Republicans are widely perceived as being opposed to progressive income taxes in general, and as giving tax breaks to the rich and taking more tax from the poor. Do Republicans oppose progressive taxation, and why? — Themon
This is splendid. At last you give me a few questions which are easy to answer. First, I will warn you that, as far as I can tell from the behavior of elected officials, Republicans in general have no fixed principles whatsoever. Nonetheless, the platform has a few ideas and the remaining principled conservatives are still reliable, so I will give you the best answers I can as to the theory. Like I said though, with the exception of Ron Paul and a handful of others, I have not seen anything in Washington D.C. to indicate Congress sees these ideas as much beyond words on paper.
The official party favors low tax rates for both individuals and businesses without specifying how that should be achieved. Some are content with a progressive system so long as it is low. Others want a flat tax or a fair tax. Still others would repeal the 16th Amendment and destroy income tax altogether. Any of these things would be better than the progressive system we have today.
The Moral Argument.
Income taxes are, first and foremost, immoral. They presume that government has some legitimate claim on our labor and that we must pay for the privilege of working. This is absurd. It is no different than, in bygone years, having one’s daily wages robbed while walking home from work or paying mafia protection fees. The fact that it has been enshrined in law and conducted by lawmakers, not by law breakers, makes not one jot of difference to the moral analysis. The principle is the same and it is wrong. In a just world, in a free world, people should be entitled to the fruits of their own labor.
Progressive income taxation is a double injustice, though. Not only does it legitimize robbery of the citizenry, it says that one small section of the citizenry should pay more for the benefit of all the other citizens. It says that the property of some can be seized and given to others, not because those others have earned it or traded for it, giving value for value, but simply because they want it. Thus they will use the machinery of government to point guns at their fellow citizens and effectively say, “Your money or your life.” Despite this, those who pay more in taxes are not entitled to expect more from their government than those who pay nothing at all. But for the 16th Amendment, this would violate the equal protection clause. When only the wealthiest 10% of our citizens pay 72% of all taxes collected, this is not justice, but looting.
Imposing a flat tax (I believe the rate would have to be about 10-20% on all people over a certain poverty threshold and a 0-9% adjustable rate below that) would certainly remove the unequal treatment. It would also greatly simplify the tax code. However, it would not get rid of the basic moral injustice of charging people for the privilege of working.
A fair tax would be better still. It eliminates income tax and would create a 20% (or 23% whatever) nationwide sales tax. This takes care of both moral arguments on the idea of taxing work and an unequal tax burden. It instead taxes a business transaction and one can justify it as the government has the responsibility for enforcing the contract created. However, it is still acts as a sort of flat income tax as people must purchase certain things for survival.
Ron Paul would prefer no income tax at all. He would rather go back to the days prior to the 16th Amendment. He would fund necessary government operations through property taxes, excise taxes, and tariffs as it operated in the past. Given that only 1/3 of government revenues come from income taxes, and government has grown a bit more than a third since the 16th amendment passed, he contends this would be quite workable while getting government back to a more manageable and limited size (i.e., not prying into every aspect of human affairs). Here there are the fewest moral hazards. It treats all people equally and it does not tax the right to work. Rather, it taxes only the use of the land and the entry into the United States markets to benefit from our contract laws. It has the added benefit of restraining government spending and overreaching (save the moral hazard of fiat money and Fed printing). Morally, I would prefer this (though the tariff system would have to be watched closely to avoid protectionism), but would settle for a Fair tax and tolerate a Flat tax. The Progressive system of taxation is not morally justifiable under any sort of legitimate ethical system.
The Economic Argument.
If a productive economy is one’s goal, a progressive tax system is the worst tax policy one can create. Even Keynesian economists acknowledge that every increase in tax rate diverts money from investment and kills jobs. The higher you set the rate, the more inefficiency you will have and the slower and the economy will be, until it collapses entirely. This admission always surprises me given that Keynesians try to find that magical place in tax rates just before the economy starts to strangle. They hate admitting that the magic spot is constantly changing given diverse circumstances and that government rates cannot possibly keep pace, and if they try they just create uncertainty and speed the process of strangulation. Yet, empirical evidence is hard to refute and Keynesians do reluctantly agree that the economy exponentially increases in productivity every time the tax rates are lowered. This is also why even Obama’s Keynesian advisors are worried about new cap and trade taxes and new taxes for a massive healthcare entitlement. Raising taxes during an economic slump is a good way to ensure we stay in an economic slump (i.e. Roosevelt in the Depression).
