Wednesday, November 10, 2004

Ownership Of Our Society - The Tax Investment

The History

The issue of taxation and America have been closely intertwined since before this nation's inception. "No taxation without representation," an issue first raised by founding father James Otis in 1764, became one of the most recognizable battle cries of the American Revolution. Another founding father, Benjamin Franklin, is famous for his lament on the ubiquity of taxation. He said, "In this world nothing is certain but death and taxes." Americans have shown an aversion to paying taxes dating back to the days before we were known as Americans.

So it might sound shocking to some of my compatriots when I suggest that taxes have gotten a bad rap. Before you dismiss me as yet another tax and spend liberal, please hear me out (given the fact that there is a reckless borrow and spend Republican administration running the country, I think I should at least be given the opportunity to speak my mind).

Still, I am aware of the dangerous ground upon which I now tread, so I want to make a few preemptive caveats and clarifications. I am not in favor of higher taxes no matter the situation. I am not opposed to tax cuts per se, in fact I would like to see more tax cuts for certain demographics. I am also not of the opinion that governments are not capable of wasteful, corrupt or inefficient handling of taxpayer money. Governments are composed of people, and people are often all of those things, be they lawyers, doctors, corporate leaders, athletes, entertainers, blue collar workers, farmers, or, yes, politicians and bureaucrats. In that sense, I suggest that government, as a rule, is no more corrupt or inefficient than many other aspects of society.

The True Nature Of Taxation

Now that I have put that on the table, let me say this: taxes are a good thing. Paying taxes is an occasion of patriotism, an acknowledgement of belonging to the group, an investment in our nation and an affirmation of one's citizenship. I am well aware that with the coming of April, and with the receipt of every paycheck, Americans have a visceral reaction to taxes that is the opposite of my rosy rendition - and that may be an understatement. But that is because of a conceptual deficiency, and perhaps some inequities in the current system, but not the inherent nature of taxation. Yes taxes represent a diversion of income away from an individual's bank account and into the government's coffers, and that can be seen as a loss of money in an immediate sense, but those sacrifices are a necessary and crucial aspect of living in a democratic, capitalist, civilized and productive society. They are not made in vain or without recompense.

Taxes are what you pay for physical security (the military, police force, fire department, etc), transportation infrastructure (including highways, roads, ports, railroads, airlines, mass transit, etc.), economic health (the banking system and its regulation, antitrust rules, corporate governance - which invites investment in our markets, monetary policy, etc.), public protection (the courts, environmental standards, workplace safety, regulation of food and drugs, regulation of the health care industry, etc), welfare of the citizenry (sanitation, public education, state universities, Social Security, Medicare, day care for working mothers, child protection, unemployment insurance, workers compensation, etc.), and the list goes on.

Without taxes, none of those things are possible, yet it is far too easy for people to take those aspects of society for granted, and to forget or look past how those most fundamental of services are funded (as I discussed in a different manner

The Prevailing Frame

The GOP has focused the attention of the voters on the negative aspects of paying taxes - the pain felt at the loss of income - while completely obscuring the other half of the narrative - the value we as a community receive by this act of patriotism and sublimation to the common good.

The very language used has been carefully crafted to trigger an emotional response and cast the conservative cause in the best possible light, while making progressives out to be nothing short of villainous. This potency is captured in the frame du jour promulgated by the right wing's media/punditry/and political class when discussing the issue of taxation. They have been quite successful in casting their policies as "tax relief." As George Lakoff points out:

When we hear the word relief, we immediately know that in the situation there is an affliction or burden, a victim of the affliction, and someone who helps us by relieving the affliction.

Without relief, there is continued suffering. Since no one wants suffering, we see anyone who interferes with the relief as a "bad guy" - as someone who must be defeated. This in turn sets up the reliever as a kind of hero. Every time the phrase tax relief is heard or read by millions of people, the more this view, which sets up taxation as an affliction and conservatives as heroes, gets reinforced.

