If you, the reader, are uncertain whether to support Trump or whoever the Democratic candidate turns out to be, I urge you to consider the devastating reduction in protections for clean air, clean water, and clean land (thus also clean air/water and food) under the Trump administration's 'hate anything Obama' approach that has put industry blowhards in charge of the Environmental Protection Administration, an agency created on December 2, 1970 to ensure federal research, monitoring, standard-setting and enforcement of environmental protection.
(Image of Trump at West Virginia campaign rally in August 2017, from CNBC article on Trump rollbacks of regulation, cited below)
Under Trump, we have instead a complete disregard for the environment, a view that harks back to the times when rich owners of factories, mines, or corporate farms exploited and polluted land, waters, and people in their greed for profits. For example, in July 15, 2019, the New York Times reported that the Government Accountability Office found that the administration "did not consistently ensure" that its appointees to EPA panels satisfied federal requirements. This was during 2017, when the Trump administration dismissed academic scientists from EPA advisory boards in order to replace them with industry-connected appointees. Panels that had in the past included a very high percentage (more than 80%) of academic scientists were reduced precipitously under Scott Pruitt, Trump's first EPA head. Pruitt, of course, resigned in scandal (as so many in the Trump adminsitration have done) in 2018 after loading EPA advisory panels with industry hacks . See, e.g., E.P.A. Broke Rules in Shake-Up of Science Panels, Federal Watchdog Says, NY Times, July 15, 2019; Removing Academic Scientists from Science Advisory Panels, Harvard Environmental & Energy Law Program, Feb. 26, 2018 (noting replacement of scientists with industry insiders and consultants, including a climate change skeptic, following Scott Pruitt's October 31, 2017 directive). Scientists removed from the panels refused often to be silent. For example, some formed their own air pollution panel after Andrew Wheeler, Trump's next EPA administrator, disbanded the Particulate Matter Review Panel in October 2018. It had "some of the nation's top scientists, who were tasked with reviewing how soot and other microscopic air pollutants impact human health." Rebecca Beitsch, Scientists booted from EPA panel form their own group, The Hill (Sept 26, 2019).
The Trump Administration labels environmentalists with the same type of derogatory terms that Trump uses for all of his "enemies"--i.e., almost everybody in the country that isn't loyal to the bully-in chief because they recognize his shallow, egotistical, narcissistic lack of knowledge and caring about the well-being of the country or its citizens--even while he claims with his typical bravado and fluff that his administration makes "the very cleanest air and cleanest water on the planet" a top priority. Meanwhile, Trump is busy rolling back as many environmental protections as possible. See, e.g., Emma Newburger, Trump is rolling back over 80 environmental regulations. Here are five big changes you might have missed in 2019, CNBC (Dec 24, 2019) (rollbacks including fewer protections for endangered species). Trump and other people of wealth think they can live in a cocoon of luxury that doesn't suffer damage when the earth's species die out from pesticides and pollution, when the earth's climate changes to create fires and storms hostile to life, when the earth's waters are no longer clear and drinkable by plants, animals (and humans), when the earth's land is destroyed by overlumbering, fracking, the rapacious thirst of oil drillers, and the careless destruction of mountains of surface mining. They are wrong, but they may not recognize it until too late. Trump's stupidity is thinking that he who doesn't read, hasn't studied, and doesn't care about science or life generally is suited to make decisions about wilderness or any of the myriad environmental issues facing us. He leads rallies where people become mesmerized by being part of a raving crowd, with little recognition themselves of the way the ultra rich are taking advantage of them in their daily lives. He knows nothing, and cares even less about what he doesn't know. Yet his administration continues to move to change environmental policy to favor big corporate interests and disfavor local decisionmaking. He appoints industry hacks as Interior Secretary--there was Ryan Zinke, and then extraction industry lobbyist David Bernhardt. See, e.g., Michael Greshko et al,A running list of how Trump is changing environmental policy, National Geographic, May 3, 2019 (pipeline order, David Bernhardt as Interior Secretary, safety regulations rolled back, oil and gas access to Arctic National Wildlife Refuge, Keystone XL pipeline approval, etc.). Preservation of pristine natural areas such as the Arctic Wildlife Refuge or the Big Bear Monument are eroded with no concern, so long as corporate grandees are satisfied. Trump's final budget plan, released Feb. 10, 2020, is yet another example: steep cuts to the agencies and programs that protect our climate, air, water and wildlife. See, e.g., Trump's final budget enshrines climate denial, war and cruelty into conservative manifesto, Friends of the Earth, Feb. 10, 2020.
This Trump no-holds-barred war on the environment is devastating for most Americans. The Flint water crisis, where local and state administrators made stupid decisions about switching to cheaper water without protections against lead poisoning are just an early example of what awaits the entire country under this approach. It is, as Friends of the Earth policy analyst Lukas Ross notes, "an immense moral disgrace" that is hardest on "our society's most vulnerable". Id. Communities of color, unsurprisingly given the GOP's empty rhetoric about caring about equality and justice, are the most harmed by these policies. See, e.g., Amy Patronella & Saharra Griffin, Communities of Color Bear the Brunt of Trump's Anti-Environmental Agenda, Center for American Progress, Feb. 27, 2020. That piece notes that systemic racism and segregation (including redlining of residential districts) have resulted in low-income communities and people of color being "disproportionately vulnerable" to climage change impacts of greenhouse gas emissions. The column lists key examples of Trump administration anti-environmental actions, including the following:
removing protections for one-third of U.S. drinking water sources "by weakening the Clean Water Act, finalizing a so-called dirty water rule, and delaying action to protect against toxic chemicals in drinking water;
easing regulations surrounding disposal of coal ash to prevent its leaking into groundwater sources, which tends to affect communities of color disproportionately with cancer, low birth-weight babies, and premature deaths;
proposing a roll-back of standards established in 2011 to protect against mercury and other toxic chemicals, including mercury emissions from coal and oil fired power polants, with a particularly negative impact on those living in close proximity, which tend to be African Americans;
gutting the Clean Power Plan designed to reduce climate-change inducing pollution and improve public health;
lowering the standards for nitrogen oxide emissions from coal plans, affecting again people of color who tend to make up a large percentage of those living within 3 miles of such plants;
deregulating oil refineries by changing two Obama-era rules that were expected to lower cancer risks for 1.4 million people;
requiring air quality standard reviews to consider economic and other costs rather than the health impacts required under the Clean Air Act (and thus favoring polluters, since any improvement from the status quo always comes with an economic cost);
limiting the role of public comment under the National Environmental Policy Act (NEPA) enacted 50 years ago, in order to keep communities from having a voice in projects that affect them and handing that voice instead to corporate polluters who profit from pollution;
proposing slashing funding for Superfund site cleanup, when such sites tend to be located in nonwhite communities (note that Andrew Wheeler as head of EPA is now overseeing sites his clients created when he was a lobbyist for the chemical industry);
refusing to ban toxic pesticides that are linked to brain damage in children after EPA scientists studied and recommended the ban;
Reducing EPA's budget by more than 25% to decrease its ability to regulate industry polluters;
continually rolling back regulations and working against climate change remediation, resulting in increases in greenhouse gas emissions and extreme weather damage ($45 billion in 2019 in the U.S. alone);
diverting FEMA funding to immigration enforcement (which has included dragging children away from parents seeking asylum).
As the article concludes:
In the midst of this systemic elimination of federal protections and willful inaction on climate, the science is resoundingly clear: We must move to a 100 percent clean energy future with equity at the forefront. The Equitable and Just National Climate Platform, co-authored by the Center for American Progress, 12 environmental justice groups, and seven national environmental organizations, recognizes the importance of justice and equity as “central components of our climate agenda.” Additionally, it calls for “healthy climate and air quality for all” as well as “[s]afe, healthy communities and infrastructure.” All communities, particularly communities of color, can no longer afford the Trump administration’s attacks on public health and the environment.
So what does this have to do with tax policy? My friends, our tax money is currently supporting the Trump administration industrial lobbyists in their efforts to undo environmental and natural area protections across the country. This is class warfare at its heart--the lobbyists and corporate managers of the most polluting firms colluding to ensure that they can freely pollute our world without facing any liability for doing so. Our tax revenues are making it possible for Trump to fly to his own resort in Florida for which the US government pays millions in secret service guest quarters so Trump can spend most of every weekend golfing. Instead, our tax revenues should be supporting good government programs that protect our land, water and air, as well as endangered species, so that our children can enjoy a healthy life and appreciate the natural beauty of this country. Ultimately, taxes and spending are intricately entwined. Bad government--like the corrupt Trump adminsitration--means both are working to the detriment of the American people.
When right-wing Roy Moore said that the time when America was great was during slavery, he revealed something key to the current GOP members of Congress and state legislatures--their primary goal is to return to a time when owners of property held all the keys to the kingdom and workers were just serfs expected to do as told and whose lives didn't really matter much to the boss capitalists.
Historian Nancy MacLean suggests that this is the reason for the tax bill's largesse to corporatists and the wealthy, the reason the GOP wants to undo Medicaid, Medicare, Social Security and essentially all the progressive programs introduced in the twentieth century to form the basis for a thriving middle class and surging democratic union. See Cahuncey DeVega, Historian Nancy MacLean on the right's ultimate goal: rolling back the 20th century, Salon.com (Dec. 13, 2017).
Here are some key points from the article.
1) "[T]he Democratic Party is terrible at translating complex questions of public policy into simple narratives that evoke emotion and, in turn, action from the American people." Id.
Indeed, having an able, sympathetic messenger who can translate the issues that truly matter into terms that make sense to ordinary people is something the Democratic Party lacked in the last election. The tone deafness of Debbie Wasserman Schultz and, much of the time, Hillary Clinton, meant that ordinary people didn't understand that Trump is merely a blowhard capitalist who doesn't care if he cheats or lies or exploits other people so long as he gets notoriety and money, while the Democrats have been the party working for a decent sustainable economy, environmental protection and preservation, protection from pollution and diseases, and working wages for ordinary folk.
The GOP, on the other hand, has mastered the art of lying to the point that they can pat themselves on the back for fooling the majority of the people the majority of the time, while blaming anything that goes wrong on Democrats (even when it is--most of the time--entirely GOP policy that the 'wrong' occur). So a tax bill that enriches the oligarchs and ultimately raises taxes on the ordinary people is exactly what they have in mind, but they rush it through without any public hearings and discussion because they don't want people to realize it.
2) The GOP tax "reform" bill is intended to create a deficit that will justify "huge automatic cuts to Medicare, Social Security and Medicaid", to be followed by a "push for a constitutional convention, at which the No. 1 agenda item will be a balanced budget amendment" with the goal ultimately of privatizing Social Security.
MacLean calls this Ayn Rand-brand of hateful thinking followed by GOP House majority leader Paul Ryan "economic eugenics". Since the GOP right-wing libertarians believe that only people who are successful have any merit, they are comfortable "inflict[ing] harm on other people. At its most basic, this libertarian moral system says that it would be better for people to die than to get health care financed by government from taxes paid by others."
3)The GOP emphasis on voter fraud (and consequent efforts across the country to make it harder for people to register to vote or to actually vote) allows the oligarch-led anti-democratic movement to disregard the will of the people because they have "gamed the system to maintain power."
