Good Deal

Ezra Klein touches briefly upon a facet of the tax debate that I’ve long thought has gone unattended.

He uses the term “Gibsonian Democrats”:

Howard Gleckman points out that while Barack Obama and Hillary Clinton aren’t as egregiously out-of-touch as Charlie Gibson, they’re pandering to the Gibsonian line on taxes, refusing to consider increases for families making less than $200,000 a year, and hamstringing themselves on needed revenue. This gets to a generalized problem in Democratic tax talk, which is that they’re very unwilling to talk about taxes in terms of value. There are lots of government services which are actually a good deal for middle income families and should be sold as something that Americans would be wise to invest in. But rather than making a positive case around awesome stuff we’re going to get, Democrats talk about taxes in complete isolation from the things that taxes buy, and begin with the premise that they’re so odious and painful that they should only be levied on folks too rich to notice. It’s not exactly the strongest argumentative ground.

Sully, letting a little of the libertarian peek through, reinforces the point that taxes do remove money from people’s bank accounts, but while ceding a possible point, also seems to sort of miss the point. In fact, what Sullivan takes note of is exactly part of the reason why Democrats have been stuck inside the kind of holding pattern that Ezra describes, and why Republicans have turned the tax issue into such a successful one for them.

Essentially, the reasons why Democrats lose on taxes is not because taxes are necessarily bad, but because Republicans and the broader coalition of anti-tax conservatives have been ultimately successful in focusing on the loss of personal revenue while preventing the focus from turning to the repurcussions of lost revenue for the government.

Ultimately, taxes represent a sales transaction like virtually any other exchange of monetary funds for goods and services. We give the government money, and the government uses that money to provide a plethora of services that are necessary for our societal structure to continue. Sometimes this does result in a simple reallocation of wealth, as many of the anti-tax crusaders rage against, sometimes this is intended to rebuild infrastructure, and sometimes we are buying varied services.

For Democrats to have any success in addressing the public in a beneficial taxation system, they would first have to find themselves in a place where they can “sell” the kinds of services that it provides. For instance, wealth reallocation may sound bad, especially for someone trying to climb the economic ladder, but when we look at our society as a whole, there are definite benefits to everyone. Tax breaks for the lower classes as opposed to those with higher incomes, for instance, not only could alleviate some of the stress on people with lower incomes, but it also increases the size and effectiveness of the pool of consumers that will have a positive influence on the market which would ultimately result in a kind of “trickle up” effect. When we take a look at the economy now, we see that even basic consumable goods such as food are starting to increase in price to the point where working class Americans are feeling the crunch. Considering that these goods are necessities, business would normally not have to worry about feeling the crunch, but we are now also seeing an emergence of grocers that are selling past due items for lowered cost. While this phenomenon so far isn’t very widespread, if it continues to grow what you could see is a situation where businesses that typically have a strong foundation of consumers will be competing with essentially their own goods at marked down prices and their foundation will become much less firm.

On the other hand, if we were to target lower class people with our tax breaks, and perhaps ask the major corporations to take on a bit more of the tax burden to do so, yes, there may initially be a bigger crunch on this class, but what we would also see is an increase in the buying power of a whole class of consumers that will be able to start purchasing their goods back at the normal grocers and thereby strengthening again the foundation upon which these corporations make their livelihood.

There is another benefit that we can all share in, and it would also likely reduce the crime rate in this country by a notable measure. Not all crime, mind you, but understand that lessened economic opportunity results in economically stressed people looking to alternative methods to make a living. If people have incomes that allow them to provide for themselves and their families legally, they are going to be less likely to hold up liquor stores, or break into houses to try and steal some goods they can turn around and fence for some quick cash.

The bottom line is that the issue of taxes is never as cut and dried as anti-tax champions make it out to be. Andrew Sullivan is right, taxes result in less money in the bank account, and unfortunately, this is the easiest concept both to grasp and to sell to the electorate.

Especially given the sound-bite structured media that governs our political discourse.

Interestingly, the kind of argument that it would seem both Ezra and I (and to some lesser degree, it would seem, Sully) want to see was exactly how Obama began the campaign; that people aren’t going to complain about taxes if they know they are getting their money’s worth. This however puts the onus on both the politicians who now have to sell the goods and wares that the government has to offer, but also upon the media to effectively cover the politicians doing so.

