Why Should the 'Rich' Pay Higher Taxes?

"We hold these truths to be self-evident, that all men are created equal, that they are endowed by their Creator with certain unalienable rights, that among these are Life, Liberty and the pursuit of Happiness."  Familiar, right?  Do we all accept this?  Can we use this as a starting point?  OK, good.

What does it mean?  Well, at the time that it appeared it didn't mean ALL men, certainly not all HUMANS; it, too, was only a starting point.  But it was progress.  It was written as counterpoint to the 'old world,' Europe, with its ruling dynasties and ubiquitous Church.  No men are born as superiors, no men are born as inferiors, is what they were getting at.  Each of us has a right to personal sovereignty, to go about our lives as we see fit, without having to please a lord or a Lord.  Unless it pleases us to.

At the end of the 18th Century America was largely an agrarian society, beginning to industrialize.  Any free man (we're going to ignore slavery in this piece) could work the land, raise a crop, feed himself and his family.  He didn't need much else.  The work was hard but it was sustaining.  Taxes were very low.  The population flourished, due both to natural increase and to immigration.  There was a continent to be tamed, roads to be built, manifest destiny!  Great stuff.  Which would require cooperation.  A government.  Taxes.  Also, with all those people, the chance for every man to have his own piece of land was gone.  But no matter!  We'll have something even better!  An industrial economy!  It was win/win.  A great country was built, people thrived, fortunes were made.  People didn't grow their own food anymore (mostly), they worked for wages and bought food from the ever more productive agricultural sector. 

America did this with, by and large, a free market economy.  Not truly 'free,' of course.  There were rules and conditions.  Even Mitt Romney recognizes the need for rules and conditions.  But for the most part the market spoke and the people heeded.  Prices rose and fell according to market conditions.  Old businesses died away, new businesses started up, everybody was happy.  Right?  Well, not perfectly.  It became evident, as time went by, that a market economy, while very useful, created some problems too.  Landless people could work for wages and feed themselves and their families, but what if someone got hurt and couldn't work?  What happens when they get old and can't do so much anymore?  Families took care of their own, as they could, and churches and neighbors provided some charity, but sometimes people were just out of luck.  Oh well.

Then came the Great Depression, and even young, able-bodied men were thrown out of work in extreme numbers.  Now what?  Not many families could absorb long-term unemployment, nor could neighborhood/church charities.  Capitalism didn't have an answer for this one.  "Wait it out," some people said.  "We've had downturns before.  It's never permanent."  Which was true.  Capitalism works cyclically.  But some of those earlier 'downturns' had been devastating to individual people and families.  And this time it was bigger than ever before.  World-wide too.  So a new President came in and declared a New Deal.  Some people, especially the ones with lots of money, screamed 'socialist!' but historians credit FDR with saving American Capitalism by seeing that it worked for all of the people, and not just some. 

Should the American people have given up on capitalism at that point?  Go back to every man a citizen farmer, responsible for his own small section of the earth, his own family and his own personal well-being?  Wasn't any real chance of that, right?  Too many people by then.  Plus, they had seen that an industrialized nation, a market economy, worked.  Just not perfectly.  It needed some safeguards built into it.  So the social safety net was born.  This of course meant new taxes.  Sucks, right?  But think of the alternatives.  Pull the plug on the whole thing.  Or let people get chewed up by the vagaries of the market.  Unacceptable, to most of the people, though certainly not all, true enough.  Remember 'Old Man Potter' in It's A Wonderful Life?

So we've had this new deal ever since.  Still, there are more Mr. Potters out there than there were in that movie.  Quietly some people simmered.  WWII united the country in a way that it never had been before or has been since.  And not only led America out of economic depression but into the greatest economic boom in its history.  For a while the economic pie was so large that everyone's piece was satisfactory, or better.  But as the other countries rebuilt and began to compete for market share again, corporate profits began to lag, a bit.  And old resentments began to resurface.  A new conservative movement began to coalesce toward the end of the 1950s.  Organized labor (Unions) had stood down during the war but came roaring back after it to win 'rights' for workers that built a large and strong middle class.  So the new conservatives had two targets: the social safety net and organized labor.  Initially they lost elections and were viewed as 'right-wing crackpots.'  But after the turbulent 1960s some of conservatism's more attractive candidates started winning national elections, and the 'conservative agenda' began to be enacted. 