The majority of Americans opposed the tax bill that almost every single Republican representative and senator voted for (no Democrat voted in either house of Congress to support the GOP tax scam). But the GOP legislators think they can ignore what the voters want, because they have held discussions behind closed doors, and are "using the power of national government to prevent voters in more progressive lcoalities and states from being able to choose more progressive policies" by enacting a bill that penalizes voters living in high-tax, progressive states that actually already send more money to low-tax, economically suffering "red" states.
MacLean notes that George Mason University's Mercatus Center, funded by Charles Koch, has been leveraging universities for their political project of undoing progressiivism for decades. They think people will be "absorbed with Facebook and binge-watching Netflix" so will disregard the way that the GOP and their oligarchic allies are using the national government to return to the late 19th century when oligarchs with property had all the power. That's what is the "stealth nature of this tax bill." Returning to a world where "only the wealthy were doing well and everybody else was screwed", a world preferred by James Buchanana, who "devised the playbook that the Koch network is using."
This tax legislation is, indeed, class warfare. It represents a huge blow in favor of wealthy corporatists though creation of a gaping $1.5 trillion deficit hole that will be used by the GOP to decimate New Deal and Great Society programs on which most ordinary Americans depend --Medicaid to pay for nursing homes in the last years of life, Medicare to help afford needed medical care, Social Security to make up for the gap between the meager savings in retirement plans and the increasing costs of living after retirement. These wealthy people in Congress just don't give a damn for ordinary working Americans, whether black or white, rural or urban, "conservative" or "liberal". All they care about is making sure that people with property have even more property. It has nothing to do with creating or promoting a sustainable economy that will lift ordinary workers stagnated wages. It has everything to do with appeasing the top one percent.
As the Friday inauguration date draws near, most ordinary Americans who read, stay informed, pay attention to history and events, and engage in critical thinking are, understandably, aghast at the poor job Mr. Trump has done so far in putting together a workable Cabinet of high-level appointees with the expertise, experience and values that can lead the country.
We Americans share many values. Among them has always been a view that those who are better off should help those who are less well off. We've done that in many ways, beginning with private charity (supported by our tax code) but going much beyond the soup kitchens and church support for a sick parishioner to include a progressive income tax, taxation of the estates of the wealthiest among us upon their deaths (since they were generally almost tax free in life), and the provision of many necessary services through public institutions. The latter includes things that are important to the everyday life of all of us as well as the opportunities for better lives for those of us not born with a silver (or, in Trump's case, golden) spoon:
a public right to decent health care, made real by the expectation that hospitals (whether for profit or nonprofit) will care for those who enter their emergency rooms in medical emergencies, even if the patients cannot afford to pay the going price for the service needed, and made more substantive by the passage of the Affordable Care Act which provided coverage for pre-existing conditions, allowed young people to remain on their parent's insurance, and made market exchanges available to provide better to understand choices while providing a federal subsidy for those who otherwise couldn't afford insurance;
public education from kindergarten through college, supported by federal and state funding, with reasonable rules that protect our children, such as not allowing private carrying of guns within protective zones around schools, and --in many states--rules that ensure that public support reaches poor districts as well as wealthy ones;
protection of the environment, from national monuments and parks to restrictions on dangerous fracking and oil drilling in sensitive areas (consider the Arctic National Wildlife Refuge), from ensuring that communities have clean water to drink through regulation of corporate waste to ensuring that children have safe homes through regulation of lead paint, from protecting the nation's waterways so that individual owners and polluters cannot hoard or harm nationally important resources to protecting creatures large and small that represent the genetic diversity of this Earth
regulation of commercial enterprises, to ensure that they do not exploit their workers, through fair labor laws and hiring laws and workplace rules that prevent employers from being able to force individuals to work in dangerous conditions or without appropriate rest and meal breaks
regulation of financial enterprises, to ensure that those sophisticated 'quants' don't take advantage of less sophisticated customers, to prevent discriminatory practices that disadvantage people of color, to ensure open and fair reporting of financial positions
regulation of the foods and drugs that enter our marketplace, to protect Americans, our children and our pets from the kind of pollution of food products that occurred when China's unregulated marketplace allowed melamine (plastic) to be substituted for protein in pet foods that were exported abroad or the indiscriminate use of toxic pesticides without informing consumers so that we can make good decisions about products that we buy; and on and on
Trump's appointees for many of the important Cabinet positions seem to be primarily wealthy crony capitalists with radical ideologies that are in direct conflict with the agency missions. Consider just the following three:
Betsy DeVos--Trump's choice as education secretary-- is a billionaire heiress (ie., another one born with a silver spoon in her mouth) who has no experience in running major programs (the student loan portion of the Education portfolio is a trillion-dollar budget with enormous complexity), shows little understanding of the broad issues in education, has never supported public schools, and has wrecked Michigan's education system by funding a multimillion-dollar initiative pushing support of for-profit charter schools that siphon off public dollars for the private enrichment of corporate managers, provide public dollars for religious education, and remain totally unaccountable to the taxpaying public while performing abysmally in their job of educating students. Not surprisingly, at her confirmation hearing she refused to support "equal" accountability for private and public schools. She supports the completely discredited "conversion therapy" for gays and will likely work to reverse the protections won for LGBTQ students based on her personal religious beliefs. DeVos has never taught, has never served on a school board, and has never even sent her own children to public schools or participated in a PTA meeting. She showed at her confirmation hearing that she has little or no understanding of educational issues of importance, such as the Federal laws requiring appropriate education for students with disabilities or nondiscriminatory opportunities for female and LGBTQ students. Her answer on whether guns should be allowed on school grounds was--(a paraphrase) Yes, because who knows, it might be necessary to protect children by shooting at a grizzly bear, and acknowledged that she would support Trump's proposal to ban gun-free school zones. This, in a world where too many toddlers and high-school students have been mown down by guns brought in by students bent on death. Betsy DeVos is anti-public education, anti-teacher, and anti-union--one of those who blame every problem of our underfunded schools on the teachers rather than on the ideological bureaucrats that have siphoned money away from public schools for vanity projects. In the confirmation hearing, she refused to say that she would not work to privatize schools, she thought it would be "premature" to say she would support the rules requiring investigation of college sexual assaults, and she didn't even understand a question from Al Franken dealing with an important educational issue regarding assessment. Her values, in short, are not the values of a majority of ordinary Americans whose children attend public schools, and who want their children's teachers to be decently paid and respected. (She hasn't completed her ethics disclosure yet, but she did omit a $125,000 anit-union political donation from her Senate disclosure form. Not a good indicator of her respect for integrity.) See, e.g., Betsy DeVos, Trump's education pick, lauded as bold reformed, called unfit for job, Washington Post (Jan 17, 2017); Amy Wang, All the vital questions Trump's pick for education secretary couldn't answer at her confirmation hearing, Quartz (Jan. 18, 2017); Some Colleges Have More Students From the Top 1 Percent than from the Bottom 60. Find Yours, The Upshot, New York Times (Jan. 18, 2017) (providing a clear picture of the way privatization of education at the college level has favored the elite).
Scott Pruitt--Trump's choice for the EPA--is an Oklahoma oil and gas yesman who has fought for years to undermine the regulatory power of the EPA--suing the EPA 14 times alongside the oil companies during his Attorney General stint-- so that the oil and gas industry can pollute at will without fearing the power of the federal government to reign them in. Fracking in Oklahoma has been clearly connected to a sharp increase in the number of earthquakes near fracking wells, but Scott Pruitt would rather expend state dollars on suing the EPA to try to eliminate regulations meant to protect people, communities, and the environment. Pruitt is a climate change denier who accepts that human activity affects climate but denies the scientific consensus about the pace of warming, suggesting at his confirmation that the discussion of climate change was too "personalized" and not "precise" enough to merit vigorous action; he has financial ties to oil and gas companies and so, unsurprisingly, he wants to use his role as EPA head to prevent the EPA from fighting pollution that endangers every American's health as well as the planet we and other species live on. As pointed out in the confirmation hearing, one of the letters Pruitt sent as A.G. was drafted for him by Devon Energy: he was serving an oil company, not the public, but he claimed such actions were appropriate. Interestingly, Pruitt claims to be in support of state's rights--except when the state's rights run counter to the interests of oil companies. So he advocates state rights approach to environmental regulation, but at the same time threatens to undo California's ability to set its own clean-air standards! Quite hypocritical and demonstrative of his obvious kowtowing to the oil industry. This obsequiousness to polluting industry is NOT an American value. It is the way crony capitalists work together to make the rules work in their favor and the public be damned. The fact that Oklahoma Republican Senator James Inhofe--a person who is notorious;y anti-environmental protection, a climate change denier, and pro Big Business no matter the cost to the environment--support Pruitt assures the American people that Pruitt does not care at all about the potential harms to the environment from removing our current protective regulations and allowing business to do to the American natural resources the same thing corrupt industry has done to China's air, water, and land. See, e.g., Trump's EPA pick casts doubt on California's longtime power to set its own clean-air standards, Los Angeles Times (Jan. 18, 2017) (Pruitt suggests he may not continue the federal waiver that has permitted the state to cut its greenhouse gas emissions from vehicles by about a third in 8 years); Scott Pruitt, Testifying to Lead E.P.A., Criticizes Environmental Rules, New York Times (Jan. 18, 2017) (noting Pruitt's hearing testimony criticizing federal rules protecting air and water and addressing climate change); Earth sets a temperature record for the third straight year, New York Times (Jan. 18, 2017) (take a look at the "How 2016 Became Earth's Hottest Year on Record" graphic showing the rapidly increasing temperatures--it is definitely starting to look much like the "hockey-stick graph" that Republicans] climate-change deniers mocked in Al Gore's "inconvenient truth" documentary, and then type in your city's name in the "How Much Warmer Was Your City in 2016?" graphic to see just how cities are experiencing climate change).
Andy Puzder--Trump's choice for Labor--is a constant friend of Big Business and an ideological critic of almost any worker protection, from much-needed minimum wage increases to $15 an hour to a national program that provides insurance for minimum wage earners (the Affordable Care Act) to any other business regulations that, in his view, impede Big Business's ability to make big profits for its owners. Thus, he is directly opposed to the mission of the department he would lead.. As the fast-food executive head of Restaurant Holdings, Inc., the parent company of Carl's Jr., he has demonstrated his view that big companies should be able to use workers however they want to make money for the managers and wealthy shareholders, with little regard for ordinary workers' wellbeing. For instance, the Carl's chain is known for the kind of scheduling that requires workers to show for a 4 hour shift that might result in the worker being sent home after 1 hour because there is lower demand. Consider what that means for ordinary Americans working at these low-salaried jobs. They may have to arrange a babysitter or some other child care every time they go into work. They may have to travel with inconvenient and expensive public transportation systems, or buy gas for a lengthy car trip that ends up not even earning enough to pay for the round trip and other expenses because of the short day. Pudzer even claims that workers who aren't paid overtime "gain in stature and sense of accomplishment" even though they are often paid so little that they qualify for food stamps and other public benefits. See, e.g., Trump's Labor Secretary Nominee No Friend to Workers, Advocate (Dec. 8, 2016) Further, Puzder's company itself has scoffed at labor laws, running afoul of requirements. Id. (noting violations of the Fair Labor Standards Act) . This is NOT American values. Of course, Pudzer has been a donor and adviser to Trump, like many another of Trump's other billionaire crony appointees.