That Obama’s message has shifted in some respect on this is a testament to just how slanted against such messaging our current political discourse really is.

For as much as I’m in the tank for Obama, and believe me, I truly am, this would be the second issue that I’m a little disappointed that he has shifted his messaging on, but I look beyond this because understanding politics is understanding that you don’t always get all the ponies you ask for.

The fact still remains, however, that we must endeavor to change the debate. No one is going to win in a debate that is as simple as who wants to take more of your money away from you. That’s a non starter, and it favors the Republicans who essentially use the tax issue to buy votes from people, even if this is under false premises.

Back in the debate, Charlie Gibson was none too subtle in implying that taxes on people up pulling in up to 200K a year would be the same as punishing people who only make 50K a year. Of course, this isn’t true, and this was part of the point that Obama was trying to make on the payroll tax cap. Here, the thing that a lot of people don’t understand is that over ninety percent of the people pay payroll taxes on ALL of their income. If you’re reading this blog, there’s a pretty good chance that all of your income is taxed. Once you reach that six figure mark, however (actually, it’s a little bit under that), you start making income that is not touched by payroll taxes.

As my stepfather likes to remind me, he has income that is not touched by payroll taxes, but he’s also for all intents and purposes middle class, and so, yes, lifting the cap on payroll taxes would be a burden on the middle class, but then that would be easily fixed by the donut hole (exempting a portion of the populace from payroll taxes between 100K and perhaps 200-250K, and then reinstating the payroll tax above that), an  idea that Obama has also proposed.

But the point is that my little digression here does not even play. It’s just like the estate tax, which Republicans successfully packaged as the “Death Tax” and thus killed. The estate tax, for those who don’t know, or may have forgotten, is simply a tax levied upon inheritances; a morbid subject indeed.

And the Republicans targeted small farmers when they launched their campaign against the “Death Tax.” The argument was that it was double taxation, a tax on revenue and property that had already been taxed once when the original owner had it, and then taxed again when it was passed on to the heir. This was how it was sold no matter what concession was made; even if Democrats offered exemptions that would have protected small farms, small businesses, and small estates, it didn’t matter.

We could have established an estate tax where only heirs and heiresses receiving billion dollar estates constructed from untaxed capital gains was still billed as the government stealing our money.

Shorter: Republicans are selling to lower class people benefits that really only affect the upper classes.

Thus, we see that trying to play the tax debate on Republican terms simply doesn’t work. We have to insist upon focusing the debate on what these taxes will do, how we can make them work, and how we are going to collect them without breaking the backs of working class people.

We have to focus upon how shared sacrifice through taxation can make all of our lives better, how it can put more well trained cops on the streets to help reduce crime, and how it can be used to help after school programs for working families. We have to begin a sales pitch to Americans that their tax dollars are not going into a vacuum where they go to fatten the already obese cats in Washington, but are redirected towards building safer streets and bridges with greater structural integrity, that their money is ultimately creating a better way of life for them and their neighbors in their community and the greater American community as a whole.

And we have to assure them that this can be done without dipping down into the dreaded regions of socialism and communism; governmental precepts that have been permanently tarnished by the Cold War. We have to assure them that the mobility and freedoms provided by capitalism will not be inhibited by taxation and government programs, but instead enhanced by providing educational opportunities for economically underprivileged students and work force programs designed to train and find employment for citizens who may find themselves on the wrong side of a challenging job market.

We have to elevate the debate because if we don’t, we’re going to find not only that we continue to lose elections based upon the lowest common denominator style of Republican politics, but also because we’re going to see more people slip through the cracks, we’re going to see more members of the American family slip into the status of economic distress, more crime, and ultimately a society with poorer health.

And one of the first things that needs to be fixed in this instance is a lazy or flawed media that is geared towards the sound bite and the punchline. We have to insist that the media step up its own game and actually cover issues and cover politicians and analysts in a depth that goes beyond gotcha style politics. If we don’t, the political debate will never evolve beyond the he said/she said state is in now.

(edited by DrGail)

7 Responses to “Good Deal”

  1. DrGail says:

    Great post — a beacon of sanity amid the recent craziness.

