In this age of neo-conservative and neo-liberal dominance, it seems that lingering around every corner is someone ready to argue for getting rid of the income tax base altogether in favor of a consumption tax that does not reach capital income (whether in the form of a retail sales tax or the Hall Rabushka combination of a business VAT and a wage-based consumption tax). One common figure pushing flat consumption taxes (or no tax at all) is Robert McGee, who writes from a radical libertarian perspective--he considers taxation a form of thievery. Reading these arguments makes one particularly appreciative of the political titans of the past who were able to engage in deliberative dialogue over politically sensitive issues without being tongue-tied by their need to seek reelection from an ever-finicky electorate.
It also makes for a pleasant surprise to see conservative scholarship that breaks the mold. In that vein is an article by Mark Hoose, an adjunct professor at Southwestern University School of Law, who writes about "The Conservative Case for Progressive Taxation" in the New England Law Review (40 New Eng. L. Rev. 69 (2005)).
Hoose notes the intensifying efforts of various self-styled conservative groups to convince Congress to enact significant, even radical, tax reform. Beginning in the early 1980s, many steps have been taken along the path--reductions in rates under Reagan, the "base broadening" reforms of the Tax Reform Act of 1986, and in the latet 1990s, Clinton's signing of the Republicans' dream bill reducing the tax rates on the capital gains that accrue primarily to the wealthiest taxpayers. With Bush's election, the step-by-step undoing of the social compact on taxation has been almost completed--further cuts in rates, significant narrowing of the tax base by excluding more investment earnings from tax, more deductions for capital expenditures, and a tentative repeal of the estate tax. These groups are ready for the next step--the final elimination of the progressive income tax, to be replaced by a regressive sales tax or flat consumption tax.
Hoose asks whether a classical conservative should favor radical tax reform or instead some continuation of the current progressive income tax system in place since 1913. He briefly defines conservatives (after jokingly citing Leo Rosten's quip that they are the people who admire radicals a century after their death) by looking to three particular conservative leaders: Edmund Burke, Russell Kirk, and William F. Buckley.
Edmund Burke (British Parliament in the late 18th century) argued for liberty generally and economic liberty in particular, but also demanded high respect for tradition and customs. Burke valued traditional institutions, such as the State, which was necessary for social order. He believed that institutions should be changed, if at all, only through slow and careful steps.
The conservative movement was challenged by progressivism at the turn of the 20th century, which led to the implementaion of the progressive income tax (after several earlier attempts) in 1913, in spite of conservative opposition. The Great Depression and World War II strengthened progressivism, resulting in the New Deal expansion of the role of government in the economy.
Conservatism began its long haul back with the publication of Russell Kirk's The Conservative Mind in 1953, claiming the following six tenets of conservatism (in shortened form).
- belief in a transcendant order or natural law
- antagonism to uniformity through egalitarian or utilitarian goals
- importance of social hierarchy rather than a classless societey
- primacy of property rights to freedom
- faith in prescription and distrust of ideal reconstructions of society
- reluctance to accept change or hasty innovation (conservatives prefer the devil they know)
Kirk also emphasized the importance of prudent restraints on power, voluntary community, and the need to accept some change because of the need for renewal.
Finally, Hoose leans on Buckley as the key to modern conservatism. While agreeing with Kirk on the need to preserve existing insitutions, Buckley rejected the isolationist views associated with Taft and pushed international involvement. For the extreme libertarians (or neoliberals), economic liberty became "an end in itself" where "government itself was the enemy" (in sharp contrast to the views of the early conservatives). Id. This group combined libertarian views about economics with interventionist foreign policy and social conservatism and heralded the "creative destruction that comes with unregulated capitalism." Id. A growing new branch of conservatives is the neo-conservatives, which combine social and economic conservativism (but not libertarianism) with nationalism. Strands of social and fiscal conservativism and populism run through all of these.
Hoose rejects the newer -isms and analyses progressive income taxation through a classical conservative lens. He concludes that if the classicists were around today, they would support progressive taxation. A few key ideas relevant to his decision follow.
- The current system has significant advantages: it is not so progressive as to challenge the traditional order, it successfully raises large revenue streams, with remarkably high compliance levels, it is "embedded" in the economy (homeowners make plans in reliance on the system).
- Proposed reforms are often misleadingly presented (claim of a flat tax of 17% simply unrealistic given the need for some exemption level) and may be considerably more complicated than claimed (e.g. McCaffery's consumed income tax at a progressive rate).
- Natural law provides little guidance--some authorities seem to provide no support for progressivity, but the Bible appears to support it, out of concern for the poor
- Progressivity is not such a strong egalitarian tool that it threatens the order of society, and yet it does conform with Kirk's ideas of voluntary community (charitable contributions; pooling resources through taxation and government programs offered in a democratic society)
- Conservatives today are not as likely to explicitly support a class-based society, but rather a sense of social peace with respect for the law; at any rate, while government is by definition somewhat egalitarian the progressive tax system does not disrupt order or functioning property rights system and in fact some restraints on power are necessary and arguably supported by progressive taxation's check on the extreme wealth of those at the top
- Although libertarians complain that the progressive income tax is a "taking", that argument applies to any form of taxation if it applies to one form of taxation. Once the need for a state is accepted, the argument against taxation from the libertarian perspective loses.
- Unless there is a head tax, there will be some differentiation among individuals in the amount of tax to be paid. Progressivity is not a devil here, and is no more intrusive than other aspects of business
- The current dominance of modern economists' notions of efficiency as supporting nontaxation of investments is not clearly supported empirically and may amount to a false "scienticism". Faith in the market has taken on "cult status", it has led to tax policies that attempt not to burden the market by not taxing capital and limiting taxation of business, and it has resulted in surprising property decisions that uses the state to wrest existing property rights from current owners for the benefit of specific commercial interests.
- The proposed tax reforms have little in the way of track records, either here or elsewhere, and have never been relied on as the sole revenue generator in other nations
- Prudence values (maintaining institutions, resisting hasty innovation) support the current system.
All in all, the Hoose article is an interesting venture into the kinds of arguments that a classical conservative, as opposed to a modern "economic conservative", can put forward in support of a progressive income tax system.