These three appointees illustrate that Donald Trump has no interest in "draining the swamp" of crony capitalism that has at times seemed to be much too important in DC. He is actively feeding the swamp monster, with selection of billionaire crony capitalists who want to remake the government to smooth the way for Big Business to do whatever it wants, without protective regulations for workers, the environment, or consumer protection. This is the 4-decade-long Republican attack on ordinary Americans taken to the extreme--deregulation, tax cuts for the wealthy (with hidden tax increases for everybody else), militarization for the military-industrial complex, and privatization of services like education and health care that the government does best because the profit motive ensures corruption and high costs.
I have espoused a view in this blog of what I call "democratic egalitarianism". It is a philosophy that government should function in a democracy to help ensure that each citizen can participate in opportunities and that the whole protects the most vulnerable amongst us. I believe that every American w wants our society to move towards a sustainable economy with decent livelihoods for all, good health care for everyone, education that provides opportunities and knowledge that bridges the gap between those born with wealth and the majority of us who are not. And I am convinced that every American who cares about these things should write or call their Senators and tell them not to approve these unfit candidates for the office they have been nominated for. Certainly, no candidate should be approved without a clear slate from the ethics office. Trump himself owes it to the American people to divest himself of his businesses. Putting them in the charge of his children and claiming that he will remain sufficiently unconnected with them is absurdly insufficient. But even more, no candidate should be approved to head an agency about which the candidate knows nothing, and for which the candidate's only vision is destruction of the protections the government provides for the American people from the 'stateless' corporatism that allows Big Business to run amok in its search for rent profits above all else, no matter the long term harm done to the American people..
As noted in my last post, part of the fanaticism that is surging in the current obstructionist Congress relates to taxes (quel surprise...). The JEC ran a hearing on Wednesday targeting "complexity" in the tax code as a source of humongous problems. The clear intent of the GOP in control is, and has been for some time, to pile in on the "blame the IRS" and "get rid of the government beast" bandwagon in order to keep money rolling in to the hands of the rich and prevent any action on public or human capital infrastructure, climate change, or any other reasonable programs that our government should be developing to deal with the many problems in today's world.
But as I also noted in that post, holding up "simplicity" as a reasonable goal for tax policy is intended to deceive. Simplicity is generally important only for tax provisions that are most likely to impact the poor or near poor; it is for all practical purposes an unimportant target for thinking about the appropriate tax provisions for the wealthy and corporate/business elite. That is because (as I said in that post):
The simpler you make the code, the more loopholes you create. The more you cut funding for the IRS and tax enforcement generally, the harder you make it for the government to discover the loopholes or catch those who exploit them on audit. The reason the tax provisions of most concern to big businesses and those with international investments and those with multiple types of investments (CDOs, hedge funds, private equity, partnerships of one kind or another, S Corporations, etc.) are complex is that new, detailed, specific language has to be developed to counter the loophole exploitation by those who apply hyperliteralism and avoid contextual meaning and purpose of the laws in order to have an arguable defense for a tax planning transaction designed to exploit loopholes.
But just as the Walton and other rich families' money has been spent for years to make ordinary Americans believe that family farms are threatened by the federal estate tax (a fallacious myth); so too has considerable money from wealthy families, spent through the conduit of various propaganda tanks, been used to convince ordinary Americans that it is government, the IRS, and a complex tax code that form the core of their problems in making a decent living in today's society. That, too, is a fallacious myth. It is the wealthy families and owners of corporate stock, who have garnered all the benefit of workers' productivity over the last few decades and have allowed wages to stagnate so they can grab their "rentier" profits, who carry most of the blame for the precarious situation of America's middle class. It is the greed-above-societal-good policies practiced by so many of the wealthy owners and managers of American businesses and lobbied for in Congress, and so easily bought into by those in the majority in today's House and Senate (most of whom belong to the same elite).
Piling onto the complexity bandwagon today was another right-wing group: the National Taxpayers Union Foundation. Like so many other right-wing propaganda tanks, the NTUF claims that it is "a nonpartisan research and educational organization dedicated to helping Americans of all ages understand how taxes, government spending, and regulations affect them." (quoting from the language in the identifying box at the bottom of the NTUF push-out email). Balderdash. It is a propaganda tank with an ideological agenda that is dedicated to supporting ideas like Laffer's fantasytaxcutland where every tax cut leads to thousands of new middle class jobs or Mitt Romney's silverspoonland where those born with a silver spoon in their mouths are the "makers" and ordinary Americans working for stagnant wages in dead-end jobs to make the bosses of silverspoonland even richer are just "takers".
But guess what--the NTUF has come out with a new "study" on "Tax Complexity 2016: The Increasing Compliance Burdens of the Tax Code". It repeats the garbage about 6.1 billion hours "complying with the tax code". Of course, anytime you get a paycheck or anytime you maintain a record of your expenditures and revenues if you run a sole proprietorship or if you are just keeping personal records, you are also spending time "complying with the tax code", and if you take a population of 350 million people many of whom get a paycheck every 2 weeks and spend money on transactions that may be deductible on a weekly basis, that alone amounts to a substantially large amount of time, but being able to count something doesn't mean that what you are counting is significant. So what, should be the response to the "estimates" of 6.1 billion hours spent complying with the tax code. But of course all these propaganda tanks also add a dollar sign to that time--coming up with $234 billion (based on average salaries and benefits for private sector workers--which would include all those multimillions paid to CEOs for their 35-hour weeks)--again, a MEANINGLESS figure. These kinds of aggregated numbers from "averages" that are picked out of thin air should not be relied on to tell us anything other than somebody is trying to impress us with big numbers that may or may not be realistic (and probably aren't). So they admit that the IRS estimate is of an AVERAGE of 13 hours for preparing federal income tax forms. I spent about 8 hours this year since I keep books fairly carefully on my activities through my checking account, etc. And I probably have more complex taxes than many, since I have rental property in New York State and royalties from textbooks I've written and some consulting fees occasionally. The 13 hour "AVERAGE" includes the time that it would take to gather records and prepare information for a multimillionaire businessperson with various businesses and investments and travels --i.e., the Bill Gates, Warren Buffetts, and Mitt Romney's of the world. The AVERAGE is meaningless. Multiplying that average by the number of taxpayers--as NTUF does, to come up with 1.9 billion hours--results in an impressively big number, but that number is also meaningless. It is a guess, it is a mix of people who spend 30 minutes with people who spend 40 hours or more, and it says absolutely nothing worthwhile about whether there is a "problem" of complexity with the tax code.
The NTUF makes a big deal about the number of pages of helpful guidance provided by the IRS in terms of instructions. It says it is just awful that "the instructions for the basic 1040 forms and schedules increased by 2 pages to 211. [whereas] in 2000, there were [just] 117 pages of instructions." In other words, like the "average" number of hours spent filing, the number of pages of instructions is set forth as empirical evidence of what the NTUF sees as awful complexity.
Now, remember, the NTUF is part of that same radical right-wing element that has treated the IRS as evil and pushed Congress to cut its budget. Congress has in fact cut the IRS by about $1 billion over the last five years, including a reduction in staff by about 17,000. And at the same time, Congress has loaded the IRS with more functions (monitoring the Affordable Care Act added huge workloads on overstressed IRS employees). Yet Congress wants the IRS to do more without doing anything that Congress doesn't like (with the result that Congress has pursued witchhunt "investigations" of the scrutiny of "tea party" and "progressive" titled organizations' applications for coveted tax-exempt status, for which the law says that NO political activity is permissible); and yet do an even better job at guidance than it is currently doing. The current House passed a bill on Thursday that says no one in the entire IRS can receive a bonus --no matter how hardworking, underpaid, and understaffed IRS employees are--until "customer service is improved". But the bill doesn't restore the cut from the IRS budget that has caused it to cut back in services to taxpayers. The bill is just one of six anti-IRS measures passed this week mostly along party lines. See Jackie Calmes, I.R.S. Fights Back Against House Republicans' Attacks, New York Times (Apr. 21, 2016). As Lawrence Gibbs (a Nixon administration IRS man) says in the article: I just don't think it's in our country's best interest" "to create a disrespect for our tax revenue system."
Further, remember that very few taxpayers need to look at the majority of items in the instructions. If you don't run a home office, you needn't look there. If you don't have any kind of capital gains income (which most ordinary workers don't), you don't need to look there. If you don't have passive activities, forgeddabout the passive activity loss schedule. If you don't own your home, you won't have mortgage interest to worry about (and even if you do, very few of you will need to figure out whether your interest on a $1.1 million loan is all deductible or not). So the instructions are doing exactly what the House has just told the IRS it must do--providing better service to taxpayers for those that need specific guidance on specific items. The fact that the number of pages in the instructions increased from 117 to 211 is neither inherently good nor inherently bad, but it is likely good because it is likely that the instructions provide better guidance for taxpayers than was available in 2000.
The NTUF complains that most filers use a professional or tax prep software. Of course, that's a good thing. If you can hire a professional and not bother yourself, why not? If you can buy and use tax prep software (which the IRS would have been able to provide for free to filers except that Congress passed a law preventing it from doing so, protecting the megacompanies like TurboTax that profit off converting the statutes to easy-to-use software), why not? That makes it not a burden but a breeze to file your tax returns. So NTUF complains that H&R Block's "average fee" went up (adjusted for inflation--which they don't do when it doesn't help their point) 3X what it cost in 1980. Gee, my cable bill from Comcast has gone up that much in the 9 years I've had the service. Sounds like tax prep is much less inflated than most IP-based 'stuff' is these days.....
The NTUF complains that the individual mandate penalty for not getting insurance coverage is "growing costlier: this will rise starkly in 2016 to $695 per adult". Yeah, of course it is. That was the way it was structured in order to ensure that a diverse population was covered, bringing the costs of coverage down for everybody. Another "so what" number. And it has nothing whatsoever to do with complexity--except for the fact that we are doing health coverage through a system that functions like a tax but an odd one, rather than through universal, single-payer, government-provided health care or by expanding Medicare for all, which would be much simpler since there is already a well-established regulatory framework.
Not surprisingly, the NTUF complains (it is, after all, an ideological propaganda tank, so one expects this) that the employer mandate part of the Affordable Care Act "is expected to" force businesses to "shed employees or switch to part-time employees due to this compliance burden." As usual, the facts don't support this "expect[ation]." In fact, experience under the ACA has shown that businesses and individuals have on the whole realized that the ACA is better than the health care world before the ACA.
The NTUF complains about taxpayer services--less ability of the IRS to respond to phone calls and to answer written correspondence in a timely manner. This has NOTHING TO DO WITH COMPLEXITY and EVERYTHING TO DO WITH THE RIGHT'S PUSH TO EVISCERATE THE IRS BY CUTTING FUNDING, CUTTING EMPLOYEES, DESTROYING MORALE, AND HAMSTRINGING THE ORGANIZATION TO MAKE TAX COLLECTION AND ENFORCEMENT EVEN HARDER TO DO WELL.
*****
One good thing about this theater-of-the-absurd presidential primary season is that many ordinary Americans seem to be waking up to the fact that the system as run by the elite establishment isn't set to work for them and that you cannot simply trust what establishment organizations (and propaganda tanks funded by the elite) say. Complexity of the tax code is NOT our major problem. Hopefully this awakening public will recognize this propaganda for what it is--an attempt to mislead ordinary Americans into thinking that they should blame all their ills on government and the tax system, rather than on the right-wing majority in Congress that has worked for four decades to tilt the tax system in favor of the rich.
