Taxes are Good
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Are We Better Off Paying Less Taxes?
There is another common anti-tax argument offered by conservatives. It is a reliable old standby: Tax cuts are good because they put more money in your pocket. It is an appeal based on pure greed and selfishness. This argument is not based on any sense of what is in the public interest, only what is in your own private interest. But it can very seductive to some Americans. And anti-tax advocates do not hesitate to play this selfishness card. Consider, for example, the way Grover Norquist of Americans for Tax Reform explains the benefits of tax cuts: “When the government doesn't take as much of your money next year as it did last year, we have more money. The government has a lower tax rate, and depending on economic growth, may have more or less money, but we, the people, have more money. So it is a good thing for us to have lower taxes."16
But here is the question: are we really better off as individuals in the long run if we were to pay much lower taxes? Naturally, most people would feel better off with a few more thousand dollars to spend. But what Norquist leaves out, and hopes Americans don’t notice either, is the essential connection between tax dollars and government programs. When the government returns tax money to individuals, it must also necessarily begin to curtail important government programs that benefit us all. Tax cuts on the scale envisioned by small government advocates can’t help but cut deeply into the dozens of vital government service and benefits detailed in other articles on this website. Loss of these collective benefits means that we would probably not be better off at all. Do you really believe that you would be better off if you had 27 more dollars in your pocket – the amount the average American spends to fund the Environmental Protection Agency – and had to forego all those agency’s programs to ensure clean air and clean water and to deal with environmental threats like toxic waste, oil spills, mercury and lead contamination, radioactive waste, pesticide poisoning, ozone depletion, and global warming?
The reality is that in modern societies, we simply face too many serious problems and risks that we cannot deal with effectively as individuals. Having a few more thousand dollars in our pockets will not help us to deal effectively with a deteriorating public school system, police and fire department layoffs, unclean air or polluted water, unsafe food, being laid off from our jobs, threats from terrorist organizations, and so on. These kinds of problems can only be addressed collectively – through collective institutions like government that allow us to pool our resources and efforts to most effectively address these threats to our well-being.
Let’s focus for a moment on one particular problem: the economic insecurity felt by a growing number of Americans. We have increasing trouble paying for health care and health insurance. Many of us are unsure whether and how we can pay for our kids to go to college. Being laid off means economic disaster for most families. Personal bankruptcies have been growing dramatically. Many Americans are also very uncertain about whether they will have enough money to live a decent life in retirement, and wonder who will take care of them in their old age. And many of these problems are greatly intensified when we have a severe recession -- like the one that began in 2008. But the point is that even in "good times," life for many Americans is full of persistent and serious economic worries.
Conservatives realize this situation all too well and have been relentless in their efforts to exploit these economic insecurities to support their campaign to reduce taxes and government. Their message is very seductive: Couldn’t we all use more money in our paychecks to meet our pressing economic needs? They also like to suggest that high taxes are much of the reason for our economic insecurities. As Rep. Dick Armey has argued, the reason that “education and health care are difficult to afford is because the government itself makes us poorer through high taxes.”17
But here again the government bashers have it exactly wrong. The cause of people’s economic insecurities is not government taxes. Virtually all of these insecurities are coming from changes in the economy. Globalization contributes to stagnating wages. Mergers and downsizing threaten many people’s job security. Many corporations can no longer afford to provide health care benefits or retirement plans for their employees. And so on. Not only are taxes not causing these insecurities, they can actually be a large part of the solutions to many of these problems. The most viable approach to many of these economic worries is again not to try to go it alone, but to support an expansion of government programs to address them directly. As we’ve seen, one of the main functions of modern government is to pool collective resources (taxes) to provide social insurance against many of the economic risks we all face – such as losing our job, or retiring, or facing a major illness. The better – and better funded – these programs are, the less economic worries we have.
Again, looking at Europe is instructive here. Europeans are more secure economically because they have more extensive programs to protect them from the many economic risks of modern life. They have universal health care, extensive unemployment insurance programs, generous government pensions, and free or very low-cost higher education. So instead of leaving everyone on their own to face these economic difficulties – they pool their tax resources and solve these problems for all citizens. Certainly this costs more in taxes, but the economic security that is enjoyed by everyone is priceless.
