact, the percentage of their income that the poor pay in state and local taxes is far higher than the percentage paid by the wealthy.

So–we have people who don’t know whether taxes have increased or decreased, and pundits whose calculations of the tax burden conveniently or mistakenly leave numerous taxes out of the equation. But my biggest pet peeve is the folks who discuss tax rates without distinguishing between the marginal rate and the effective rate.

Right now, we are arguing about the wisdom of returning to the marginal rates under Clinton–approximately 39%. Listen to the bloviators on your favorite talk show and you are likely to get the impression that such a rate translates to taking 39% of the taxpayer’s income in taxes. Of course, it means no such thing. It means that once an individual has made enough to be in the highest income bracket, each dollar in that bracket will be taxed at that rate. The effective rate is the actual percentage of overall income paid, after averaging out the rates applied to each income bracket. That–plus lots of loopholes aka “incentives”–is why Mitt Romney’s effective rate was in the neighborhood of 13%, and why corporations that are theoretically subject to 30%+ tax rates actually paid 12.6% in 2008.

My point here is not to advocate for any particular tax policy–we can all agree or disagree about what an optimum tax system would look like. My concern is more basic. It seems to me that if we were really arguing about taxes, we would know much more about them. And if we aren’t really arguing about taxes–if taxes are just a useful surrogate for whatever it is that actually has our collective panties in a bunch–what is that sore spot?

What’s the real source of our sour national disposition?

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My Country ‘Tis of Thee….

If you are looking for an uplifting, “ain’t we great” post appropriate to the 4th of July, you probably need to stop reading now.

I began my reading this morning with Kurt Anderson’s Op Ed in the New York Times, on the downside of liberty. Anderson revisited the historic American tension between individualism and community, and concluded–in concert with many other contemporary observers–that Americans have confused a robust defense of individual rights with a wholesale abandonment of our civic obligations to the wider community. He argues that we have lost the ability to distinguish between individual rights and self-interested greed.

Anderson points to a cultural phenomenon. Thanks to the recent weather, I have been pondering a structural one.

As anyone who isn’t spending time in the arctic knows, we’ve been having an unprecedented heat wave. Much of the nation has also been battered by ferocious storms, and television news has been featuring visible evidence of the damage–especially shots of the downed power lines responsible for a massive loss of electricity. As of last night’s newscast, more than a million homes remained without power. Elderly people and children, especially, are at risk without air conditioning.

My question is simple: why don’t we bury our power lines? My answer is equally simple: because we have a political/economic structure that privileges short-term savings over long-term quality–a structure that rewards those who are penny-wise and pound foolish.

It costs more up front to bury our utilities. It’s cheaper–initially– to string lines. But not only does burying those lines improve the appearance of our cities and towns, it is much cheaper in the long run. It doesn’t take extraordinary storms to down the lines; more predictable weather also takes a toll. Over a period of years, utilities will more than save the extra dollars spent to bury the lines and consumers will enjoy more dependable service.

This same “penny wise, pound foolish” mind-set permeates our public services. Go to Europe (yes, I know, it is heresy to suggest that other countries might do some things better than we do) and walk on granite pavements that have lasted longer than most of our cities. Expensive to build, much less expensive to maintain and replace. Look at the current rush to sell off public assets–Toll Roads, parking meters, even the City-County Building–rather than spend what is necessary to maintain those assets for future generations.

In business, the triumph of the shareholder and manager over the entrepreneur-owner has meant that the next quarter’s bottom line is privileged over the long-term best interests of the enterprise. It’s more important to return an extra twenty cents per share now than to invest in improvements that will benefit the business ten years hence. In politics, it has always been the case that “long term” means “until the next election.” So we have the ridiculous spectacle of the State of Indiana returning $100 to each taxpayer rather than applying those funds to necessary improvements in education or infrastructure that won’t yield such immediate gratification.

Maybe it’s fitting that we have fireworks on the 4th of July. Children love fireworks, and we seem to have become a nation of children.