Once citizens, influenced by media, accept tax relief as the right words to use when discussing taxes, it becomes almost impossible to see why taxes sometimes should go up instead of down, or to point out who is not paying their fair share. [emphasis in the original]
The Facts

The last part of Lakoff's analysis is important - that it seems almost impossible to make gains by pointing out who is not paying their fair share of the taxes because people have been led to believe that paying taxes is an affliction, and thus anyone's avoidance of this affliction should be applauded. This, in part, explains why the public was willing to overlook the "facts" regarding President Bush's tax policies.

It is no secret that since 2001, President Bush's tax cuts have shifted federal tax payments from the richest Americans to a wide swath of middle-class families, according to a number of sources including a report by the non-partisan
Congressional Budget Office.

Some other facts laid out by the Congressional Budget Office report were described by New York Times columnist Paul Krugman:

One-third of [Bush's] tax cuts over the past three years went to people who earned an average of $1.2 million annually. Households with incomes in the top 1 percent received an average tax cut of $78,460 this year. Households in the middle 20 percent -- they average about $57,000 a year -- received an average cut of $1,090. That is a 72 to 1 ratio in favor of the millionaires.
In addition, despite the deceptive claims by the Bush/Cheney campaign, according to, 35.6 million individuals and families got absolutely no benefit from the Bush tax cuts. For these taxpayers, their income was so low they were not paying federal income taxes before the cuts but were paying federal payroll taxes for Social Security and Medicare. Bush didn't cut payroll taxes, so this substantial group was left out entirely.

Still, as I have
mentioned before, facts often fall victim to frames and larger patterns of thought. When the facts conflict with the frames, the frames trump and the facts are disregarded. In addition to the "tax relief" frame, there are also a couple of other aspects of the meta-narrative which contribute to the cognitive myopia, that, in many ways, are unique to the American psyche. A large percentage of Americans believe that they one day will be amongst the wealthiest, and they do not want taxes to be high when they arrive in the promised land. For these Americans, lessening the tax rate of the wealthiest Americans is seen as a benefit they will soon be enjoying themselves - despite the overwhelming weight of the evidence which suggests most of these people will never attain such status.

In a related sense, Americans are prone to think that by espousing policies, beliefs and attitudes of the upper class, they will become wealthy by association or emulation. In the process, working class people identify with the causes of the wealthy in a vain hope that the wealth will rub off, or flow to them because of the similarity in appearances and attitudes.

Finally, many Americans are under the belief that wealth and power gravitate to those that are morally superior, disciplined, and hard working. Thus, it would be immoral to suggest that these people pay a large portion of the tax responsibility. While it is true that many wealthy Americans owe their opulence to hard work and discipline, these two traits alone are not guarantees of the attainment of wealth. There are many more hard working and disciplined blue collar workers and middle class Americans who never break through the ceiling, and there are many wealthy Americans who are the beneficiaries of serendipity, subterfuge and/or inheritance - not their own hard work.

Recapturing The Language

When touting their tax policies, conservatives frequently repeat the mantra "you know how to spend your money better than the government." That appeals to peoples' sense of independence, autonomy and ability, as opposed to government waste and inefficiency. It promises more money in your pocket, and a more efficient allocation of resources on the grander scale. It is also untrue. Paying taxes is the act of making an investment in our country. In that sense, we have made investments in the past that have paid enormous dividends, such that these returns would not have been possible if the government had left such decisions to individual citizens. Sometimes government is the only efficient actor, and by guiding these investments, our society is infinitely wealthier, more productive, and better functioning. George Lakoff reminds us of what came before us.

For instance, take our highway system paid for by taxpayer investments. Imagine trying to take your tax cut and use it to build a highway system? Or take the Internet - it was paid for with taxpayer investments, as was the development of computer chips. Imagine trying to use your tax cut to invent and build the internet, and design and make chips for all of our computer uses? Through our education system, as well as through the NSF (National Science Foundation), and NIH (National Institutes of Health), our wise taxpayer investments have trained generations of scientists and medical researchers. Imagine trying to take your tax cut to train doctors and scientists.