First we started to see corporations relocating manufacturing operations outside the U.S., where labor costs were much lower.  Then we got the 'Reagan Revolution' and tax rates, especially on higher incomes, double especially if the income came from 'investments' instead of as wages, came way down.  At the same time, domestic spending was cut, slightly, in an attempt at balance, mostly on what would come under the heading of 'welfare,' but 'defense' spending soared.  Consequently we saw peace-time budget deficits at unprecedented levels.  (This from a man who campaigned on the importance of balanced budgets.) 

Still, for a while the economy improved, hummed even.  So people mostly kept quiet.  Until there was a Democrat in the White House.  Then, suddenly, the HUGE national debt was an issue.  A new, Republican Congress rode into Washington and went so far as to 'shut down the government' for about a day.  No more money going out, anyway.  Nothing.  We're broke, sorry, can't do it.  Of course the American people blamed the new Congress for this and not the President, so they relented.  Then an interesting thing happened.  The Democratic President decided to co-opt the Republican agenda, as a means of having a 'successful' presidency, and together they balanced the damn budget.  Even created a bit of a surplus, due to a booming economy, and were nicely positioned to start paying down the debt, which, the theory went. would lead to even more economic good news. 

So what happened?  Well, you all know.  A Republican got into the White House (I won't say that he stole it but he sure didn't 'win' it) and he decided that it was time for a big new round of tax cuts, especially on the upper income earners, again, double especially if the income was from 'capital gains' instead of wages.  And increased 'defense' spending.  And then had some bad shit happen but stubbornly stuck to his guns with the tax cuts, even calling for a second round, just after opening a new front in his 'Global War On Terror.'  And of course the deficit sky-rocketed.  But no matter.  To quote the new vice president, "Reagan proved that deficits don't matter."  (Reagan was that first tax-cutter, in case you're new here.)  Well.  OK then.  Deficits don't matter.  How about that?  Until (wait for it) ... there's a Democrat in the White House.  And then, guess what?  It's a crisis!  Oh my God!  They're spending like drunken sailors!  They're mortgaging our kids' futures!  They're mortgaging our grandkids' futures!  We have to stop them! 

OK.  So let's undo the mistakes of the previous administration then.  I never believed that 'deficits don't matter' bullshit and neither did you.  Right?  Let's put taxes back where they were, end those ridiculous wars, scale back on 'defense' spending to something at least approaching sane levels and see what we've got, right?  Oh hell no!  We have to shred the social safety net, remember?  There are two targets for the new conservatives, right?  Organized labor, mostly out of the way.   And the New Deal.  Time to get rid of that. 

So here's where I answer the question.  Why should the 'rich' pay more taxes?  Because they have all the damn money!  Hello!  Did I forget to mention that their crazy deregulating sorta kinda crashed the economy, about five years back?   Pretty much completing the transfer of wealth from the middle class (what they had of it, anyway) to the top.  So the wealthy became the uber-wealthy.  And a very large percentage of the people are now just getting by. 

So, higher taxes.  But targeted higher taxes.  There can still be tax incentives, for things like employing American workers and paying them good wages.  Or for innovating and, for one example, pulling us into the 21st century regarding energy resources.  The higher taxes that do come in (say goodbye to offshore tax havens, by the way) will go to strengthening Social Security and Medicare (which will get some reforming of their own, while we're at it).  And to getting the budget back into balance. 

Remember, if people get paid well enough they can pay for stuff.  If not, they're going to be candidates for 'government programs.'  Which way do we want to go?

More to come ...