There is a cancer in America today. It is the misleading and distorted information about taxation that sprouts from politicians and lobbyists, religionists and tea partiers. It is on the left and on the right, but particularly viral in the radical right, from the likes of Michele Bachman, Grover Norquist, Rand Paul and others.
The cancer is potentially terminal. As a society, we need to share a common understanding of the role of taxation in supporting our goals. By joining together to fund our government, we empower ourselves to take actions that otherwise would lie well beyond the capability of a single individual, whether it is regulating and overseeing multinational corporations that may pollute our waters or funding research in life-enriching innovations. Taxation can reinforce our sense of a common destiny, that we are all in the same enterprise together.
But when the public discourse on taxes is filled with distorted and misleading propaganda, it is much too easy for people to become angry and to support policies that are against their own interests out of ignorance and confusion.
The cancer today takes many forms. From anarcho-liberatarians who scream that all taxation is theft to national lobbying groups and purported think tanks that publish propaganda pieces intended to distort, such as the Tax Foundation's "tax freedom day" bit, taking an average across all Americans to create a meaningless date that is used to incite anti-tax anger in headlines around the country.
One form is media sloppiness, picking up partisan talking points without sufficient checking to point out the problems with the approach. FAIR covered one such instance of tax reporting on ABC, in which Republican claims that raising taxes ont he rich would stall job creation were insufficiently considered. See ABC's Broken Tax Factcheck: World News bolsters Republican Myths, Sept. 13, 2010.
Another form is focusing on the irrelevant or trivial, so that the important aspects are overlooked. the Media accuracy organization FAIR's Peter Hart provides an illustration in its discussion of George Will's October tenth Washington Post column, George Will's Bogus Tax Math, FAIR.com, Oct. 11, 2010. While Will focuses on fact that a policeman married to a high school principal could have some increase when the Bush cuts lapse as scheduled if there is no new tax cut for those earning more than $250,000, FAIR points out that the couple in Will's illustration would face a mere $400 increase in taxes--easily borne with that income. And the real point, FAIR notes, is that multimillionaires and billionaires are the ones that would have significant tax increases--a point that is lost in George Will's column that focused on those just above the cutoff point.
One form is repeating statements known not to be true. The wealthy families' efforts to end the estate tax has relied on continual repetition of the idea that the estate tax has destroyed small businesses and family farms. Even when critics have shown that the argument about family farms is false, the opponents of the estate tax keep saying it. See, e.g., Neil Buchanan's guest post on ataxingmatter, Distortions and Tax Rhetoric, May 7, 2006 (citing David Caye Johnston's research on the family farm issue). The reason it continues to be cited is that it "works" because it misleads. Many people think small businesses and family farms are good things to have. And if the estate tax destroys them, then the estate tax must be bad.
Another form is sheer hypocrisy. Many Republicans (and the Republican National Committee) attacked health care reform by suggesting that a terrible sales tax (dubbed the Obama sales tax) would be necessary to fund it. A sales tax to support health care reform was apparently about as evil as you could get. But just months after the bill passed (without a sales tax), prominent Republicans are again pushing a national sales tax. Rand Paul supports swapping income tax for fair tax, the Hill, Oct 13, 2010. The national sales tax is surrounded by a good deal of its own distortions. Most represent it on a tax-inclusive basis, misleading Americans about the actual tax rate. (Most of us think of sales tax as an amount that is charged on top of the sales price--so a 20% sales tax would be 20 dollars on a 100 dollar purchase or 20/100. But the push for a consumption tax has often been cast in terms of a tax-inclusive rate, so 20 of tax on a total price including tax of 120 would give a rate of only 16.67%.) The regressiveness and administrative difficulty of implementing such a sales tax are usually glossed over, with claims that it will be "simpler" than an income tax, in spite of the substantial transition, state-federal and other complications involved. For my earlier discussion of the problems of the purported "Fair Tax" proposal, see National Sales Tax: why it shouldn't get a hearing, Apr. 25, 2006.
Similar distortion is present in the discussion about Social Security. It isn't bankrupt, but that term is often used by those who want to decimate the "entitlement" system under cover of deficit reform. Similarly, organizations like the Tax Foundation distort Americans' perceptions of how heavy is the tax burden in the United States--when we are actually a tax haven country when compared to many higher taxed advanced societies such as France or the Netherlands--when it pushes its concept of "tax freedom day" which is arrived at by taking averages across the wealthiest and poorest Americans and thus is a meaningless concept that can only be intended to make ordinary Americans perceive of their tax burden as heavier than it actually is.
If we want to cure the cancer, we need to be frank and open in our discussions of taxation. Obama just signed the Plain Writing Act (HR 946) requiring federal agencies, including the IRS, to write guidance and forms in a way that their intended audience can understand them. We need to require everyone to speak in plain English about taxes. Wealthy families trying to eliminate their estate tax--a tax that doesn't hit ordinary families at all--shouldn't hide behind organizations with labels that invoke the idea of ordinary Americans fighting to save family farms. Those intent on privatizing Social Security and restricting its benefits shouldn't hide behind commissions purportedly focusing on deficit reduction. We need to be up front about who is funding particular approaches to taxation and who will pay taxes under the system proposed. And we need to permit politicians to discuss taxation honestly--Grover Norquist and his ilk have made reality-based discussions of tax policy almost impossible. We cannot continue in that vein, because it permits those with power and wealth to secure the laws to their liking while the rest of us are bamboozled into thinking that "no more tax increases" is a policy that we can run a country with.
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