    Looking at taxation from a “value received” standpoint perfectly mimics what ordinary consumers do. So it can be tied to the vaunted kitchen table issues. Further, it ever-so-subtly ties into the realization that all but the KoolAidKidz have come to, which is that borrowing money from bad people to pay for things that are a waste of money is NUTS!

    So, how do we start getting this mindset out there, keeping in mind that we are but one of many players in the blogosphere and the larger realm of politics?

    Hmmmm?

  2. No clue!

    Though, if I were to hazard a guess, I think netroots and grassroots organizations need to start working on two things. The first is putting pressure on the mainstream media to change how it covers politics; as we know, we’re getting shafted on the current state of political coverage which focuses on minutiae. So we need to start really watchdogging the media establishment and making it painful for them every time the cover politics in a soundbite fashion.

    The other thing that I think is a necessity is to start supporting candidates who don’t campaign in a soundbite fashion. I’m not talking strictly in regards to taxes, but instead on a more general platform. I think we need to start picking up those candidates and supporting those candidates that kind of force the media to cover them in larger clips and with more depth, and the reason is that I think where we really suffer here is that debate is so terribly truncated, and forcing a platform that really opens up the discourse is going to give us the maneuverability to start discussing taxes in these broader terms.

    So, what I’m suggesting is a broader solution for a more focal challenge.

    Alternatively, we could see about trying to “bumper sticker” the way we sell taxes. That’s to say, put some creative effort into repackaging the debate on taxes in a way that allows our position to “dumb it down” to a more soundbite prone media.

  3. DrGail says:

    Sound suggestions all. When you mentioned “candidates who don’t campaign in a soundbite fashion”, I assume you were thinking of Barack Obama. My immediate thought was Darcy Burner. Unfortunately, it often takes an ability to talk in soundbites to gather sufficient media attention for the more substantive thoughts one has. Jim Webb comes to mind here.

    Pressure on the media is an easy one. Letters to the editor, anyone? Or the more updated version, (polite) comments on their blogs?

    The bumper sticker methodology — loosely called “beat them at their own game” — takes discipline to work. That is, whatever the bumper sticker slogan is, it needs to be repeated incessantly. “Bush’s Third Term” is just such a bumper sticker meme.

  4. Obama is a good example, I would have to research Darc Burner. But a prime example is the race speech. Due to the complexity of that speech, you saw a lot of networks not just carrying clips that were thirty seconds or less, but actually showing clips that were in the minutes range. Minutes is good, that gives our candidates an opportunity to make actual arguments as opposed to just jabs.

    But you’re right, it is difficult, and really, what it is going to take is evolution. Another example, now that I think of it, are campaign advertisements. Right now they are typically thirty seconds of specific music and very little substance, but, you know, why not try and get some politicians to take their thirty seconds or forty five seconds, or however long the spot is, and just use that to run straight through an argument at full clip? Start off with, “I’m so and so, I approve this ad, and I want to spend this time talking about taxes, or this issue, or that.”

    Plus, with alternative media, and fundraising going through the rough, we can start using youtube clips adverts that can allow a politician to engage in longer arguments for less money. We can buy whole time slots in a station’s schedule as opposed to running a bunch of smaller ads.

    Really, this all takes leaps of faith and realizing that we’re going to lose some elections this way and we’re going to have to sacrifice some politicians for the greater benefit of altering the way we discuss politics.

  5. DrGail says:

    With respect to Darcy Burner (candidate for WA-08, against Reichert), I was thinking in particular about the Responsible Plan to End the War in Iraq (http://responsibleplan.com/). This was drawn up by a variety of progressive candidates, is endorsed by some heavy-hitters (e.g. Rand Beers, Paul Eaton, Lawrence Korb) and managed to get some favorable press. Not nearly enough, of course, but some.

  6. vulcanhammer says:

    This is a very interesting post and an excellent blog. I have a few questions and comments for Kyle. If in 2009 the American economy still shows signs of weakness, should taxes still be increased? It would seem to me that raising taxes when the overall economy is wobbly is less than desirable and may prolong slow economic growth. (See the state of Michigan as a current example.)