I was at a housewarming party last Saturday and talked to quite a few people I didn't know. One was an economics professor at a regional school. Naturally, economists and tax professors gravitate towards talk about the economy and tax policies, so it isn't surprising that our talk got there fairly quickly. I will add that his views were not too surprising, either: he suggested that corporate inversions and other forms of corporate tax planning and abusive transactions would disappear if only we made the tax code "simpler." Not surprisingly, that is the issue I hear most insistently from many of the economists that I talk to-- especially those who have bought into Milt Friedman's free marketarianism: they suggest that the entire problem of the tax code--or the problem of the unprecedentedly low percentage of GDP we raise from corporate taxes in particular--could be solved if only we made the tax code simpler.
One thing they don't seem to realize is that the neoliberal approach has led to corporations treating their employees as just another number to be crunched for the benefit of the bottom line, their obligation to community and people as just another PR element, and their obligation to pay a fair share of their income to support the many levels of legal stability and benefits that they receive from government --including the benefits from basic research supported by government funding--as just another expense to get rid of in any way possible. If the statutory rate is 35% even though the ACTUAL EFFECTIVE RATE is near zero for 75% of corporations and no higher than 20-26% for many corporations, they will still argue that the statutory rate should be 25%. If it is lowered to 25% (and the effective rate for almost all corporations is near zero with a few paying around 10%), they will argue for a statutory rate of 10%. And so on.
The argument from simplicity is, these days, mostly another example of class warfare being waged on behalf of the wealthy, corporatist elite against ordinary American workers. And Congress today--controlled as it is by a majority in both the Senate and House that is generally much farther right than the nation's people--tends to use the complexity of the tax code exactly in that way--as a flagwaver to fool ordinary Americans into thinking that the corporatist, wealth-favoring tax changes the right wants to enact are "reforms" that will aid economic growth and ordinary Americans.
See, for example, the Joint Economic Committee (JEC)'s hearings today (April 20, 2016) on the topic of tax code complexity (and note the presupposition about complexity and the "taxing" problems in the wording of the title): Is Our Complex Code Too Taxing on the Economy? The title alone tells a lot about the JEC's implicit bias against taxes and against "complexity". But if anyone thinks this was likely to be a useful discussion of complexity, just look at the first three speakers. Only Jared Bernstein comes from a Center that has recognized some of the fairness issues that most of the push for "simplicity" pushes under the rug.
Art Laffer, Mr. RightWing TaxCut Spokesperson personified and the person who has made a reputation (and I bet great wealth) out of arguing that tax cuts pay for themselves after drawing a graph on a dinner napkin and proclaiming it to be a theoretically supportable description of how human behavior responds to tax rates, testifies about "The Economic Burden Caused by Tax Code Complexity (written in 2011 but presented in 2016 anyway--if it's propaganda, ya don't need to update?).
A lot of these numbers about the "cost" of complexity are speculative, one-sided in that they overlook the huge costs of a simple tax code that permits enormous sums to be lost through tax evasion, and based on theoretical assumptions far removed from actual experience to project trillions of economic gain essentially from reducing the tax rates on corporations and the wealthy. Consider one of the "complaints" in the Laffer 'study'--the requirement that businesses file forms reflecting business-to-business payments in excess of $600. It is clear that many small businesses evade taxes by using cash outlays where possible for those kinds of transactions. Reporting has proven to be an efficient way to capture those kinds of tax evasion. The same kinds of complaints are registered, of course, whenever any reporting requirement is created, whether it be an employer withholding and reporting requirement or a business reporting requirement. In a digitalized business world, creating and filing appropriate reports can increasingly be automated and almost costless. Compliance costs without such reporting are much greater because they require people and audit time at the business and at the IRS enforcement end. Those issues are disregarded entirely by Laffer.
Laffer also claims that "the more complex a tax system is, the higher the compliance costs will be." It is not clear that such a statement is empirically true. Note that he claims to be talking about "the tax system." It is worth noting that an entire system may have simple areas and complex areas, and complexity tends to reside in specific areas in which there are highly technical issues that require a complex system of rules to arrive at a reasonable answer or where Congress has acted rather hastily to add 'bolt-ons' to the tax system rather than systematically working through how provisions should work. Could the code benefit from a 1986-style revamping to remove the bolt-ons and re-integrate the system? Yes. Should that revamping be based on a "let's "simplify everything and make the taxes of the rich and powerful even less" philosophy? NO. Our current system is more complicated than it needs to be, but at the same time, not as complicated as it needs to be to prevent many of the tax avoidance schemes that tax planners dream up. Once a system of rules is in place and operative, it is not necessarily true that there will be higher compliance costs, even if there are changes every few years in the specifics of how the system works to address new issues.
Laffer also states as fact that IRS administration costs are higher when the tax code itself is more complex. However, a "simpler" tax code that nonetheless intended to capture a share of the profits to fund government could well result in much higher administration costs, as it would require considerably more agency interpretive rulings and interaction with taxpayers and audit/enforcement actions to prevent sham transactions designed around "simple" language. It makes you wonder, of course, if by "simpler" Laffer doesn't really mean--one that collects less tax, period, by having fewer brackets and lower rates. That sounds simpler to the unknowing and naive, but ask any tax professor and he or shee will tell you that determining the income to which the tax applies is the complex part, not the rates. What that kind of "simplicity" does is disguise from ordinary Americans yet another tax break for the wealthy as a move for a "better" tax system "because" it is "simpler".
Note that Laffer also talks about the "teams of accountants" and others that businesses track and measure taxes, as though they could all be done without if only we had a "simpler" tax system. Fact is, even without taxes, those teams of accountants would be part of the business world, because for most businesses, much of their business information and their tax information goes hand in hand.
So while Laffer claims to want a "fair" tax system, what he means by simple would be a tax system that shifts the burden from rich to poor even more than we already do and that eliminates the critical use of the tax system as one of the few levers that can operate to reduce the gaping inequality that has resulted from decades of tax cuts primarily benefiting the rich. So while I claim that the costs of complexity are mostly problematic if they fall on the poor or near poor, Laffer values the cost to the rich as much higher, because he looks at time used to comply (of course, that will be hired time) and the wealth of the rich to conclude that the burden is greater because their time is more valuable. He complains that the top pay more and pay proportionately more than the bottom, but of course that is exactly what a system designed around ability to pay will do: since the marginal utility of the last dollar is less to a wealthy man, one should tax them proportionately more than one should tax a poor man who perhaps already cannot satisfy the necessities of life using every one of his dollars.
For my earlier analysis of the Laffer Curve, see, e.g.The Laffer Curve Part II (March 2008) and other posts linked therein.
Scott Hodge, the President of the Tax Foundation, a right wing organization that calls itself nonpartisan and wants to be considered a "think tank" (it is a propaganda tank) that drums up an annual piece about "tax freedom day" full of specious arguments to bolster ordinary Americans views that taxes are too high about how long a typical worker works to pay his taxes.
I'm not surprised that he starts his testimony with the increasingly meaningless statement that the Code was 409 thousand words in length in 1955 and now is 2.4 million words in length. OF COURSE the code is longer in 2016 than it was in 1955 when it was still an embryonic text. It took a while for Congress to realize the lengths to which wealthy taxpayers and corporations would go to invent pathways through loopholes in the code to avoid taxes, and then to put the appropriate blockade up.
There is of course the same thing about billions of hours spent complying with tax requirements, coupled with costs estimates claiming this is all "wasted" effort. Think about that. Complying with our tax obligations is actually a privilege of citizenship, and at least a good part of the compliance "burden" is something we should be proud to do as a way to pay our fair share. This constant talk of tax compliance as though it is inherently evil also misses the point that the tax accountants and return preparers and legal advisers (especially of course for the more sophisticated and wealthy taxpayers amongst us) are also people who are earning a living by helping their fellow citizens navigate one of their citizenship duties. This is not "wasted" per se; much of this effort adds to GDP and is a viable part of a complex economy. You wouldn't guess that from reading Hodge.
Even worse is Hodge's first item of "complexity" for the income tax system that the Tax Foundation would like to see eliminated--progressive tax rates. Please note. The number of rates and the number of brackets has almost nothing to do with complexity. See Jared Bernstein's discussion of this issue, please, as well as numerous posts here on A Taxing Matter. This is a figleaf to cover the propagandizing of the Tax Foundation on behalf of the wealthy. It is the same as their push to ensure that "everybody" (even the poor and near poor) should pay some income tax, and the wealthy should pay less. Of course Hodge also quotes the economic theoretical "truth" that at some point "when the "tax price" of earning the next dollar of income gets too high, people will stop working to earn that extra dollar." However, that idea is very hard to prove, especially with our very low-rate tax system and given the different forces at play besides taxes in determining whether and how and for how much we work. After all, while the average paycheck in the country may be in the $50,000 range for a year's work, there are many CEOs willing to take ordinary paychecks of obscenely high amounts from $70 million a year to $700 million a year to in the billions per year. They pay such a small percentage of that paycheck in income taxes that it doesn't affect their willingness to hold that CEO seat one bit. Yet on the flimsy assumptions (supported by Laffer economics that claim tax cuts create economic growth) about getting more work if taxes are less and if progressive rates are eliminated, Hodge claims a boost of GDP of 1.4 percent and 1.1 million jobs. Quite speculative and without empirical foundation. Certainly didn't happen when Reagan cut taxes in his first year (and then increased them every year of his presidency thereafter). Nor when George W. Bush's administration put in place gigantic tax cuts for the wealthy. (In fact, we entered the Great Recession.....)
Hodge also wants to eliminate the phaseouts on some of the tax expenditures that limit their benefit to high income taxpayers (not terribly complicated to do--tax software calculates it automatically) and claims giving rich people that money will result in .1% GDP growth. This is, quite simply, pie in the sky made-up numbers, which any economist can do by tweaking their hypothesis to get the results they want.
Now Hodge is right about one of the individual items he mentions--the Earned Income Tax Credit phases out in a "jerky" way that is especially hard on low income workers. Many Americans in or near poverty don't claim the EITC, and others make errors claiming it. This is the kind of complexity that should be reduced, and it is even possible that a uniform phase-out rate--at a much higher income level than currently used or than recommended by Hodge--would be a good solution to that complexity.
Hodge goes on to claim that we should not eliminate itemized deductions (i.e., they are quite valuable for the upper class), but that we should instead lower every single tax rate by 10%! I heartily disagree. Most people should use and do use the standard deduction--around 70% of taxpayers. The only people who generally take itemized deductions are those with complex real-life economic situations (rental properties, business investments, unusually hefty medical expenses, or significant charitable contributions perhaps) and most of those are from the upper end of the income distribution. Further, the operation of the Alternative Minimum Tax was designed to counter, in part, the ability of affluent taxpayers to amass quite a few itemized deductions (charitable contributions that are in many way quid pro quos for those taxpayers whose name is in bold letters over the building they funded or in the bulletin of the opera they made possible, etc.): the AMT's effectiveness has been undercut by Congressional responsiveness to lobbying from higher income taxpayers but does still act to ensure that those who aren't in the richest group pay a more reasonable share of taxes than otherwise (It theoretically doesn't apply to the wealthiest taxpayers because their regular tax rates should be above the rate for the AMT). For more information on the AMT, see the series I wrote earlier on this blog, at the following post (and the links to earlier Parts therein): What Should Congress Do About the AMT (Part 5). It might be reasonable to say that the standard deduction should be increased to ensure that we are ensuring a sustainable living allowance for lower-income workers (which is the reason the standard deduction and personal exemption are in the code). But we should not reduce "each rate" by 10% and thus provide a significant benefit to wealthier taxpayers. That is most certainly not a reasonable "simplification" solution.
