Many of my fellow tax profs complain that there is a good bit of ignorance in the American public about tax. The lack of information ranges all the way from the reasons for the original Boston Tea Party (NOT pushing for tax cuts, but in fact protesting a tax cut decision on the grounds that it resulted from taxation policy being made in Parliament without representation of those affected in the Colonies) to the rationales for a progressive income tax system (not a communist-style takeover of our economic system but rather a long-held view that we are all in this together and that we should pay taxes in accordance with our ability to pay, which reflects the fact that lower-income people must spend most or all of their income on necessities or near-necessities while high-income people have considerable choice and even difficulty in managing to spend all of their income).
The lack of information is related to the way tax is used in ideological disputes--because it is so easy to misrepresent information about the tax system and because it is so easy to appeal to everyone's wish that there was no need for any taxes whatsoever. We don't educate our children well in elementary and secondary school about either personal or public finance, so they come to questions about tax policy ill equipped for the debate and ready to glom onto the facile and deceptive arguments put out by the various propaganda machines that are essentially aiming at cajoling them to vote/support policies against interest.
Remember the survey results discussed by Bruce Bartlett that showed that significant errors in understanding of tax, including a large number who affirmed the erroneous statement that "taxes had gone up in 2009 under Obama." The Dems are firing back on tax issues (finally) by choosing some of the numbers that will likely be easy to understand while helping to convey the problem of tax cuts going to the benefit of those who already garnered the lion's share of increases in income and wealth over the last few decades. See, e.g., the Democratic Policy Committee "Senate Democrats are on your side: Taxes by the numbers, Apr. 14, 2010 (e.g., average tax cut per filer of 400 wealthiest taxpayers in 2007 was $46 million, which would take ordinary taxpayers 914 years to earn at the median US income of $50,300 a year; tax cuts for 400 richest households in the US in 2007 totaled $18 billion, which is the economic output of Bolivia).
And it isn't just tax. This problem manifests itself anywhere that economics has lent a hand, anywhere that understanding of budgets, financial terms and systems is important--from grade school decisions about spending allowance to faculty governance units' ability to understand the budgetary impact of their curricular and hiring decisions. What better evidence of this problem than the posture of the Republicans in the Senate on financial reform? Robert Reich discusses the Senate GOP appraoch to financial reform: vote against reform by claiming that it is just an example of the Dems cozying up to Wall Street, while in fact a no vote on reform is exactly what the Wall Street fat cats are hoping the GOP can deliver. See Reich, The Republican Strategy on Financial Reform: Make Democrats Look Like Patsies for the Street, Apr. 13, 2010. [hat tip to Thoma's Economist's View, Apr. 14, 2010 on "the audacity of nope" --comments there worth reading--such as "Democrats just have to quit being patsies and start fighting for Main St and the middle class."]
As I've written often here, what we need is stronger reform than currently being proffered by the Senate. We should let our Senators and Representatives know that we want independent consumer protection, the big banks broken up, derivatives and financial innovation generally disincentivized, transparent reporting of assets and liabilities, and much more ability to force banks to deleverage, at a minimum.
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