This is another reason why Europeans are not revolting against their high taxes. In Europe, taxes are not seen as a threat to people’s economic security – they are seen as providing that security. Europeans do not feel like they cannot afford to pay those high taxes, rather they feel that they cannot afford to not pay them – and thus risk losing the crucial economic safety net that their social programs give them. To over-simplify only a bit: for Europeans, more taxes mean more economic security. It is a very different attitude toward taxes than we have here – but it is one we might learn a great deal from.
Seeing Government as “Them,” Not “Us”
The anti-tax arguments of conservatives and libertarians also rely heavily on denying the connection between the people and their government. They do not want us to see public money as “our” money being spent for “our” benefit. Grover Norquist, for instance, rankles when people refer to the government as “we.” When the interviewer Terry Gross pointed out to him that “The Bush tax cuts would cost us about $1.1 trillion over the next 10 years, and we're going to be hundreds of billions of dollars in debt.” He responded by saying: “Well, there's a very interesting use of the word 'we.' Every time you use the word 'we,' you meant the government, and I tend to use the word 'we' to mean the American people and to speak of the government as the government.” 18
For anti-government advocates this is a crucial distinction. They don’t want people seeing government as “we.” In terms of taxes, they want people to see the government as “them” taking money from “us.” It is this same rhetorical point that President George W. Bush expressed when he was pushing for one of his tax refunds: "It is not the government's money,” he said. “It is your money.” But isn’t the government’s money in a very real sense “our” money too? Aren’t government programs “our” programs? Al Gore, when he was running for president, certainly thought so. Responding to Bush’s tax cut proposals, he argued: “Their theory is that’s going to be good for the country, and they say it’s your money. Well, it is your money. But it’s your Medicare, it’s your Social Security, it’s your environment, it’s your school system, it’s your country.”19
In a working democracy, government is supposed to be “us,” and its spending policies are supposed to generally reflect “our” collective will. Granted this process works imperfectly and sometimes special interests win out over the public interest in budget battles. But the basic idea underlying democratic government is that it is a reflection and representation of us. This gives us a very different perspective on taxes. As Benjamin Barber has explained:
The money does not belong to the government, it belongs to us. But the government belongs to us too. ‘It’ does not steal from “us,” we pool resources so we can act on behalf of the commonweal – the weal (well-being) common to us. … Taxes are not tithes imposed by tyrants; they are self-imposed duties that permit our government to discharge our common purposes. … To cry “Give Americans back their hard-earned tax dollars!” is a disingenuous way of saying “To hell with establishing justice, promoting welfare and securing liberty!” It is nothing more than a cynical bribe to get people to give up on one another and to go it alone.20
The Real Problems with Taxes
All of this has been a defense of taxation and an argument that taxes play a very positive and beneficial role in our society. But this is not to say that there are no problems with taxes in this country. Of course there are – but they are not the problems that conservatives usually cite, like that we are overtaxed or that taxes are strangling the economy. In fact, if you ask the American people, their main complaint about taxes is something quite different. Pollsters have found that “What most bothers the public about taxes is the feeling that some in America are not paying their fair share. They believe that middle and lower income people pay too much while the wealthy and corporations pay too little.”21 So some of the real questions surrounding taxes involve how fair they are, and how much of the tax burden should be shouldered by various economic classes. There are other issues as well: Are there better and worse ways to collect taxes? Should we be relying more on regressive taxes like sales taxes and less on more progressive approaches like income taxes? Should we continue the substantial tax breaks given to the middle and upper classes, such as the home mortgage interest deduction? All of these are valid and ongoing controversies about taxes in our society. But the important point here is that while these questions of what makes for a fair and effective tax system are valid issues for debate, the legitimacy of taxes themselves is not.
Americans need to come to their senses about taxes. We need to reject taxophobia and stop falling for conservative arguments about how taxes are bad. We need to recognize that taxes are necessary and beneficial – that they are indeed the dues that we pay to live in a modern, functioning society with all the government benefits to which we have become accustomed. We need to appreciate that there is a very real connection between the taxes we pay and the vital services and programs offered by our state, local, and federal governments – and that cutting taxes the way many conservatives propose will inevitably undermine the viability of these programs and harm the public interest.
Embracing a more realistic view of the value of taxes is especially important if we want to make progress on a number of important fronts. If we want to make health care more accessible, improve education, combat global warming, etc., we need more money to do so – which means tax increases. The trillions of dollars that were spent on the Iraq War and the economic bailout have produced record budget deficits that cannot be sustained. So there is no more free lunch. If citizens want more out of their government, they must be willing to pay for it.