Of course, Hodge argues for elimination of the estate and gift tax, claiming that eliminating estate and gift taxes would raise GDP by 0.8 percent and create 159,000 new jobs while repeating the mantra that the estate tax makes it "harder to pass family businesses and farms to the next generation." This is hogwash, put simply. The estate tax as currently set is a ridiculous subsidy for wealthy families: coupled with the low rate of tax on capital gains and the step-up in basis at death, it allows them to live off the income of their wealth during their lives at low tax rates (zero if the Republicans like Paul Ryan have their way); pass their estate to their heirs with very little tax due (more than 10 million dollar exemption for a couple, and all kinds of planning schemes to get around taxes on the rest); and give their heirs a step up in basis so that they will never pay tax on the appreciation on the estate from the deceased person's lifetime. In other words, these arguments support an almost tax-free existence for the wealthy who already have hogged an unfair share of the gains from workers' productivity. The claims that benefiting the wealthy in this way will result in better economic growth and trickle down to the middle and lower class are, quite simply, unfounded and unsubstantiable. These ideas will simply aggravate the already grievous inequality in this country that has one in four children going to bed hungry at night while do-nothing heirs inherit enormous wealth, privilege and the hubris that goes with it.
Oh, and of course he repeats the statement that "the U.S. has the highest corporate income tax". that is misleading, since while it has a high statutory tax rate, it does NOT college anywhere near that tax rate. three quarters of U.S. corporations pay ZERO tax. Many of the rest pay very little tax. Very few pay a rate of tax that is significantly higher than our industrialized peers. The claim that GDP would be boosted 2.3% by eliminating the corporate tax, or that wages would increase by 1.9% or that 443,000 jobs would be created are pure salesmanship. When workers increase productivity and corporate profits grow, their wages have not grown. That money has gone into the corporate manager/shareholder pockets instead. Any tax cut would likely be viewed as just more gravy for the already rich owners and managers.
I could make similar counter arguments to every one of the "reforms" Hodge promotes: corporate integration is just another tax cut for the mainly upper income distribution elite who are the managers and shareholders of corporations. It makes no sense at all in the current economic context of this country.
Hodge also argues for keeping the "expensing of R&D costs". Economically, these costs should be capitalized. A business that wants to thrive will invest in R&D because it needs to do so for business reasons, not because there is expensing. Of course, expensing something that should be capitalized is exactly one of those distortive tax provisions that the Tax Foundation tends to argue are problematic in other contexts......
Not surprisingly, Hodge pushes the ridiculous consumption tax plans from Republicans like Ben Carson --a regressive "flat" tax that would favor wealth and put the tax burden on workers by exempting taxes on capital gains, dividend and interest (the kinds of income wealthy people live off), Marco Rubio, and Ted Cruz. All of these plans shift the burden of taxation to the middle and lower classes (from capital to labor) while protecting the wealth of wealthy people.
Of course they would have a Joseph Grossbauer, CEO of small business and spokesperson on behalf of the National Federation of Independent Business, to claim the taxing requirements for small businesses of making determinations based on tax rules. Note that he complains at least as much about the frequency of changes to tax provisions--That is not an element of the tax system itself but a result of the way that Congress has grafted on policy that should be handled by spending into the tax system, in part as a way to fool the public about what it is doing, when it enacts one tax expenditure after another in favor of one corporatist interest after another. And while I don't doubt that some of these complaints about complexity are real, I do doubt the time claimed spent complying and the difficulty claimed for regular determinations about depreciation, employee status, and other items. Note, for example, that the reason for the confusion of what "counts" as real property for tax purposes lies with business owners who push for various tax expenditure provisions in their favor, which result in increased categories that must be examined to determine appropriate classification! If business owners and their lobbyists would focus more on doing the right thing and less on wringing the last theoretically (aggressively speaking) possible penny out of their potential tax liabilities, tax time wouldn't be as "taxing" as they claim.
Jared Bernstein, also speaking Jared Bernstein Testimony Meeting the Goals of the Federal Tax System April 20, 2016 , is a more respectable figure represent the nonpartisan Center on Budget and Policy Priorities, which has tended to be less partisan and more in the center to center. Bernstein notes that the idea that simplicity is a matter of rates or brackets is itself misleading.
"Complexity has nothing to do with the number of tax brackets and rates. If taxable income were easy to define, it wouldn't matter how many rates existed in the code; all taxpayers would have to do is look up their liabilities in a table or online calculator."
"What makes our system so complex are the exemptions, deductions, other tax subsidies, and privileges for one type of income, industry, or activity over another. On the corporate side, these include “transfer pricing” opportunities (the ability to book income in low-tax countries and deductible expenses in high-tax countries), deferral of foreign earnings, inversions, and the many other loopholes that explain why the effective corporate rate is at least 10 percentage points below the top statutory rate (about 25 percent versus 35 percent). To be clear, not all subsidies in the tax code are poorly targeted and inefficient. Research shows the Earned Income Tax Credit and Child Tax Credit, for example, encourage work and prevent millions of people from falling into or deeper into poverty, and children in families receiving the tax credits do better in school, are likelier to attend college, and can be expected to earn more as adults. But well-targeted, effective subsidies like the EITC and CTC are unfortunately more the exception than the rule."
Needless to say (for anyone who has read much of this blog in the past), I don't agree with the JEC and Laffer/Tax Foundation's simplistic approach to tax reform of pushing for a "simpler" tax system based on fewer brackets, fewer and lower rates, exemptions of income mostly earned by the wealthy, and correspondingly less progressivity.
The taxpayers for whom a simpler tax code does make sense are the poor and the nearly poor. They usually have much less access to sophisticated tools for tracking their income and expenses and while they often have less income and most or all of it is wage compensation from which taxes are withheld, they need easily understandable rules without "gotcha" complexities that they can apply straightforwardly. Note that many of the poor and nearly poor in this country are also "unbanked"--meaning they don't have enough assets to maintain bank accounts or pay the fees on accounts with low balances, and they even have trouble cashing checks when they are paid with checks. They should be taking advantage of various provisions put in the code to help ensure that every American is able to provide for necessities--things like the Earned Income Tax Credit, and various other credits for child care and education expenses, etc. Simplicity counts here, because simpler provisions help to ensure that those in or near poverty are more able to take advantage of all the provisions that have been put in the code for their benefit.
But the people who do not need a simpler tax code are those at the top of the income distribution and, generally speaking, corporations and businesses. Simplicity is one of the ideas flogged by those on the right who want to eliminate corporate taxes (a benefit primarily for shareholders, which consist primarily of the wealthy and wealthier elites), eliminate estate taxes (which would give an even greater windfall to those who inherit through no merit but merely luck of birth and add even more to the worrisome growth of inequality), or legislate a complete exclusion from tax for capital gains (which would give an even greater windfall to those who live off inherited investments or even off investments that started with some personal effort, compared to those who live off the sweat of their brows, while providing the "simplest" returns (zero taxation) to those who need it the least in order to survive and contribute to the economy). The fact is that the wealthy are well able to make their way through the tax code with sophisticated advisers, seeking every loophole those sophisticated advisers can find. The simpler you make the code, the more loopholes you create. The more you cut funding for the IRS and tax enforcement generally, the harder you make it for the government to discover the loopholes or catch those who exploit them on audit. The reason the tax provisions of most concern to big businesses and those with international investments and those with multiple types of investments (CDOs, hedge funds, private equity, partnerships of one kind or another, S Corporations, etc.) are complex is that new, detailed, specific language has to be developed to counter the loophole exploitation by those who apply hyperliteralism and avoid contextual meaning and purpose of the laws in order to have an arguable defense for a tax planning transaction designed to exploit loopholes.
That's too many words in one sentence. The tax code is complex and can't be put on a post card for most complex entities or wealthy individuals with many different business and money making interests because (among many more reasons, I'm sure):
It must cover, in one way or another, all human and enterprise activities that could in any way involve the exchange of valuable goods or money for the benefit or one or more persons.
It must do so in a way that achieves at least roughly a set of laws that can be consistently applied, with exceptions explicitly set forth, to a wide variety of taxpayers (single, married, divorced, widowed, with or without children, poor, wealthy, filthy rich, corporate owner, manager and corporate owner, controlling owner of a group of affiliated corporations or businesses, partners in various kinds of partnerships doing business--the list could go on and on) who are trusted to voluntarily comply by providing a true and accurate report of their income and expenses and taxes due
It must take into account that the more sophisticated, powerful, and monied a taxpayer is the more likely that taxpayer has resources sufficient to game the system by exploiting any verbal loophole and, as evident by historical trends, will be likely to do so if the penalty is sufficiently light and the reward sufficiently great.
It must respond when a loophole is exploited by closing the loophole.
It must do so in a way that permits the voluntary compliance system to function as well as can be given resources available.
It must make fairness--based on a principled view of what that means, such as ability to pay and benefits received--a key linchpin of the way the tax system works. Progressivity and reduction of complexity for the poor and near poor should be high priorities. Transparency and reduction of redistributive subsidies for the rich should be significant attributes of a reformed tax code.
Of course, for years our tax system has also been burdened by the partisan obstructionism that considers it silly to think "Tea Party" or "progressive" might be indicators that a group applying for tax exempt status actually intends to engage in political activity and similar right-wing witch-hunts that affect morale at the Treasury and IRS among employees struggling to handle an ever-expanding job function.
If we wanted to make the tax code work better, we would fund the IRS sufficiently to have employees who can provide service to taxpayers more readily, and we would enact legislation to ensure that those who get paid for preparing tax returns actually know the law they are claiming to apply. And, in fact, there are a few key provisions that we could eliminate to "simplify" the tax code and make it better across the board while ensuring that we act to protect the Earth's future
eliminate all of those tax expenditure provisions that have been in the code for decades that provide harmful subsidies to "old" fossil fuel energy (oil, gas and coal) that contribute significantly to global warming.
eliminate the capital gains preferential rate, treating all income as of the same character and taxable at the current ordinary income rates (and eliminate thereby as well the advantage of "carried interest" in private equity partnerships to those money managers who have gotten wealthy off of other people's money)
sharply restrict the number of nontaxable reorganizations (both acquisitive and divisive) by requiring at least an 80% continuity of interest in all reorganization forms for tax-free treatment (and thereby also increase the forces against growth of megalithic multinational conglomerates)
limit the number of new tax expenditures ladled into the code to those that have gone through a lengthy process of consideration and review to ensure that they are targeted to the desired objective and eliminated promptly if evidence shows that they have not succeeded in their objective. Generally speaking, the complexity that is least justifiable in the code stems from addition of tax expenditures that favor one or another congressional constituency and are enacted in the tax code in ways that would be hard to do if enacted as a spending provision targeted to the favored constituency. As Bernstein shows:
[T]he extensive set of legal subsidies to individuals or businesses through exemptions, deductions, and other tax subsidies, generally referred to as tax expenditures, cut federal income tax revenue by over $1.2 trillion last year — more than the cost of Social Security or the combined cost of Medicare and Medicaid. Moreover, as shown in the figure below, these tax breaks disproportionately benefit higher-income households, often wastefully subsidizing behavior that would occur anyway.
In Part I, I outlined some of the many ways in which the U.S. provides favorable treatment to religious institutions and/or their representatives, including income exclusions from the federal income tax for ministers that are unavailable to any other occupation.