This is the primary reason cited by Republicans for why they oppose the progressive tax system. They certainly do not want to lower taxes on the rich while increasing taxes on the poor. They want to lower taxes period. However, as I said earlier, because wealthy people pay almost all of our taxes anyway, tax cuts tend to benefit them more than others. This does not increase a burden on the poor, though. It simply makes the law (as distinct from economic status) a bit more equitable, while freeing up additional capital for investment and job creation. That is where the rest of the people begin to benefit as well. Remember that the rich do not just pay income tax. They also pay capital gains taxes, excise taxes, property taxes, business taxes, and the list goes on interminably. Their tax burden, over and above their 70% share of income taxes, is incredible. Freeing that wealth to flow into the real economy rather than government coffers is a good thing for everybody.
A Flat tax system would free up a lot of capital for the real economy to digest. It would also eliminate uncertainty and market imbalances created by the innumerable and unjust special interest subsidies, exemptions, credits, rebates, et cetera that dominate our monstrous tax code. Even the overtly socialist states of Europe look on our tax code with fear, and it is the most maddening and illogical area of law to study. Yet there are armies of lawyers and accountants ready to defend it as they make their living by charging exorbitant amounts to interpret what should be comprehensible to everyone.
A Fair tax system of 20% on all sales transactions creates a high threshold for purchases. However, it also frees up a great deal of capital to flow into the economy. Moreover, it is very easy to enforce, as it can all be placed on business, just as sales tax is now. This is also thought to encourage savings rather than our current need for constant consumption. Austrian School economists argue that this would create real capital to build real and stable wealth in the economy. There would not be so many of the consumption driven bubbles as people would be less inclined to purchase unless they had real wealth backing it. They would see the taxes they pay more effectively. Keynesians, though, who favor constant consumerism and Fed driven inflation, might have a harder time tolerating this.
Then there is the Ron Paul system of pre 16th Amendment taxation. This is also easy to enforce and undoubtedly the least distortion creating. I have only recently begun to look into its practical effects, though. I don’t doubt it would be absolutely impossible to fund government at its current levels through such a system. A few years ago, that might have concerned me. Now, I think that would be a very good thing.
The Druid Perspective
Druids are not a big part of the Republican Party, or really any party I suppose. However, looking back on the Brehon legal system of the Celtic world is somewhat important as if forms the basis of our modern contract and business law in the common law. Brehons never permitted an income tax (until the dawn of Christianity when the rí became a king and wanted divine rights of tyranny). Rather, tenants paid rent for protection to the chieftain. Those not on land directly owned by the chieftain had the option of declaring for another chieftain in the surrounding area if he became too demanding. And the chieftain could always be unelected if enough people disputed his rule.
In Iceland, a mix of Druid and Asatru tradition, and I believe the oldest running republic on earth, one was not territorially tied to a chieftain at all. Regardless of the land you occupied (with the exception of land held by the chieftain as personal property) if you did not like his fees for protection and judicial action, you could always declare your household and land for a competing chieftain, even if that chieftain did not occupy territory contiguous with your own. Both the Celtic and Icelandic law collected revenues based on rents and fees for services, most closely resembling the Flat or Fair tax. Being liberty loving people with firm commitments to equality, this makes sense.
So there is the Republican views on taxation, both economic and moral. While the party has no official view other than wanting to lower taxes all around, I favor any of the three options other than the progressive. In practice, though, Republican lawmakers have been as bad as any others for polluting the tax code with all manner of odd provisions. If tax reform comes, it will have to be at the grassroots level. For conservatives, these are the ideas growing at the grassroots level.
More on the other topics next.