The very best thing about Election Day is the inner peace it brings, the feeling that the people have spoken and that we will accept our collective verdict, for awhile at least, and maybe everybody should just shut the heck up for a few weeks, please.
And of course there’s the literal quietude that comes from the sudden cessation of those God-awful political ads, most of them this year scaring the bejeezus out of us about taxes, a thing to be feared right up there with terrorists.
It’s always like this with Americans and taxes, and has been since the agrarian Jeffersonians in the 1790s were warning us about the big-government Hamiltonians. It might always be thus in a country founded by wealthy, white anti-tax guys. But I don’t recall any elections where advertising demagoguery was more irresponsibly centered on an infantile fear-and-loathing of those words “taxes,” which by the way, is not a four-letter word, and shouldn’t be used that way.
Democrats as well as Republicans indulged in this puerile bashing of the mechanism by which we finance our democratic governments, pay for wars against anti-democratic terrorists, ensure a measure of economic security for our elderly and incapacitated, educate our children and build the physical infrastructure that makes business prosper.
In Minnesota, we saw one particularly jaw-dropping ad taken out by the Democratic House Congressional Committee against a conservative Republican, accusing him of raising taxes. And I think it could be argued that Barack Obama, despite a commendable strategy of bringing more progressivity to the federal system, focused too much on the promise of tax cuts for mostly everybody, knowing full well that we need more revenues overall to avoid debilitating debt and to finance much needed investments that can build a new shared prosperity.
Taxes are simply the price we pay for a civilized society, as countless wise people have noted. They are dues for the club, and we arrive at the price through one of the most legitimate democratic processes in human history. (I’m trying to imagine a national ad campaign designed to get people to fear and despise paying their bills, or the dues to their organizations.) Sometimes I wish we had a national group that does nothing but counter-attack the relentless attacks on taxes and government, a sort of Public-Sector Anti-Defamation League.
In the meantime, let’s face some facts, as the policy debate in the Congress and the Legislature begins about what to do next, who pays for it, and how much. And in Minnesota, how to balance a projected state budget shortfall of $2 billion or more.
And here are the underlying bottom-line facts to consider.
We have low taxes Our current tax load and government’s share of the economy is the smallest of the industrialized and truly democratic and more prosperous nations. And considering that our military budget is so much larger than any of those nations, the percentage that our governments spend for the domestic common good and for economic security is even smaller. And in Minnesota, our ranking on taxes as percentage of income has fallen to about 20th among the states. In total revenues (including such things as fees, tuitions, and federal aid) as a percentage of income, we’re down to an unMinnesotan 30th among the states. We probably as a nation will always be an outlier on the economic freedom side, but there’s room for a reasonably larger amount to go in the common pot for the common good.
And bigger problems It’s tempting to note also that those other high-tax countries, mostly in Europe but including Japan and the old Commonwealth nations such as Canada and Australia, have much better quality-of-life indicators on most measurers. These include mental and physical health, crime, and the general economic condition of citizens with middle incomes and lower incomes. History and demographics explain some of that and it’s harder to build a common pot in such a heterogeneous country. But we could use a little more common-purpose building.
Starting with inequality You know you have an inequality problem when none other than Alan Greenspan, former Federal Reserve Board chairman and a leading apostle of the tax phobia generated by libertarian Ayn Rand, says this about inequality lately: “This is not the type of thing which a democratic society – a capitalist democratic society – can really accept without addressing.” Not up there with FDR’s exhortation that capitalism needed to be saved from itself, but it’s a start.
Statistics released recently by the Washington-based Center on Budget and Policy Priorities shows that income from the bottom 20 percent of Americans increased by a paltry 6 percent from 1976-2005, and by a staggering 228 percent for those in the top 1 percent. Studies also show the wealthiest households are paying a smaller percentage of their total income in taxes. If it’s time for more sacrifice, and to heed the challenge embedded in John McCain’s “Country First” slogan, it’s pretty clear whose turn it is to sacrifice.
We tried even lower taxes, and. . . One must be careful about direct cause-and-effect, but it was the hard-core anti-government and anti-tax crowd that for years has tried to make the linkage between lower taxes and a stronger economy, an abundance that would trickle down to everyone else. The United States and Minnesota are now about a decade in to the largest income tax cuts in their respective histories. We now have lower taxes, especially for the wealthy at the federal level, and also lower income taxes and less government in Minnesota, and we also are underperforming the national average on key economic measures for the first time in decades. The economic “recovery” that followed these record tax cuts was the weakest expansion since World War II, and wasn’t a recovery at all for many of those in the middle and on the bottom.
Instead of a bonanza, we are in the midst of what could become the greatest economic crisis since the Great Depression. A lot of Americans are wondering, as New York Times columnist and Noble Prize-winning economist Paul Krugman recently wrote, “Where’s My Trickle.”
Here’s a final assertion, not a fact but an educated prediction. We won’t get through our current crises and we certainly won’t make broadly shared economic progress as a state or nation without raising more revenue and back-tracking from a decade of wrong-headed tax cuts.
And when zillionaires such as Bill Gates and Warren Buffet are calling for higher income taxes, when free-market zealots like Greenspan worry about inequality, and when conservative commentators such as David Brooks are calling for a restoration of a communitarian mindset and more investment in human capital and infrastructure, you know the tide has turned.
Dane Smith is the president of Growth & Justice. A non-partisan advocate for fair taxation and smart public investment, Growth & Justice believes a sustainable economy provides the foundation for a just society.