How the Left Can Win Arguments and Influence People, by John K. Wilson
Wilson, John K. 2001. How the Left Can Win Arguments and Influence People: A Tactical Manual for Pragmatic Progressives. New York: New York University.
133 - Income taxes have remained steady for more than a half century at about 50 percent of federal government revenues. The problem is that the proportion of revenue from exise taxes and corporate taxes has been cut in half during this period while payroll taxes have grown to fill the gap. If corporations paid their fair share, there could be huge tax breaks.
134 - Two factors determine how progressive an income tax would be: the rate of taxation at different incomes, and the standard deduction. Progressives are accustomed to seeking a more progressive tax rate, rising as income increases. But there's no reason that the same result couldn't be achieved with a flat tax rate and a dramatically higher standard deduction.
The Forbes flat tax is an appalling giveaway to the wealthy that would add to the tax bueden on the poor and the middle class. But imagine a progressive flat tax with a stanard deduction of $20,000 for each individual (instead of the current $4,300 for singles and $7,200 for couples). After that, all income would be taxed at a rate of about 44 percent. A married couple with children could earn up to %50,000 tax free. The result would be lower taxes for 98 percent of Americans, a 100 percent tax break for the working poor, and a clear-cut, popular issue for progressives to stand on.
135 - [P}rogressives have become so attached to fighting these tax cut proposals for the wealthy that they haven't proposed a popular alternative: substantially reducing taxes on the poor. Politically, it' and amazing opportunity: a substantial cut in taxes for all Americans living in poverty would require only a tiny tax increase on less than 1 percent of the richest people. [. . .]
[. . .] Because the poor make so little money compared with the rich in America, their totoal federal income taxes are barely noticeable. The top 50 percent of wage earners pay 95.7 percent of federal income taxes (the top 25 percent pay 81 percent of the income taxes). This means that the government could essentially eliminate deral income taxes on anyone earning below the average income (around $25,000 a year) and lose only 4.3 percent of revenue--an amount that could be taken from the propsed budget surpluses* or raised by a tiny increase on the taxes of the wealthiest 1 percent.
*[Note: Since this book was published, we obviously no longer have a budget surplus. I don't know how much of Wilson's argument would have to be revised in the face of our massive deficit, but not knowing that, I still think the basic principles of what he's proposing are sound--JLHart]
136 - Currently, we have a crazy tax system in which we heavily tax the working poor for Social Security and impose an income tax on them, but then we give them back some of the money with the earned-income tax credit (EITC).
137 - Imagine if we simplified the system: reduced the payroll and income taxes on the working poor (while still giving them credit for Social Security) and eliminated much of the need for an earned-income tax credit.
140 - Many progressives make the mistake of attacking the capital gains subsidy in the tax code soley as a "giveaway to the rich." Of course, it is precisely that. But progressive ideas are most persuasive when they don't use the standard rhetoric of attacking the rich. The capital gains subsidy (and the proposal by virtually all Republicans--including Steve Forbes's flat tax--to increase this tax break) can be effectively countered on libertarian, antigovernment grounds. What business is it of the government to judge the value of the way we earn our money? [. . .]
Why should someone who makes his money by investing stocks benefit from a lower tax rate than does the construction worker who goes out and works hard all day to make a living? The construction worker pays more in income taxes than the speculator--and the far right wants the speculator to pay nothing at all.
141 - The reason that the construction worker pays higher taxes in order to subsidize the stock speculator, we are told, is that paper shufflers are more important to our economy than construction workers are. Yet there's never been any sound eceonomic theory to prove that $50,000 made on Wall Street is important to our economy than $50,000 made on Main Street. [. . .]
Isn't it interesting that the advocates of "tax simplication" suddenly want more complicated taxes when it comes in the form of a tax break for the rich? After all, keeping capital gains income separate from other forms of income only complicates people's taxes [. . .]
The low tax rate on capital gains also distorts the economy. Instead of investing in safe bonds or CDs (which pay interest
142 - taxed as income) or stable, profitable companies (which provide dividends taxed at the higher income rate), many investor seek high-risk, unprofitable companies that provide no dividends but have the potential to rise in value and create the desirable low-taxed capital gains. The stock m arket is precarious enough without the government providing handouts to the people taking the biggest risks.
The principle of fairness in taxation demands a reformed tax code that lowers income taxes (especially for the poor) while providing for equality between income and capital gains taxes. By challenging the current tax structure that favors the wealthy and the powerful, progressives could take away one of the most powerful and popular issues manipulated by conservatives. But even more important, the left could use tax policy and tax cuts to help the poor more than any government program could accomplish. Until progressives address tax cuts, they will always find themselves on the losing end of American politics.