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Reconsidering ID

I’ve always been reflexively opposed to the notion of a national ID card. Call it the civil libertarian in me, but such an identifier raises visions of police states past and privacy intrusions future. That said, I’ll admit this is not an issue I’ve really thought through–my distaste is more visceral than intellectual.

So I was grudgingly persuaded by Bill Keller’s column in this morning’s New York Times.  Keller’s point of departure was the recent Supreme Court decision that struck down most of the Arizona immigration law, but left intact the right of police to demand “papers” from people being detained for other reasons. As he pointedly asked, “What ‘papers’?” What sorts of identification do any of us carry that proves we are citizens? Wouldn’t employers and police officers be better served by the existence of a standard ID?

Keller acknowledges the privacy concerns.

 “The trick, and I won’t pretend it’s always easy, is to distinguish the reasonable and constructive from the invasive and excessive. We want the sales clerk at the Gap to know our credit card is good, but not to have access to our whole credit history. We want our doctors to share our health histories with one another, but probably not with our employers. We may or may not want retailers to know what kind of books we read, what kind of car we drive, where we are thinking of traveling. We may or may not want those who follow us on the Web to know our real-time location, or our real name.”

“This will not satisfy those who fear that any such mandate is potentially “a tool for social control,” as Chris Calabrese of the A.C.L.U. put it. But the only way to completely eliminate the risks of a connected world is to burn your documents, throw away your cellphone, cancel your Internet service and live off the grid.

As it happens, the proposal I described is already on the table. Senators Charles Schumer and Lindsey Graham included it in their menu for comprehensive immigration reform in 2010. For obvious reasons, they didn’t call it a national ID. They called it an “enhanced Social Security card.”

Like just about everything else, immigration reform is stuck in the mangle of election-year partisanship. And if Congress ever does revert to the business of solving problems, there should be many parts to a humane, sensible immigration bill — including expanded legal immigration and a path to citizenship for many of those already here. But a fraud-proof, limited-use national identification card is an essential part of the package.

Then the Arizona police can go back to doing their real jobs.”

I won’t say his argument entirely persuades me–but it’s undeniably logical, and worth more consideration than I have previously given the matter. Read the whole column, and see what you think.

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Absence of Trust

In the wake of the Supreme Court’s decision to uphold the Affordable Care Act, I was once again reminded of how painful it has become to watch what passes for political discussion/debate in this country.

We have always had disputes about policy, about the proper role of government and the reach of the federal courts. We always will have those disagreements, and that’s how it should be. What is qualitatively different about our current discourse is the degree of suspicion and paranoia that characterizes it.  Americans simply do not trust the motives of those in government, and as a result of that distrust, we are unwilling to grant that honorable people of good will can come to different conclusions about the problems we face.

In Distrust, American Style, I investigated the sources and consequences of that distrust. The sources were easy enough to identify: for the past two decades, we’ve seen massive betrayals by businesses and Wall Street, scandals in institutions ranging from churches to major league sports, obscene amounts of money being spent on lobbying for legal advantage and more recently, poured into Super Pacs. There are undeniable reasons for our current levels of cynicism and distrust.

The problem is, when citizens don’t know who they can trust, they don’t trust anyone, and politics becomes impossible.

Yes, there are bad corporate actors–but there are also scores of good corporate citizens. Yes, there are politicians who are “on the take” and/or beholden to those who finance their campaigns, but there are also many, many good public servants who genuinely are trying to do the right thing. Yes, there are judges whose ideology drives their decision-making, but there are many more who divorce their policy preferences from their responsibility to faithfully apply the law.

Wholesale distrust makes for toxic politics.

