By Doug Thomson
“Death and Taxes”, you all know what I mean, right? Inevitability. Those words have formed an idiom in the English language since early in the 19th century; idioms being phrases that mean much more than their literal definitions.
Now, in truth, the former, death, is truly inevitable. I don’t mean to be depressing, but as Siggy says in the movie, What About Bob, “There’s no way out. You. Are. Going. To. Die.”
However, I must disagree with Benjamin Franklin, Daniel Defoe and the rest of the boys in the band, who casually prattle on about the inevitability of taxes.
No, taxes are not inevitable, at least not all of them.
First, like some of the more rabid Libertarians among us, one can refuse to pay his or her taxes.
There are consequences to this choice, of course, and they’re probably pretty nasty ones, but if one is willing to pay the price, taxes are not inevitable. Then, for the monied types, there are the possibilities of tax avoidance schemes, tax havens and other hidey-holes where they can stash their funds to avoid the grasping hand of the tax collector.
And, for the uber wealthy, think Donald Trump, tax law is so complicated that their tax lawyers can generally find ways to keep their cash happily at home in their vaults.
There are, of course, the Gates and Buffetts of this class who not only pay their taxes, but freely give up buckets of cash. Their altruism is wonderful, but in truth they have so much of the green stuff, it really isn’t a big sacrifice.
Finally, there are the multi-national corporations who, despite their profitability, wheedle and sometimes extort huge tax breaks from the countries where they ply their trade.
So, a lot of tax is more or less avoidable, but just not for the bulk of us who are honest, middle or low income citizens or small business people.
That’s really frustrating and certain politicians know it, so they promise to plug the loopholes, crack down on cheats, and give the middle classes lower taxes.
Sadly, they seem to do rather poorly at the loophole plugging and cracking down bits, but they do, upon occasion, give the middle classes tax breaks that often are offset immediately by user fees that are also terribly regressive in that they impact the poor far more than the wealthy.
Obviously, charging a $10 transit fee impacts a single mother earning minimum wage far more than it does an executive earning $300 an hour. On the other hand, the executive would never ride public transit; so much for that comparison.
But still, politicians and pollsters do like to talk about tax reduction, and it sounds good, so we can assume that it is a popular topic with a sizeable portion of the public. But are lower taxes always a good idea? Well, as it turns out, no, lower taxes are not always a good idea, especially when the uber rich are the recipients.
It seems we need taxes to pay for the infrastructure and the services necessary to a functioning society and the theory that tax breaks at the top of the food chain will somehow trickle down to the masses is hopelessly optimistic.
In fact, the whole trickle down concept (technically called Supply Side Economics) from where all this tax reduction stuff flows hasn’t performed all that well since it was devised by economists including Robert Mundell (a Canadian Nobel Prize winner no less) during the Regan administration.
Arthur Laffer, another leading light of the Supply Side Economics team had the opportunity to trot out his theories in 2012 when he was the economic advisor to Sam Brownback, the Governor of Kansas.
The results of the ensuing tax cuts were devastating to the economy of the state.
Laffer’s defense? Brownback didn’t cut enough. Laffer remains dogmatically wedded to a model that didn’t work under Regan, didn’t work under George W. Bush, and certainly hasn’t worked for Kansas, yet for some reason right leaning politicians sidle up to it like it is simply the best dance partner in town.
Could the simple reason be, and I don’t want to be too cynical, that it makes the rich, richer?
Indeed, since the Regan years the gap between the rich and the rest of us has been growing wider and wider.
When we add to that widening gap, a dramatic shrinking of the progressive tax rates (where the wealthy once paid progressively more than the poor) we begin to understand why the masses are a little perturbed.
So, what’s the lesson? Be very cautious when a politician trots out tax breaks as a solution to all our problems.
We are social beings and we do best when we cooperate with each other and our taxes are a fine example of that cooperation.
We need tax revenues to provide the broad range of structures and services that allow business to flourish and the lives of all to be enriched.
To quote the great American jurist, Oliver Wendell Holmes, “Taxes are the price for a civilized society.”
All in all, our taxes aren’t such a bad deal and maybe if Benjamin Franklin, Daniel Defoe and the rest of the boys in the band had been a tad more positive about the subject we’d all be a lot better off.