Dependence on taxpayer investments is even more extreme for corporations. Taxpayers pay for all of our government financial institutions - our national banks, the Federal Reserve, the Securities and Exchange Commission, the Treasury and Commerce departments, as well as our courts, of which 90% is used for corporate law. When someone wants to start a business, they do not have to build highways, the internet, educate scientists, found banks, or start a court system from scratch. They are all there waiting for you, courtesy of taxpayers. These are taxpayer dividends. Our taxes are investments that pay extraordinary dividends. No investment, no dividends. Some of the most important dividends are economic growth and jobs.
In addition to the conception of taxes as an investment, taxes are also the dues we pay to belong to the club that is the United States of America. These dues are used to maintain much of the infrastructure that was built through the utilization of the investments our parents and predecessors made. Our dues help to perpetuate our institutions, and foster the sense of community that ties us together. It is our continuing contribution to the common good, in addition to our ongoing investment in the future and in the lives of our children and grandchildren, that gives us a bond and common purpose.

In that light, paying taxes is also an issue of patriotism. Patriotic individuals and corporations pay taxes, rather than looking to cut corners and take advantage of the contributions of others. We pay taxes because we recognize that through investment and maintenance, tax expenditures have made America what it is today. It is this vast interconnected infrastructure that feeds the engine of our economic, military, artistic, cultural and entrepreneurial success. We love our country, and we want to support it, improve it and raise the fortunes of our fellow Americans. Patriotic Americans pay their taxes.

Because paying taxes is an investment in the future, a perpetuation of our strengths through the maintenance of our infrastructure and an opportunity to actively support our nation, tax policy needs to be made fair. The Bush administration has engaged in a policy that shifts the onus on to the middle class and working class, while letting the wealthiest Americans shirk their responsibility. This is fundamentally unfair, and morally bankrupt. The wealthiest Americans have been able to reap the benefits of our collective investment in infrastructure. There are no "self-made men."

Wealthy Americans have used the vast infrastructure that others have paid to construct in order to make their wealth. Their efforts are a net positive for society, and they should be commended for their spirit, but they must also repay the taxpayers for building and maintaining the system that allows them to amass such wealth. In addition, wealthy Americans and corporations utilize this infrastructure more than most, and so they bear a greater responsibility for its upkeep. Again, I refer to Lakoff:
-An overwhelming percentage of state and federal court time is devoted to corporate law. Businesses and corporations rely on a smoothly functioning court system to negotiate disputes and ensure contracts are upheld.

-The Securities and Exchange Commission and all the apparatus of the Commerce Department are mainly used by the wealthy.

-Companies depend on sound roads, railways and ports to transport their products.

-Companies benefit from an educated workforce, and the scientific and technological research that we have all paid for.

We all pay in to maintain these resources, but corporations and wealthy people use more of our public resources than an ordinary family does - so it only makes sense that they pay accordingly.
I understand that trying to change the concept of taxation in the minds of the American people is a herculean task, but it is one that we must undertake because the stakes are too high. The Bush administration's policy of "tax relief" is really a code word for the dismantling of most of the infrastructure that was built up by our previous tax investments, our current maintenance, and our patriotic contributions to our nation's future. The only infrastructure that will remain will be those aspects that favor the wealthy and the corporations, but most aspects of public protection and public welfare will be gutted. Further, the Bush plan calls for eliminating all taxes on passive, investment income which will further ensconce the wealthiest Americans in a tax free haven. They have twisted James Otis' words from "no taxation without representation," to read "no taxation of wealth."

Their plan appeals to the cynical side of our citizenry - the one that only sees the loss of income, and not the returns generated by the investments. But the impact of their policies will be felt hardest by many of these same citizens seeking relief, relief from the onus that has unfairly been shifted to their shoulders by an inverted bottom up tax code. Relief is not what the Bush team offers for most Americans - but rather hardship, struggle and burden dressed in seductive language.

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