Posted on 12/22/2002 12:22:53 PM PST by Torie
Get Lucky
by Jonathan Chait
Post date 12.17.02 | Issue date 12.23.02
One of the things that has fascinated me about The Wall Street Journal editorial page is its occasional capacity to rise above the routine moral callousness of hack conservative punditry and attain a level of exquisite depravity normally reserved for villains in James Bond movies. To wit, a recent lead editorial titled "THE NON-TAXPAYING CLASS." A reader unfamiliar with the Journal's editorial positions might read this headline and assume it refers to ultra-wealthy tax dodgers. But no--the Journal, of course, approves of such behavior. The non-taxpayers it denounces are those who earn too little to pay income taxes: "[A]lmost 13 percent of all workers," the editorial fumes, "have no tax liability. ... Who are these lucky duckies?" In typical Journal fashion, the editorial is premised upon a giant factual inaccuracy--it completely ignores sales and excise taxes, which consume a huge share of the working poor's income. But what makes the editorial truly exceptional is the reasoning underlying it. The Journal complains that low taxes on the poor are "undermining the political consensus for cutting taxes at all." For instance, the editorial considers the example of a worker who earns $12,000 per year, and, after noting bitterly that he pays less than 4 percent in income taxes, concludes, "It ain't peanuts, but not enough to get his or her blood boiling with tax rage." In other words, the Journal wants to raise taxes on the working poor so that they will have more "tax rage" and thus vote for Republicans. Once in office, of course, those Republicans would proceed to cut taxes for the well-off. (Indeed, according to the Journal's logic, they couldn't cut taxes on the poor because that would just lead them to stop voting Republican.) When I try to visualize the editorial meeting that produced this bit of diabolical inspiration, I imagine one of the more rational staffers--maybe Dorothy Rabinowitz--tentatively raising her hand and asking, "Isn't that idea a bit, you know, immoral?" Then Robert Bartley or Paul Gigot would emit a deep, sinister laugh and press a hidden button, depositing the unfortunate staffer into a tank of piranhas. Come to think of it, I haven't seen Rabinowitz's byline in a couple of weeks.
The Journal is perhaps most famous for helping to transform supply-side economics from a crank doctrine ridiculed by mainstream economists and rejected by Washington policymakers into a crank doctrine ridiculed by mainstream economists yet embraced by Washington policymakers. But, even though President Bush is no less committed to supply-side economics than was Ronald Reagan, W.'s policies, unlike the Gipper's, are almost never described in the press as "supply-side." A rare exception occurred last month, when President Bush declared at a press conference that "the deficit would have been bigger without the tax-relief package." A minor stir ensued, with Democrats accusing the administration of practicing supply-side economics and Bush aides denying it.
Why Bush's embrace of voodoo economics became newsworthy just recently is hard to figure, because his spokespeople have been saying the same thing for months. "The tax cut gives us a chance for sustained economic growth. If we have higher taxes on this economy then the [revenue] projections won't get stronger; they're more likely to get weaker," insisted White House Budget Director Mitch Daniels last summer. "The president does believe that cutting taxes is the best way to spur growth and therefore to have a return of bigger surpluses," declared Ari Fleischer ten months ago. Indeed, describing this administration's economic policies merely as "supply-side" is something of an understatement. Supply-siders believe that cutting upper-bracket tax rates can cause massive economic benefits, and in the early '80s they did famously claim that those benefits would be so large that they would actually cause tax revenues to increase. But most have spent the intervening years fervently insisting never to have said any such thing. "[T]he 'supply-side' movement is not remembered for its correct predictions about prosperity, but for the 'Laffer curve,' and its supposed prediction that the revenue effects of tax cuts would be large enough to shrink the deficit," writes Bartley in The Seven Fat Years, his apologia for Reaganomics. "The prediction, however, is not one any of us really ever made." So Bush has embraced a version of supply-side economics so radical that even the supply-siders themselves have repudiated it. After the president's controversial pronouncement, no less a purist than Jude Wanniski, author of the influential 1978 supply-side tract The Way the World Works, told The Washington Post that the Bush tax cut is "decreasing revenues."