In this Part II, I want to consider how the corporatization of religion relates to increased politicization of religious fundamentalism in recent decades and the religious right's incessant push to influence public policies. Then in Part III I will return to the uneasy juncture of religious freedom claims and taxation.
A caveat. It is sometimes easy to mythologize the past, to see it in more favorable light than the present merely because of the filter of time that removes more garish problems. Sometimes I think that is the way we see the role of religion in political life. Certainly there is no rosy past where there was a perfect separation of church and state, where religious views were considered to be private matters not suitable fodder for public consumption. There appears to have always been an awareness, at least, about a candidate's values and religious beliefs, most of the time. Certainly, most candidates--even those that we may suspect were not active members of a religion--have been willing and able to call on "God" to bless the country.
Think about Abe Lincoln as described in this US News article (Dan Gilgoff, Abraham Lincoln's Religious Uncertainty, US News, Feb. 12, 2009). Though he grew up in a religious family and read the Bible (one of the few books the family had) and quoted from it liberally throughout his life, he never joined any church. It's not clear that he actually practiced a religion, though he probably would satisfy what we think of as "spiritual" these days. Early on, he was so clearly non-affiliated that he faced some faith-based attacks (some considered him an atheist as a youth). But he started attending church services (still not joining) after his son died in 1850 and, in the last 15 years of his life, he often spoke of some concept of God, though what he thought that meant was clearly uncertain.
Maybe a lot of what seemed to be the country's ease and less attention to the particular religious affiliation of political leaders prior to the more recent marked visibility of religion in political contests was because most candidates and officials were assumed to be some kind of Protestant Christian, with the particular variant not mattering too terribly much when all was said and done.
But in addition to getting good PR, Kennedy openly addressed the concerns about separation of religion and state during the presidential campaign in his famous speech on his religion, convincing some who had expressed earlier doubts. What is particularly notable about that speech is his claim that it was how he viewed the country's future, and not his particular religion, that should be of interest to voters. Also quite notable is his expression of what freedom of religion meant to him.
These [concerns outlined above] are the real issues which should decide this campaign. And they are not religious issues — for war and hunger and ignorance and despair know no religious barriers.
But because I am a Catholic, and no Catholic has ever been elected president, the real issues in this campaign have been obscured — perhaps deliberately, in some quarters less responsible than this. So it is apparently necessary for me to state once again not what kind of church I believe in — for that should be important only to me — but what kind of America I believe in.
I believe in an America where the separation of church and state is absolute, where no Catholic prelate would tell the president (should he be Catholic) how to act, and no Protestant minister would tell his parishioners for whom to vote; where no church or church school is granted any public funds or political preference; and where no man is denied public office merely because his religion differs from the president who might appoint him or the people who might elect him.
I believe in an America that is officially neither Catholic, Protestant nor Jewish; where no public official either requests or accepts instructions on public policy from the Pope, the National Council of Churches or any other ecclesiastical source; where no religious body seeks to impose its will directly or indirectly upon the general populace or the public acts of its officials; and where religious liberty is so indivisible that an act against one church is treated as an act against all. Id.
What is interesting in this speech--one that was designed to address what was perceived as a political weakness-- is that Kennedy considered himself to be expressing the predominant American view about separation of church and state, when he said: "no protestant minister would tell his parishioners for whom to vote"; "no church or church school [should be] granted public funds or political preferences" and "no religious body [should seek] to impose its will directly or indirectly upon the general populace or the public acts of its officials." Id.
The fact that Kennedy was elected suggested that the country had finally grown well beyond the colonizers' centuries'-old religious straitjacket where colonies killed or converted native populations in the name, e.g., of a state-led Church of England or Catholic Pope and the Civil War era's constant (and inconsistent) invocation of God as favoring North or South in the political and military strife.
But beginning around the 1970s, dogmatic religious ideologues became stronger players in the country's political life. That has included overt attempts to breach the wall of separation that Kennedy had endorsed, including trying to reinstate prayer in schools and city councils (note the current court case on a city council prayer practice); finding various ways to use public money to support private religious schools (through the use of vouchers); and fighting for exemptions from generally valid legislative enactments to allow religious institutions the ability to not comply with the law (including ability to discriminate against employees; ability to prevent employees from having access to the same health care services available to others; etc.).
The increased politicization of religion grew in the US with the corporatization of the religious message. So-called Christian businesses expanded from a few small Bible and music stores to national corporate-driven mass-marketing of popular Christian recording stars, media empires, and merchandising empires. The birth of the megachurches, often with their own suburban malls and church-run schools, created the kind of deep pockets that supported political campaigning in earnest, with leaflets and radio programs pushing "values" candidates. See, e.g., Keilholz, The Megachurch Juggernaut (Mar. 2008). Religous private and charter schools, and home schooling by fundamentalist religionists, insured that young children wouldn't be exposed to other ideas and could be brought up as fervent followers of the religous dogma.
Pat Robertson's religio-poltical empire developed, with the 700 Club and the Christian Broadcasting Network. Robertson's 1988 presidential run freely merged politics and religion (often expressed in terms of "values" campaigning). Fundamentalist groups increasingly pushed for religious views to be expressed at schools, in the public square, in courtrooms, as controversies ignited over creationism and so-called intelligent design doctrines being taught instead of, or alongside, scientific theories of evolution, as schools and city councils (especially in the South) continued to allow prayers (mostly Christian), and courtrooms displayed the Ten Commandments.
We started hearing the religious view that fundamentalists' religious freedom was violated when they--or businesses they owned or churches they were associated with--were "forced to conform" by not being able to mandate their views of values for all of society. We started to get the claim that the country was practicing religious discrimination if it did not allow religious institutions- or even businesses owned by religious institutions or even businesses owned by religious individuals--to exercise purported entity religious freedom rights (or their managers/owners religious freedom rights) to practice in whatever way they wished, even if it meant that the organization's employees' (who weren't necessarily co-religionists with the managing religious institution or commercial enterprise's religious owner) could not have the same religious freedoms as other Americans.
Bill Clinton signed the Defense of Marriage Act (commonly called DOMA), an egregious piece of discrimination against gays and lesbians that was pushed for by fundamentalist Christian religious organizations. California overturned its Supreme Court decision allowing gay marriage, in an initative funded by groups such as the Mormon Church. George W. Bush instituted a "faith-based initiative", creating a government post intended to further the expansion of religious institutional involvement in government programming. The vast majority of the religious recipients of federal monies to run prison programs and similar activities were Christian-protestant organizations. Although not supposed to proselytize with the funding, proselytization has been a critical part of many of the programs.
And Americans have been bombarded with religious dogma and slogans in the context of political grabs for attention. So the endless claims that the US wages a "war on Christmas" when holiday songs replace religious carols in public school muscials or when Rudolf the red-nosed reindeer and Xmas trees are required to be placed alongside nativity scenes on the public square. Google the term and you get 547 million results, including the silly new book listing Sarah Palin, failed half-term Alaska governor and religio-political Tea Party fave, as author.
(See, e.g., David Edwards, Palin links 'zealot-like' atheists with 'war on Christmas' and slavery with government debt, The Raw Story, Nov. 11, 2013. Please don't buy Palin's book. You already know what it says. And you already know the idea is wacky. Fundamentalists purport to be spreading "freedom" by attempting to force everyone to live by their own "values" and rules. After all, if you ask any atheist, you will be reminded that Rudolf and Xmas trees are just cartoonish manifestations of fundamentalist Christianity and no diversification of the holiday display at all. And adding a Kwanza song to the roster of carols or Bach's rousing Hallelujah Chorus in a setting replete with red poinsettias, "Christmas" lights, and boughs of balsam fir is a minor diversification, at best.)
Mitt Romney and Barack Obama both faced questions about their particular religious faiths. Romney, who would have been the first Mormon president, had to deal with the long history of concerns about Mormonism, from the massacres sanctioned by Brigham Young to the polygamy actively pushed by the church until it finally succombed to outside cultural and legal pressure to end it (though polygamy is still practiced by split-off sects). Obama faced "guilt by association" attacks for the stridently expressed views of Rev. Wright, a prominent black minister of a church he attended in Chicago, and "guilt by reason of family" for being born into a racially mixed family that led to him spending part of his youth in a Muslim country around Muslim relatives. See, e.g., this snopes.com piece setting out and then debunking the claims that Obama was Muslim. The continuing attacks on President Obama related to "values" pushed by fundamentalists religionists in the TEa Party/ GOP coalition.
And all those megachurches with megamalls bringing in millions for ministers led to another entanglement of church and state, as government investigators needed to see whether in fact these were just religious scams leading to the private inurement of the purported ministers out of the church businesses.
An investigation by the New York Times into megachurches and their off-shoot companies reported: “Business interests are as varied as basketball schools, aviation subsidiaries, investment partnerships, etc...” The branding of faith with those quaint, little symbols (in lieu of a pesky, troublesome cross) is representative of a shift into commercialism in the battle for Christian market share, now made manifest in evangelical-corporate empires. Says Business Week: “All this growth, plus the tithing many evangelicals encourage, is generating gushers of cash. A traditional U.S. church typically has fewer than 200 members and an annual budget of around $100,000. The average megachurch pulls in $4.8 million.”
Megachurch and televangelist ministers gross enormous salaries. Much of the millions raked in are generated by books, iTunes, and DVDs. But how much is going back into the ministry, considering that, were it not for thousands of devoted followers, most of these [mega]ministers would reside in relative obscurity? According to the Washington Post the Senate Finance Committee has recently announced an investigation into at least six Word of Faith ministers. Megachurch pastors and televangelists alike—Joyce Meyer, Kenneth Copeland, and Benny Hinn among them—are subjects of a probe following reports of unrestrained spending on ministries and private estates. After allegations involving the purchase of “such amenities as private jets and Rolls-Royces” reported thePost, GOP Iowa senator Charles E. Grassley has “asked for credit card records, clothing and jewelry expenses, and any cosmetic surgery expenses” as part of the congressional query. Id.(Juggernaut).
The current state of affairs is that in spite of the long tradition in this country of religious freedom for individuals--made possible by the Constitutional provision but more broadly by the underlying concepts that the state should not support or fund religious activity and that religious institutions should not be involved in political affairs--it is now politically expedient for a candidate for major political office to publicly claim that s/he ascribes to Christianity. Similarly,fundamentalist Christian religious organizations, in particular, demand increasingly broad exemptions from generally valid U.S. laws under the claim that such laws impinge on the (institutional) religious liberty. And religious individuals even claim that their personal religious freedom should allow them to cause their commercial enterprises to discriminate against the religious freedoms of their enterprise's customers and/or employees. And some courts are even falling for that wacky argument that allows a business owner's personal religious freedom to use the business to deny religious freedom to any number of customers and/or employees. See D.C. Circuit Backs Faith-Based Challenge to Contraception Mandate (discussing Gilardi (D.C. Cir. Nov. 4, 2013) (religious belief of owner of business allows business to discriminate against employees, so health care law contraception mandate cannot be enforced)). And the need for courts to consider these issues (because of the many suits filed by fundamentalists seeking to overturn generally valid laws as applicable to them) and for government entities to investigate religious enterprises (because of the expanding potential for violation of the rules for tax-exemption and tax exclusions) amounts to an unfortunate entanglement of religious affairs with the state and the state with religious affairs, and the consequent unfairness of the combination of tax exemption with religious exemptions from generally valid laws. More on that issue in Part III.
