Progressive Taxation

Let's really get something started!

First, some background. In the context of higher gas prices, their benefits, and their impact on the poor, Andrew Sullivan (who doesn't drive, by the way) restated his belief that progressive taxation of income is immoral. That led to a defense of progressive taxation by John Schwenkler - in which he pointed out that the poor are disproportionately affected by high fuel costs - and the following from Andrew Sullivan (part of a longer post):

To put it as plainly as I can: I don't believe in a governmental attempt to engineer a substantively "fair" society through taxation. I see taxation as a necessary evil to pay for those few social goods that private individuals cannot provide for themselves. And the mode of taxation, in my view, should be as simple and as market-friendly as possible and should treat citizens equally, irrespective of their incomes. I believe in formal equality and a very limited state, not substantive equality and the welfare state. I know this is pie-in-the-sky, given our current Byzantine tax code and the entrenchment of certain socialistic assumptions in our political culture. I don't expect any radical change any time soon. But I'm not going to enable this kind of thinking without a challenge to it.

So yes: a flat tax so far as possible for as many as possible and no deductions. That's my goal. How that differentially impacts the lives of citizens should not be government's primary concern.

No, government has no responsibility to redistribute wealth downward, but it does have both a moral and practical responsibility not to impose an unreasonable burden on the poor. The advantage of progressive taxation to me isn't redistribution or some other social engineering fantasy. It is simply that the tax burden should not be unreasonable.

To me, if a family is struggling to pay rent, put food on the table, keep the lights on in the home, pay for health care, buy school supplies, etc., we should avoid making things more difficult by taking 20% of that family's income. For a single parent of three children earning $30,000 per year, you would be reducing the take home pay to $24,000. With three children, $2,000 per month goes pretty quickly. The lives of the poor are already made more difficult by reduced access to credit, reduced ability to afford goods and services that make others lives easier, and the day-to-day stress of living paycheck to paycheck, among other things.

I think it is immoral for government to, through taxation, help to drive the poor deeper into poverty. Beyond that, I also think it is bad policy to increase the burden on the most financially vulnerable. Poverty is harmful to society as whole, and even more harmful when it spreads and perpetuates itself. Crime, divorce, and school dropouts are just a few of the steps in the vicious cycle of poverty from generation to generation.

Of course we can't end poverty. There will always be winners and losers in a capitalistic economy. But we can refrain from making matters worse.

The important thing to me is not that taxation be fair. It is that taxation not be overly burdensome. A tax of 20% on the poor is crippling. A tax of 20% on the rich means less luxury items. There should be some recognition in our tax policy that all income earned up to a certain amount is necessary for basic needs.

UPDATE: Sullivan posted this reader email and his reply:

A reader makes the best case I know of for progressive taxation at this present time:

We have seen during the Bush and Reagan eras the negative effects of a more regressive tax policy. The gap between rich and poor widens. The middle class stagnates, while incomes for the top 10% explodes. Crime rates rise, families crack under the strain, whole communities undergo upheaval, the wealthy separate themselves in gated communities, and on and on. If Burkian conservatism is based on a respect for societal traditions and community institutions, one of its greatest adversaries must be unencumbered market forces and the "creative destruction" it unleashes. Have you read your "Cultural Contradictions of Capitalism" lately? I'd say if you want to avoid a future of wholesale class conflict and radical socialism, the smart thing to do would be to keep the gap between the rich and the poor from becoming a chasm.

This is also why Ross and Reihan may be ideologically difficult for me to agree with but are making an important contribution. Conservatism is defined, to my mind, by a respect for practical wisdom, the knowledge of when to abandon certain principles in the face of emergent realities. It is a perfectly conservative worry to follow Aristotle in hoping for a strong middle class as a bulwark for a stable mixed regime. If global economic forces shred that class or drastically exacerbate social and economic inequality so as to threaten the stability of the polity, conservatives should be open to some measure of redistributionism as a palliative. Not as a general principle - but as a temporary pragmatic response to a social danger.

The question then becomes one of whether progressive taxation is the right way to go - or whether raising exemptions, expanding the EITC, investing in public education are not better routes. Where Obama has made me pause is his assertion that we need some re-balancing after the last twenty years. I'm still skeptical for all the reasons I stated here. But it would not be a conservative thing to dismiss the argument at the present time. And the need for greater fiscal responsibility might push some Obamacons toward gritting their teeth and accepting a more liberal Obama administration than we'd like.

I agree with Sullivan's reader completely. I failed to mention in my post that a strong and dynamic middle class is a societal good that our tax policy should take into account.

I also think Sullivan's nod to the reader's points is admirable, but I doubt the efficacy or wisdom of government programs as a route to alleviate the tax burden on the poor. Raising exemptions is more along the lines of what I was proposing, but do we have a bright line cut off at which earners under a certain income are not taxed at all but earners over that income are taxed at something like 25%? That seems to create all sorts of weird incentives. Also, it makes the person with a higher gross salary substantially poorer than a person with a slightly lower gross salary and loses sight of the fact that there is a wide spectrum of wealth, not a magic number at which one's financial well-being is immune to the burden of taxation. Therefore, you inevitably arrive at some sort of sliding scale. We need to simplify the tax code, certainly, but five to ten tax brackets, with far fewer exemptions and deductions and credits, would be fairly simple.