It is one thing to disagree with President Obama’s priorities and policies–quite another to suggest, as “commentators” on Fox News and others regularly do, that he is a Kenyan Muslim Socialist who wants to destroy the United States. It’s one thing to disagree with Senator Lugar, quite another to suggest that his ability to work with Democrats on national security issues makes him unfit to hold office. You may disagree with the Court’s analysis of the healthcare law (although very few people seem to know enough about the actual law to form a reasoned opinion), but to suggest that Chief Justice Roberts is a “traitor” or (more bizarrely) that his opinion was flawed because he takes epilepsy medication is to embrace paranoia.

We have reached such levels of derangement that we no longer believe anything we don’t want to believe–and thanks to technology, we can choose to inhabit media environments that reinforce our most unhinged conspiracy theories.

We don’t trust the “lame stream” media (or what is left of it). We don’t trust businesses or unions. We don’t trust the courts. We don’t trust the President, Congress or the Supreme Court. Increasingly, we don’t trust each other.

This is no way to run a country.

It won’t be easy, but rational people need to insist on measures that will make our governing institutions trustworthy again–beginning with more transparency and more control of money in politics. If we can restore a measure of basic trust in the good will of those we elect, perhaps we can begin to calm the crazy and actually talk to each other again.

Failing that, maybe Prozac in the water supply??

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Back Home Again in Indiana…

As we walked into the passenger lounge in Chicago’s Union Station on our way home, the TVs were all on “breaking news”–the Supreme Court had upheld the Affordable Care Act, aka “Obamacare” by a 5-4 vote.

There’s much that could be said about the Court’s decision–and virtually all of it has now been said. Initially, most legal scholars had predicted this result, which was dictated by relevant precedent; however, recently, Scalia had gone out of his way to reject those precedents, including his own prior rulings, stirring speculation that the Court might overturn the Act. (Scalia’s behavior, in several recent cases, has been so bizarre as to generate a cottage industry in armchair psychology…with one notable Court observer suggesting that he has “jumped the shark.”)

Lawyers and legal scholars will be in hog heaven dissecting the decision, the dissent, and what many attribute to Chief Justice Roberts’ concern that a contrary ruling would further damage the legitimacy of a politicized Court. I’ll leave those arcane arguments to them. What I have found utterly amazing–and ludicrous–is the public reaction from the right.

It is perfectly acceptable to disagree with the Supreme Court. I do it all the time myself. It is perfectly acceptable to dispute the wisdom of the ACA as policy. I’d have preferred a “Medicare for All” approach myself (although I recognize the political constraints that made such a solution to our health care crisis impossible). But the hysteria that greeted the Court’s ruling is quite simply astonishing. People are threatening to move to Canada (which has truly socialized medicine), comparing Obama’s effort to extend access to health care to Hitler’s Germany…this is the stuff of mass psychosis.

And then there is Mike Pence.

The man who has been blanketing our airwaves with soft-focus, “just a Hoosier like you” thirty-second ads, the man who is skillfully rewriting his own history to obscure his radical persona, just couldn’t stay in (his newly assumed) character. Pence compared the Supreme Court’s ruling to 9/11.

Think about that for a moment. A President and a majority of the legislature recognized that America had a healthcare crisis. Fifty million people could not afford health insurance, while spiraling costs posed a huge threat to the economy. Half of all personal bankruptcies were due to medical emergencies…I could go on, but you know the drill. The President and Congress addressed the problem with a complex piece of legislation.

And this–in Mike Pence’s strange reality–was equivalent to a terrorist attack. Trying to provide universal access to medical care is just like killing 3000 innocent people.

Pence immediately tried to walk this obscene reaction back, by calling it a “thoughtless” remark. As a friend of mine observed, thoughtless is when you forget your anniversary.

In what reality is an effort to fix a national problem, an effort to provide health care to children with pre-existing conditions, an effort to reign in abuses by insurance companies, a national calamity? What accounts for such a bizarre and disproportionate response to a measure that was first proposed by Republicans like Bob Dole, and first instituted at the state level by none other than Mitt Romney?

Someone recently said that if Obama endorsed oxygen, Republicans would suffocate themselves. This irrational response to a piece of well-intentioned legislation would seem to prove the point.

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