Wal-Mart has used its market clout to shut out labor unions and bring the retailing sector down to its self-defined low. I've written before about my own personal experiences in talking to Wal-Mart employees about unions and encountering abject fear that the employee would lose his or her job if any Wal-Mart supervisor were to be aware of the discussion, being told that Wal-Mart supervisors routinely enter employee rest areas and tear down any materials discussing advantages of unionization, and seeing the evidence of anti-Union and pro-owner sentiment in the way huge profits are channeled to managers/owners while workers are paid a mere pittance of what would be a decent wage. Wal-Mart documents revealed several years ago that it was intentionally refusing to provide health coverage becuase it was cheaper for the "company" (managers and owners) to push employees off to Medicaid and other government assistance.
That is brute capitalism at work--ensuring that the few at the top receive all the benefits of profit-making and productivity gains, while the average workforce is paid too little to provide a decent living for a single person, much less a family.
So what does this have to do with tax policy, you say? Reich is making an argument for an increase in the minimum wage to $15 an hour and greater recognition of workers' rights. Those are worthy objectives, and I fully support them. You could add better enforcement of anti-trust laws. In general, we should be asking ourselves why we allow one retailing giant to become so huge that it encompases distribution networks, warehousing, sales and manufacturing contracts around the globe that ensure that workers in China or Bangladesh manufacturing clothing for the company are making it on very little money and that workers in the US who sell that same clothing (or otherwise work in stores) are similarly poorly situated.
But the question I am raising is the connection between such company policies and tax policy. I think there is a strong argument that we should consider at least the following principles, coupled with a stronger (more progressive and higher rates) corporate tax to ensure the rules have some bite:
1) our tax rules should discourage companies from ripping off workers to overreward managers and owners.
2) our tax rules should work to ensure that people in the lowest income brackets don't have to carry the burden of paying taxes on their meager incomes
and
3) our tax rules should shift the incidence of tax to those at the top who control their own salaries and away from those at the bottom who have practially no say on what they work for.
We could go part way towards accomplishing the first with a strict limitation on deductible compensation. That might perhaps deny a deduction to executive pay that is more than 30 times the pay of the average worker as well as impose a cap above which no pay is deductible in computing the company's taxes.
We could make our rules work better to accomplish the second point by extending the personal exemption and standard deduction to ensure that some measure (2X?) the federal poverty amount is entirely exempt from federal income or payroll taxation.
Finally, we could accomplish the third point by creating a more progressive income tax structure that identifies several additional brackets at the high end (distinguishing between those who earn not quite a million and those who earn multi-millions and those who earn billions) and a more progressive estate tax structure that exempts a core amount (smaller than the high exemption recently made permanent) and then imposes a graduated tax on the excess.
If we don't begin to address the issue of hardworking Americans who cannot get by on a single job by amending our policies (including tax) to make the existence of a highly privileged upper class and a highly disadvantaged underclass the most important topic for government to address, I fear this country is in for a rude shock. Infrastructure expenditures will continue to dwindle especially in poorer areas, Education will continue to be moved to easily quantifiable but not so likely to be enduringly useful online instruction under the pressure from the "accountability gurus" (who want to evaluate out of existence public teacher unions, without knowing what makes a good educator) and the likes of the (also non-educator) Bill Gates and his ilk. The wealthy will continue to live in more and more secluded and luxurious gated communities separate from the hoi-poloi of the middle and lower classes. Generally speaking, brute capitalism and bogus "free market" theories of economics and tax will continue to leave more and more of our citizens underprivileged, hungry, lacking in education, and turning to whatever avenue for changing their lives remains open (including crime).
Megan McArdle (one of those Bloomberg economists who tends to write in support of right-wing economic ideas) recently argued that Wal-Mart can't pay the good wages that Trader Joe's or Costco pays because (i) it is simply too big, with too much merchandies, to make the kinds of profit it expects doing so, and (ii) it has a low-income customer base who can't afford to buy anything except the cheap stuff it provides [produced in unsafe conditions by a non-unionized labor force]. See Megan McCardle, Why Wal-Mart Will Never Pay like Costco, Bloomberg.com (Aug. 27, 2013).
Megan thus supports my argument that we should never allow one retailer to grow to such huge consolidated form (antitrust needs to be reinvigorated to battle giants like WalMart). But Megan misses Henry Ford's key insight--if you want your workers to buy your good product, you pay your workers well, and their business will further your business. Wal-Mart has done exactly the opposite--it has driven out stores that paid workers better (and added to localities' environmental problems in spades), in order to drain off huge profits for its owners and top managers while using every technigue in the book to block workers' unions and prevent workers from getting paid decent wages for what they do, forcing workers to only be able to buy from the Wal-Mart type distribution network (Wal-Mart and "dollar store" or other cheap merchandisers who pay their staff very little).
Whether we think about this in terms of the growing inequality in this country that stifles economic growth for all in the long run, or the class warfare that the right has been engaging in for at least the decades since Reagan was elected President, or the corporatism (derived in large part from the "free market" rhetoric) that has taken over most American institutions, we should recognize that Wal-Mart and other big companies like McDonald's and the other fast-food chains have built a business model that is detrimental to ordinary Americans for the benefit of the few ("the 1%" of the Occupy Wall Street rhetoric). And we should start considering ways to counter the these harmful developments. In particular, we should ensure that companies pay their workers a living wage and we should protect those workers at the bottom of the income scale from having to give up any of that wage in payroll or income taxes.
Outsourcing (or offshoring) is a bigger contributor to unemployment in the U.S. than laziness.
Since 2000, U.S. multinationals have cut 2.9 million jobs here while increasing employment overseas by 2.4 million. This is likely just the tip of the iceberg as multinational corporations account for only about 20% of the labor force.
When was the last time you saw a front-page headline about outsourcing?
In 5-4 decisions in which Justice Kennedy, as considered likely, joined the Court's liberal wing to form a majority as against the Scalia-Thomas-Roberts-Alito rightwingers, the Supreme Court delivered its opinions in the two gay marriage cases before it this term. They are-Hollingsworth v Perry (rejecting an appeal of the lower court decision overturning California's Proposition 8, on technical jurisdictional grounds), and US v. Windsor (affirming the unconstitutionality of Section 3 of DOMA (the federal "defense of marriage act" ) that forbids the federal government from treating as married spouses for any federal law purposes those gay couples that are legally wed in their state jurisdictions).
The Windsor case was on appeal from the Second Circuit, which applied heightened scrutiny to find unconstitutional DOMA's denial of the marital exemption to a same-sex surviving spouse of a marriage that took place in Canada and was recognized in New York where the couple lived at the time of the spouse's death.
The limitation of lawful marriage to heterosexual couples, which for centuries had been deemed both necessary and fundamental, came to be seen in New York and certain other States as an unjust exclusion. Slip op. at 14.
The jurisdictional issue in Windsor was not a hangup for the Court. As I had indicated in the BNA Webinar on the two cases prior to the decision, the US retained a sufficient stake in the matter--relying on INS v. Chadha, the Court found that the government's refusal to pay the tax refund, even after the Justice Department's decision not to defend such cases, provide an existing Article III "case or controversy" before the Second Circuit and before the Supreme Court.
The judgment orders the United States to pay money that it would not disburse but for the court’s order. The Government of the United States has a valid legal argument that it is injured even if the Executive disagrees with §3 of DOMA, which results in Windsor’s liability for the tax. Slip op. at 8.
There was merely a prudential hurdle to overcome, and here prudence argued for a decision, given the extensive amici briefings on both sides, including the House-leadership organization's briefing adverse to the Executive.
BLAG’s sharp adversarial presentation of the issues satisfies the prudential concerns that otherwise might counsel against hearing an appeal from a decisionwith which the principal parties agree. Were this Court to hold that prudential rules require it to dismiss the case, and, in consequence, that the Court of Appeals erred infailing to dismiss it as well, extensive litigation would ensue. The district courts in 94 districts throughout the Nation would be without precedential guidance not only in tax refund suits but also in cases involving the whole of DOMA’s sweep involving over 1,000 federal statutes and amyriad of federal regulations.
The constitutional holding in Windsor is a narrow reading of the equal protection afforded by the Fifth Amendment's extension to the states. Writing for the Court and joined by Justices Kagan, Sotomayor, Breyer, and Ginsburg, Justice Kennedy recognized that states have historically been allowed to define marriage--subject to Congressional restraints as in Loving v. Virginia's rejection of miscegenation laws--and noted that DOMA intervened to take away a protected status provided by those states that had recognized gay marriage--this was both the Congressional purpose and the effect of the law. Because it creates two-classes of marriages within a state that recognizes one class of marriage, and forces couples to treat their relationship one way for state purposes and another for federal purposes, it violates the most basic principles of equal protection.
Today twelve states and the District of Columbia recognize same-sex marriage. This decision gives same-sex married couples in those states equal treatment under federal law with married couples.
Here the State’s decision to give this class of persons the right to marry conferred upon them a dignityand status of immense import. When the State used its historic and essential authority to define the maritalrelation in this way, its role and its power in making the decision enhanced the recognition, dignity, and protectionof the class in their own community . ... What the State of New York treats as alike the federal law deems unlike by a law designed to injurethe same class the State seeks to protect.
***
This status is a far-reaching legal acknowledgment of the intimate relationship between two people, arelationship deemed by the State worthy of dignity in the community equal with all other marriages. It reflects both the community’s considered perspective on the historicalroots of the institution of marriage and its evolving understanding of the meaning of equality.
***
DOMA seeks to injure the very class New York seeks to protect. By doing so it violates basic due process and equal protection principles applicable to the Federal Government. See U. S. Const., Amdt. 5; Bolling v. Sharpe, 347 U. S. 497 (1954). The Constitution’s guarantee of equality "must at the very least mean that a bare congressional desire to harm a politically unpopular group cannot" justify disparate treatment of that group.
***
The Act’s demonstrated purpose is to ensure that if any State decides to recognize same-sex marriages, those unions will be treated as second-class marriages for purposes of federal law.This raises a most serious question under the Constitution’s Fifth Amendment.
***
Under DOMA, same-sex married couples have their lives burdened, by reason of government decree, in visible and public ways. By its great reach, DOMA touches many aspects of married and family life, from the mundane to the profound.
***
Though Congress has great authority to design laws to fit its own conception of sound national policy, it cannot deny the liberty protected by the Due Process Clause ofthe Fifth Amendment.
***
This requiresthe Court to hold, as it now does, that DOMA is unconstitutional as a deprivation of the liberty of the person protected by the Fifth Amendment of the Constitution. The liberty protected by the Fifth Amendment’s DueProcess Clause contains within it the prohibition against denying to any person the equal protection of the laws
But there is a huge problem looming because of the failure of many states to recognize same-sex marriages performed in other states even though they recognize all other marriages performed in those other states. Section 2 of DOMA--which allows states to refuse to recognize sister-state marriages--in flagrant violation of the normal rules of comity between states--was not at stake here and thus its repeal remains for future cases. This means that there will be considerable uncertainty --and much bigotry and discrimination against gay couples for some time as those states that have enacted discriminatory constitutional or statutory provisions against gays continue to deny marriage rights to gay married couples when they move into them, and perhaps prevent them from retaining custody of their children or being able to legally divorce their spouses or will estates to their spouses. These problems will be resolved, at least for now, under each states "conflict of laws" provisions, with the overlay of the state's constitutional prohibitions, where existing, on recognition of same-sex marriages. This will cause harmful suffering to gay couples, so one would expect that there will be litigation on this issue soon. The Court's opinion regarding the many problems that would be created by extended litigation over the legality of DOMA section 3, across 1000 federal laws, shows that factor weighed heavily in its prudential decision to consider the constitutionality of Section 3. Perhaps it failed to adequately consider what it would mean to fail to carry the point further to a repudiation of same-sex marriage bans under a full Equal Protection holding. After all, the Court, citing Loving v. Virginia, acknowledged that
State laws defining and regulating marriage, of course, must respect the constitutional rights of persons.