    On the payroll tax cap: That cap was $97,500 in 2007 and is $102,000 this year. Since Obama has that he did not want to raise taxes on the middle class, “people with annual income lower than between $200,000 and $250,000.” Wouldn’t lifting the cap be raising taxes on the middle class? And trying to jerry rig the tax code some more by creating a “donut hole” for the same people he is trying to tax sounds like he is trying to have it both ways. Most taxes paid in this country are done by the higher income classes. Attempting to create tax cuts for lower class people will not generate the sort of tax revenue that will keep all the programs that Obama or Hillary desire. If one of them becomes president, they will learn that economic fact VERY quickly.

    As far as, “repercussions of lost revenue for the government:” Bush’s capital gains tax cuts did not result in lost revenue for the federal government. Revenue actually increased as it has every time capital gains taxes are cut (For example, under Kennedy and Reagan) The issue really is how much is spent by the federal government: That is what will create deficits.

    Finally a comment on taxes having “value” much like a consumable good: What happens when you are taxed and you don’t get value for your money? If you are taxed and your taxes are wasted on earmarks, pet projects, and programs that aren’t working the way that they were meant to? Should we tax more to achieve the results that elude our objectives? In many ways, taxpayers are consumers. When you purchase something that doesn’t work as advertised, you demand your money back. You don’t agree to pay MORE to make the service or product work as it should have in the first place. A lot of us “anti-tax conservatives” simply want to get the “value” that was promised the first time around.

  7. Well, VH, thank you for the compliments, and some interesting and modestly challenging questions. Your first question, if the economy is still struggling a year from now should taxes still be increased, is kind of undercutting the complexity of the issue.

    What we’re talking about, in essence, is establishing a system wherein the government is able to gain revenue through a system that “taxes” Americans the least (ah, see there, pun. I used tax as a synonym of burden). This was one of the things that Governor Mark Warner did in Virginia, and his methodology was passed on to Governor Tim Kaine. It’s a matter of striking a balance to maximize income while at the same time allocating the burden in areas where it will have the least negative impact.

    Which becomes point one; that part of shifting the debate, so to speak, must include breaking out of this language of tax increases and tax cuts. This because not all tax increases are equal, and, say, I’m no economist, but, for an example with absolutely no factual basis, but merely intended as an analogy, let’s say we have an economy that includes only two consumable goods, rice, and cigarettes. Now, everyone has to eat, so everyone has to buy rice, whereas only a fraction of the population is addicted to cigarettes. As a result, if you were to choose to tax one product over the other, you would have to tax the cigarettes at a higher rate proportional to the needed income and the population. So, we’re talking, maybe a ten cent tax on a pack of cigarettes would be what was needed to equate to a one cent tax on rice in our hypothetical scenario. So let’s say we had been taxing cigarettes the whole time, but now, we realize that we can more fairly generate equal or better revenue (Since cigarettes are not required for survival, there is the possibility that over time cigarette consumption will go down over time) by establishing a one cent rice tax, and start rolling back the cigarette tax cut.

    To fill out the hypothetical situation with what we see in modern politics today, chances are that the smokers are going to cheer this idea, while the non smokers who are now being taxed on rice will at least some of them not be happy. Instead of making an argument to tax the cigarettes over the rice, however, they simply say that all taxes are bad, primarily to defeat the measture because to do so would keep the tax system beneficial to them.

    Payroll taxes. Of course the point of the donut hole is to have it both ways and there’s absolutely nothing wrong with trying to have it both ways. Indeed, it shows creativity and an ability to go beyond the basic precepts of modern debate. More specifically, the donut hole targets two specific demographics; upper middle class and small business owners, both for good reasons.

    For the upper middle class, these focus could be the prime consumers, like an elite consumer force in the market that has both the will and the buying power to provide a firm foundation for businesses to build their markets upon. These are going to be people who are largley successful in their career, they have a very steady income, and they’re going to have houses that they are going to put a lot of money to improve, hobbies, boats, etc. As a government you want to look at them and say, okay, this is a buying force that I want to keep strong, so you grant them a little leeway, or give them a payroll tax cut. For small business owners, that’s just more obvious, these ventures often being started up out of pocket, we don’t want to overtax that and inhibit small business growth.

    I got to get out of here soon, so I’m going to have to cut this short, but we’ve discussed cap gains here recently, and were even mentioned in a blogging heads edition that you can watch by going back out to the main page.

    l8

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