Wanniski, once a confidant of GOP stars such as Jack Kemp and Steve Forbes, has since become marginalized by holding forth on noneconomic subjects--for instance, defending Louis Farrakhan or insisting that Saddam Hussein did not use poison gas against the Kurds--where his nuttiness is apparent even to laymen. The other great tax-cut tome is Wealth and Poverty, written by George Gilder in 1981. Gilder's reputation, too, has gone south recently. After winning acclaim as a tax-cut zealot, Gilder abruptly became a telecommunications autodidact. During the 1990s boom he made a fortune as a new economy evangelist--he earned up to six figures for a single speech, and his newsletter, "Gilder Technology Report," often caused stocks he recommended to jump as much as 50 percent. Gilder used his wealth to purchase the conservative monthly The American Spectator, which he turned into a monument to his own genius. One issue featured a 6,600-word cover interview of Gilder himself, in which he was asked questions such as, "In the late 1970s and early '80s, you led the intellectual debate on sexual issues from the conservative side. In the 1980s your book Wealth and Poverty transformed the way people thought about capitalism. And then you wandered off to study transistors. Why did you do that?" (Gilder's reply: "I thought I had won those debates. Whenever I actively debated anybody, they didn't have any interesting arguments anymore.") In the same interview Gilder declared, "Almost all [upper-class women] are averse to science and technology and baffled by it. And they clutch at the pretentious irrationality of environmentalism as their countervailing wisdom." The Spectator promised its readers that "[a]n equally wide-ranging talk with George will be an annual event." Alas, only one ever took place. The technology crash caused most of the companies Gilder extolled in his newsletter to lose virtually all their value. "I told people in early 2000 they should sell half their shares in these companies," he told Wired in a semi-contrite interview last July. "I didn't say it often. I didn't put it in a newsletter." Gilder had to abandon the Spectator and, according to Wired, is now broke and has a lien against his home--giving the phrase "Wealth and Poverty" an unanticipated poignancy. But, as the Journal might note, his income-tax bill these days is probably almost nil. Lucky ducky.
Jonathan Chait is a senior editor at TNR.
I could be convinced that the remedy you suggest in the legal profession for the past treatment of black Americans is just but I'm unconvinced that it should apply only to the legal profession.
Perhaps we should drop it. The topic seems to have become the first through the fifth rails.
But then I am fairly liberal on tax policy matters. The richer should pay more.
Maybe we could start with Mark Rich, the billionaire who was pardoned by Bill Clinton for $250 million in tax evasion. And no, my friend, a specific, concrete example does not fall under the categorization of 'bon mot.' It's not a matter of my opinion as to whether Mr. Rich (what an ironic name!) was liberated by Mr. Clinton for this amount of tax evasion. He actually done did it. It really happened. Reality is what separates the facts from the bandwidth-wasting bon mots.
. . . Maybe we could also pass federal laws requiring companies to show citizens what they actually pay in taxes. For example, Social Security and withholding taxes are itemized on my paycheck for only 50% of the amount actually paid. The other fifty percent is paid by the company which employees me, yet even though it appears on their budget as a cost of hiring people, I don't see it itemized on my paycheck . . . it appears the government is getting away with taxation without visible representation.
Perhaps also landlords should be required to show what proportion of their rent goes to pay property taxes. That would be interesting. I wonder if fewer urban-dwelling poor people would be so enthusiastic about supporting a civic 'convention center' if they knew that they were each going to end up paying hundreds of dollars for the construction out of their rent check.
Corporate and business taxes also get passed onto consumers in the form of higher prices. Perhaps there should be an accounting there as well. If 'corporate tax' really translates into 'taxing rich and poor at the same rate through higher product prices,' then it doesn't seem quite as egalitarian a policy as Tom Daschle and Teddy Kennaquidick would have it to be.
I agree, the poor pay a lot of taxes. As one of the working poor, I would like to see liberals explain why their emphatic shouting for 'tax the rich' in practice ultimately and invariably means secretly taxing the poor and middle classes, while limosine liberals seem to always grow richer and richer.
No poor people running the New York Times, hmmmmm? (Or is that a 'bon mot?' Well, better bon than mal, I always say!)
What issues are you not a liberal on? How can you defend forcing people to "invest" into a system that will pay them a zero percent return?
OK. You proposed a remedy and apparently I missed the basis for the remedy. Can you elucidate?
This is true ... but if they keep turning up the heat, however gradually, the goose will eventually be cooked.
Of course ... a certain amount of Black Market activity will become ligitimate when taxes are lowered.
I was listening to Bob Brinker this afternoon. Bob thought it would be more effective to give tax cuts to us working stiffs. He didn't think giving the filthy rich a tax cut would do much to get the economy going. The rich would just put new radars on their yachts. Well, the radar makers and radar installers would be happy. The sea lanes might be a little safer.
Might as well base a Tax structure on height and weight, that is as fair as what you prescribe.
How does "They can afford it" work? Who is the judge?
Do they get the same services as the "poor", i.e. Food stamps, Pell Grants, W.I.C., Earned Income Tax Credit, Fannie Mae et al?
If I can use your explanation, then the "Rich" should get 10 votes to every "Poor" person's 1 vote, since the Rich pay an unreasonable percentage more...after all, they can "afford it", right?
Perhaps that is the answer, to keep the "poor" from being able to vote to pick the "Rich's" pockets at will.
Someone mentioned envy. I am afraid that shot rather misses the mark.
Is "Guilt" a closer shot to the mark, then?
Of course, since the Commies are now calling themselves "Progressives," they're starting to become consistent when they call the income tax "progressive."
Now if we can henceforth refrain from using word "progressive" in any of its older, positive connotations, we may eventually get people to hear it as a political curse word.
Something like that has already happened with the terms "Socialst" and "Communist." The collectivists, the mass killers, can continue to scurry under the latest high-sounding appellation, but if we remain vigilant we will eventually flush them out, every time.
That, it would seem to me, would be a good reason to keep government out of the health insurance business.
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