The result is that gay marriage is recognized in the 12 states and the District of Columbia that have official recognized gay marriage either through legislation or court action (and, under Hollingsworth v Perry, now also in California), and that couples married in those states can now file joint returns, inherit an estate from a spouse without paying any estate tax and otherwise enjoy the special privileges (or, in some cases, burdens) provided to married couples under federal tax law and all other federal laws.
Regretably, but as expected, the Court did not reach the question of whether state-law prohibitions of gay marriage violate the Equal Protection Clause. This will await another day with a proper case challenging a state ban on same-sex marriage, perhaps after a number of states reverse their current constitutional amendments discriminating against gays by treating the privileges of marriage under state law as available only to a man-woman couple. Perhaps the varied views of the right-wing--a dissent by Chief Justice Roberts, a dissent by Justice Scalia in which Justice Thomas joined (and Roberts in Part I), and a dissent by Alito in which Justice Thomas joined in Parts II and III--augers well for a gradual withering away of the "traditionalist" (and religious fundamentalist) views supporting a same-sex marriage ban.
Some celebration is in order, as indeed took place across the country today, regarding this additional step toward erasing the kinds of bigotry that have been a stain on the country's belief in liberty for all since its inception. See Joy, and Dismay, as the Supreme Court rules, New York Times (June 26, 2013) (slides).
But the country's religious right will undoubtedly try to minimize the freedoms for gay and lesbian citizens as much as possible in the course of the state-by-state battles to come over recognition of gay marriage. The right claims that this is a matter of religious freedom, but it is in actuality a matter of religious imperialism--an attempt by conservative Christians to hoist their church's definition of marriage onto the laws of the land for everyone in the country, no matter their own religious persuasion or lack thereof. The fundamentalist view that only men and women can marry should have no legal status. Let those churches whose hierarchies accept that ideological position adopt that position as their church policy, but let them not succeed in forcing others to accept their views about gay and lesbian citizens and what constitutes a family.
Ross Douthat's commentary in the Times discusses this religious issue. See Religious Liberty and the Gay Marriage Endgame, New York Times blogs (June 26, 2013). Douthat supports the idea that these kinds of rights should be developed on a state-by-state basis, as a social experiment. I must admit I find that approach disgusting. If we were to say today that segregation or slavery or anti-semitism could be incorporated in state laws on a state-by-state basis to allow the dissenting minority who wanted (and still want, in a dismaying number of cases) to treat African Americans or Jews as inferior citizens without too much community disruption, no one would accept it. Why is it that people who claim to be thinkers--like Ross Douthat and the four right-wing Justices of the Supreme Court--continue to act like treating gays and lesbians as inferior citizens with second-class privileges is okay?
Note that the idea, discussed by Douthat, that there is a "religious issue" and that churches will have to incorporate their schools differently to "protect" them is a result of the growing false understanding of the Constitution's guarantee of religious freedom, fostered by politicians too willing to kow-tow to religious hierarchies and a Supreme Court overladen with a strongly religious majority who have long failed to understand the Constitutional framework for what it is--a protection for individual practitioners, not for religious institutions. Neither churches nor their businesses nor their organizational charities (i.e., church-run schools, hospitals and similar subsidiary institutions) merit religious protection from anti-discrimination laws intended to protect individual rights to religious freedom: by definition, if the institution is given "freedom" to impose its ideologies on individuals, the individuals themselves have lost those freedoms. These are individual rights, not institutional or corporate rights. Thus, to protect the individual's right to freedom of religion, a religious institution should not be permitted to force an institutional employee--other than perhaps its management personnel who have supervisory rights to hire and fire and penalize employees and are the carriers of the religious dogma "torch"-- to practice the dogma of the institution on birth control, gay marriage, divorce, or any other aspect of the religious dogma.
I thus find the statement of Ben Domenech, editor of The Transom, who is quoted in Douthat's commentary, quite offensive--he says that states will need to "alter their laws accordingly to protect religious organizations, businesses, mosques and churches, and prevent community clashes as best possible." The Constitution doesn't protect "religious businesses" and cannot put avoiding community clashes above protecting the religious liberties (or nonreligious views) of all Americans.
Someday the Court will correct its error on this point, but one suspects that will be far in the future.
Too bad that the Supreme Court voted the other way on the Voting Rights Act--a decision that essentially disregarded both Congress's role under the Civil War amendments and Congress's 2006 analysis of the need for continued oversight, especially in the states currently within the coverage. Note that the law provided for states to be brought within the coverage or exempted from the coverage, so the Roberts Court's right-wing activist decision was an unjustified effort to find a way to favor Southern (and Republican) states. Scalia's dissent in the Windsor case--in which he argues that the Court owed respect to the legislative branch (see exceprt, below) stands in sharp contrast to the willingness of the Court to override Congress's renewal of the Voting Rights Act upon the basis of an extensive record of hearings and evidence as to continuing discrimination against minority voters in those Southern states, where poll places are moved to inconvenient locales and ID forms are required that may be difficult for minorities to obtain. In Windsor, Scalia claims that "democratically adopted legislation" like DOMA should be upheld by the Court, but in the Voting Rights Act case the majority ran roughshod over such legislation in a situation where Congress's role is mandated by the amendment itself.
We have no power to decide this case. And even if we did, we have no power under theConstitution to invalidate this democratically adopted legislation. The Court’s errors on both points spring forth from the same diseased root: an exalted conception of the role of this institution in America. J. Scalia dissent in Windsor, Slip Op. at 1.
While I disagree with Scalia's view expressed in his dissent that there was no standing in Windsor, I do think he makes some very good counterarguments to the arguments in Alito's dissenting opinion about jurisdiction, which would recognize the BLAG (purportedly a bipartisan house legislative group, but in the Windsor case, only 3 Republican leaders of the House authorizing a "defense" of Congress's actions in enacting DOMA) as a rightful adversary at the Court in a case such as Windsor. Scalia accurately sinks daggers into Alito's trumped up theories of Congressional prerogative to litigate against the Executive whenever it doesn't like the way the Executive carries out Congressional duties.
Two items caught my attention in today's newspapers and they represent diametrically opposed positions on what matters in society. One, by Paul Krugman, deals with the problems of monopoly rents--especially in industries in which there is very little production in this country combined with mostly profit-taking from some kind of intellectual property--think Apple and the financial industry. The other, by Richard Posner, talks about the importance of national security and minimizes the need for a minimum wage.
Krugman notes the "growing importance of monopoly rents," which are "profits that do not represent returns on investment but instead reflect the value of market dominance." Krugman, Profits without Production, New York Times (June 21, 2013), at A19. He suggests that the growing importance of these rents from markiet dominance represent a "disconnect between profitsd and production" that may factor into our continued lack of robust economic growth. He contrasts GM in its heyday, when it owned hundreds of factories and employed about 1% of the total nonfarm workforce in this country, with Apple today, when it "seems barely tethered to the material world, employing fewer than 0.05% of US workers, with most work outsourced to China and "charg[ing] what the traffic will bear" for its i-products. And this story is part of a bigger story--the impact of rent-seeking corporate profits on the overall economy. It is driving rising inequality, as there is a "sharp shift in the distribution of income away from wages in general and toward profits." Id. Since the profits reflect market dominance rents, not returns on investment, a monopolist can be profitable without expanding its production capacity--as Apple is, sitting on "a giant pile of cash, which it evidently sees no need to reinvest in its business." Id. The effect of monopoly profit-taking is that wages are depressed. With household spending down as "labor gets an ever-smaller share of national income while corporations, despite soaring profits, have little incentive to invest, you have a recipe for persistently depressed demand."
The second item was a small blurb on the editorial page inthe Wall Street Journal, in which they pick out quotes from famous people worth noting. This time it's Richard Epstein writing for the Hoover Institution. See Notable & Quotable, Wall Street Journal (June 21, 2013), at A13. Epstein suggests that "[a]ll government actions should be examined under a presumption of distrust" which is why, he says, he has supported "constitutional regimes that afford strong protections to economic liberties and private properties." Now, folks, you have to ask, what does "economic liberty" --or even "private property" mean. For Epstein, it is a "natural right" kind of idea--the misguided, Friedman-derived notion that markets can run themselves, letting the powerful who own considerable private property succeed and the weak who don't fail. That kind of brute force capitalism encourages corruption, rentier profits (see Krugman, above), and a depressed, highly unequal society in which them that have gets and everybody else is either a peon or some kind of low wage earner in thrall to the titans of Big Business. Epstein goes on to give an example of his belief in "economic liberty"--the veiw that "there is no coherent case for state intervention" to maintain a minimum wage. This is the view of someone who might say "let them die" of a poor person unable to afford health care, or "let them eat cake" of a poor person unable to afford bread. This is not "compassionate conservatism" but brute force capitalism. It is the view that the wage will find its bottom based on the "neutral" market forces. But neutral market forces don't exist. They are shaped by the powerful and if you let the powerful take wages from ordinary workers to puff up their own profits, they will do so to the full extent of their market power.
Epstein then contrasts the lack of a need for the state to ensure a minimum wage, which would "degrade the efficiency of private markets" with the need for the state to "put in place institutions that limit aggression in both domestic and foreign affairs. Unlike protecting the livelihood of ordinary Americans, "national security is an area where government may be appropriately feared, but is still desperately needed." We shouldn't be so uptight about the FISA court's allowing the government to grab all kinds of privacy data, because Epstein is confident that the NSA data grab is not "an intolerable invasion of privacy."
I for one remain unconvinced that the incredible data-grab by all the federal spy agencies is an acceptable intrusion on individual liberties in the name of "national security." And I am quite sure that the establishment of a minimum wage to prevent the huge imbalance of power in the work place from allowing owners to grab all the gains from production at the cost of workers is a very good kind of state intervention on behalf of ordinary folk. Epstein has it backwards--his ideological blinders from Chicago School economic "theory" are showing and his "economic liberty" arguments translate into the same old class warfare approach of protecting the profits of the elite at whatever cost they may bring to the rest.
If an increasing share of the economy driven by monopoly profits and increasing inequality from depressed wages and the impact of rent-seeking profits on business expansion are bad things, what might be considered reasonable policy steps to take to deal with this problem Krugman has pointed out and Posner has disregarded? It seems to me there are several policy positions that noticing the damaging effect of rent profits should push for: 1) increase minimum wages, 2) enact "Medicare for all" so that all those who lose out in a monopoly-driven corporate environment have an opportunity for decent health care (and the monopoly power of insurers is removed), 3) reinvigorate anti-trust legal actions to break up huge corporate empires like Big Oil, Big Banks, Big Pharma, etc., and 4) reinvigorate labor law to protect workers and ensure that those who want to organize can do so easily (with card-check and similar provisions, similar to motor vehicle registration of voters.
Recent Comments