Fortunately, there are reasons to hope that Americans are coming around to a more positive view of taxes. Polls show that the number of Americans who believe that taxes are too high has been dropping over the last several years and is now at its lowest level since the 1960s.22 Much more importantly, they also see taxes as an important part of their contribution to a democratic society. 81% of Americans agree with the statement: “I don’t mind paying taxes because my taxes are part of my contribution to society as a citizen of the United States.” Another 84% also say “I don’t mind paying taxes because my taxes contribute to making sure we have public schools, clean streets, public safety, national defense, and a cleaner environment.” And even 74% say that that “I don’t mind paying taxes because I want government to play a strong role in helping people when in need.”23 We need to actively promote and build on these kinds of pro-tax sentiments. We need to go on the political offensive on the issue of taxes and make it clearer that in many cases paying more taxes makes us better off, not worse off.
Thankfully, a number of Americans have already begun to fight tax cuts and even support tax increases. In my own town, a majority of residents have voted several times in the last decade to raise their own taxes to pay for such things as a new fire station and a badly needed renovation of our high school. Many Americans are also now saying that they are willing to have their taxes increased – if the money goes to important programs like education and environmental protection. It is also encouraging that during the ongoing fiscal crisis in the states, thirty-three state legislatures have made the brave choice to raise taxes to ensure the continuation of vital services. And in a few of these states, even some Republican politicians have acknowledged the necessity of boosting revenues and have gone along with these tax increases – a testimony to the fact that common sense can triumph over blind political ideology. All of these things suggest that while anti-government crusaders may still be able to fool some of the people all of the time with their rhetoric about the evil of taxes, they are not able to fool all of the people all of the time.
1. George Lakeoff, “Simple Framing,” Rockridge Institute, August 25, 2006, http://www.rockridgeinstitute.org/projects/strategic/simple_framing
2. George Lakeoff, “Progressive Frame for Taxes,” Rockridge Institute, August 25, 2006,
3. Larry Kudrow, “Terminating Any Doubt,” National Review Online, http://www.nationalreview.com/kudlow/kudlow082103.asp
4. Meg Bostrum, By, or for, the People: A Meta-Analysis of Public Opinion of Government (New York: Demos, March 1, 2005) p. 27.
5. T. R. Reid, The United States of Europe (New York: Penguin Press, 2004) p. 145.
6. People for the American Way, “National Taxpayers Union, August 25, 2006. http://www.pfaw.org/pfaw/general/default.aspx?oid=10235
7. Revenue Statistics 1965-2003, OECD 2004, p. 18.
8. Kaiser Family Foundation, “National Survey of Public Knowledge of Welfare Reform and the Federal Budget,” http://www.kff.org/kaiserpolls/1001-welftbl.cfm. June 23, 2006
9. Mimi Abramovitz, “Everyone is Still on Welfare: The Role of Redistribution in Social Policy,” Social Work, Volume 46, No. 4, p. 299.
10. Andrew Chamberlain and Gerald Prante, “Who Pays Taxes and Who Receives Government Spending? An Analysis of Federal State and Local Tax and Spending Distributions, 1991-2004.” http://www.taxfoundation.org/files/wp1.pdf
11. All of these figures are from John O. Fox, If Americans Really Understood the Income Tax (Boulder Colorado:Westview Press, 2001) p. 170.
12. Fox, p. 169.
13. Fox, p. 166.
14. Joel Slemrod and Jon Bakija, Taxing Ourselves, 3rd Edition: A Citizen's Guide to the Debate over Taxes (Cambridge, MA: MIT Press, 2004), p. 119.
15. Anna Bernasek, “Do Taxes Thwart Growth? Prove it,” The New York Times, April 3, 2005, p.6, Business section.
16. Terry Gross, “Grover Norquist” Fresh Air, http://www.npr.org/templates/story/story.php?storyId=1452983
17. Dick Armey, The Freedom Revolution, Washington, D.C.: Regnery Publishing, 1995, p. 292.
18. Terry Gross, “Grover Norquist” Fresh Air, http://www.npr.org/templates/story/story.php?storyId=1452983
19. NY Times, Aug 31, 2000.
23. Bostrum, p. 27.