The great thing about working in the tax, wages, and labor space is that I get to meet and hear many different perspectives from a variety of organizations about how we can confront some of the biggest challenges facing our country today. I may not always agree with the approach others recommend, but I always take the time to carefully consider where they’re coming from.
That is why I wanted to share with you my thoughts about recent comments made by Elizabeth Wilkins of the Roosevelt Institute in her blog post. I both agree and disagree with parts of what she says about the Working Americans’ Tax Cut Act and revenue and spending in general.
It’s important to keep in mind that there are differences between how revenue is earned and used for state and local governments, as opposed to the US federal government which is in the unique position of actually issuing money. There has not been a direct connection between tax revenue and US federal government expenditure in the great part of a century. The US federal budget deficit, with rare exceptions around the turn of the 21st century, has been growing for many years.
It’s long been the stance of the Patriotic Millionaires that the federal government should (1) decide how much revenue should be raised from taxes, and then (2) decide how those taxes should be allocated among the populace. The criteria for number two should be to allocate the taxes in a way that reduces (not exacerbates) the economic inequality in our nation. In other words, people who make the most money (people like me) should shoulder a larger tax burden than someone making $46,000 a year (the median cost of living).
Ms. Wilkins writes derisively of policies which “erode the tax base” and says that “Tax Policy … should bind us all to one another and to our government by fostering a sense of shared national purpose and solving problems together that we can’t solve on our own.”
I do not agree that the goal of “binding us all together” is a proper justification for making people living in poverty pay taxes. In my experience, those who send their children to public schools, or show up at our municipal hospitals, and depend on the services of our society have much more of a sense of community and shared national purpose and solving problems together than do the very fortunate.
People like me, who live off of investments and pay virtually no income tax because people who are already rich don’t need any income, can very easily lack a sense of shared national purpose. If the school where my granddaughter is enrolled in a great bilingual program loses funding, our family will be calmly figuring out where we can get the best educational experience for her, knowing that we have the financial resources to make it happen.
The most fortunate among us—some of whom do not even realize that they are enjoying good fortune—are the ones who should be paying some taxes so as to improve their sense of national purpose. “Fostering a sense of shared national purpose and solving problems together that we can’t solve on our own,” varies greatly from person to person. For some of us, having a roof over our heads and sufficient calories to keep our children alive is a problem that requires a collective solution.
Since our nation currently has tens of millions of people who pay Social Security and Medicare taxes—but do not pay any federal income taxes—a modest increase in that number is not going to negatively impact our “shared national purpose.” Decreasing the number of billionaires who do not pay any meaningful taxes would be a far more effective solution to that problem.
Ms. Wilkins asserts that “the main sources of their economic pain these days are the cost of essentials like housing, health care, and childcare—not high income taxes.”
Money is fungible. The “pain” is caused by not having enough money to pay for stuff. The most direct way to solve the problem of lack of money is to give the people who are feeling the pain more money. Telling them anything else is condescending at best, and a political error too.