133 - Income taxes have remained steady for more than a half century at about 50 percent of federal government revenues. The problem is that the proportion of revenue from exise taxes and corporate taxes has been cut in half during this period while payroll taxes have grown to fill the gap. If corporations paid their fair share, there could be huge tax breaks.
134 - Two factors determine how progressive an income tax would be: the rate of taxation at different incomes, and the standard deduction. Progressives are accustomed to seeking a more progressive tax rate, rising as income increases. But there's no reason that the same result couldn't be achieved with a flat tax rate and a dramatically higher standard deduction.
The Forbes flat tax is an appalling giveaway to the wealthy that would add to the tax bueden on the poor and the middle class. But imagine a progressive flat tax with a stanard deduction of $20,000 for each individual (instead of the current $4,300 for singles and $7,200 for couples). After that, all income would be taxed at a rate of about 44 percent. A married couple with children could earn up to %50,000 tax free. The result would be lower taxes for 98 percent of Americans, a 100 percent tax break for the working poor, and a clear-cut, popular issue for progressives to stand on.
135 - [P}rogressives have become so attached to fighting these tax cut proposals for the wealthy that they haven't proposed a popular alternative: substantially reducing taxes on the poor. Politically, it' and amazing opportunity: a substantial cut in taxes for all Americans living in poverty would require only a tiny tax increase on less than 1 percent of the richest people. [. . .]
[. . .] Because the poor make so little money compared with the rich in America, their totoal federal income taxes are barely noticeable. The top 50 percent of wage earners pay 95.7 percent of federal income taxes (the top 25 percent pay 81 percent of the income taxes). This means that the government could essentially eliminate deral income taxes on anyone earning below the average income (around $25,000 a year) and lose only 4.3 percent of revenue--an amount that could be taken from the propsed budget surpluses* or raised by a tiny increase on the taxes of the wealthiest 1 percent.
*[Note: Since this book was published, we obviously no longer have a budget surplus. I don't know how much of Wilson's argument would have to be revised in the face of our massive deficit, but not knowing that, I still think the basic principles of what he's proposing are sound--JLHart]
136 - Currently, we have a crazy tax system in which we heavily tax the working poor for Social Security and impose an income tax on them, but then we give them back some of the money with the earned-income tax credit (EITC).
137 - Imagine if we simplified the system: reduced the payroll and income taxes on the working poor (while still giving them credit for Social Security) and eliminated much of the need for an earned-income tax credit.
140 - Many progressives make the mistake of attacking the capital gains subsidy in the tax code soley as a "giveaway to the rich." Of course, it is precisely that. But progressive ideas are most persuasive when they don't use the standard rhetoric of attacking the rich. The capital gains subsidy (and the proposal by virtually all Republicans--including Steve Forbes's flat tax--to increase this tax break) can be effectively countered on libertarian, antigovernment grounds. What business is it of the government to judge the value of the way we earn our money? [. . .]
Why should someone who makes his money by investing stocks benefit from a lower tax rate than does the construction worker who goes out and works hard all day to make a living? The construction worker pays more in income taxes than the speculator--and the far right wants the speculator to pay nothing at all.
141 - The reason that the construction worker pays higher taxes in order to subsidize the stock speculator, we are told, is that paper shufflers are more important to our economy than construction workers are. Yet there's never been any sound eceonomic theory to prove that $50,000 made on Wall Street is important to our economy than $50,000 made on Main Street. [. . .]
Isn't it interesting that the advocates of "tax simplication" suddenly want more complicated taxes when it comes in the form of a tax break for the rich? After all, keeping capital gains income separate from other forms of income only complicates people's taxes [. . .]
The low tax rate on capital gains also distorts the economy. Instead of investing in safe bonds or CDs (which pay interest
142 - taxed as income) or stable, profitable companies (which provide dividends taxed at the higher income rate), many investor seek high-risk, unprofitable companies that provide no dividends but have the potential to rise in value and create the desirable low-taxed capital gains. The stock m arket is precarious enough without the government providing handouts to the people taking the biggest risks.
The principle of fairness in taxation demands a reformed tax code that lowers income taxes (especially for the poor) while providing for equality between income and capital gains taxes. By challenging the current tax structure that favors the wealthy and the powerful, progressives could take away one of the most powerful and popular issues manipulated by conservatives. But even more important, the left could use tax policy and tax cuts to help the poor more than any government program could accomplish. Until progressives address tax cuts, they will always find themselves on the losing end of American politics.
posted by jlhart7 at 8:08 AM
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