Thursday, January 07, 2010

When Dishonesty Becomes Grotesque

-- Posted by Neil H. Buchanan

In a recent post, I referred to my series of posts from late Summer 2007 in which I identified the worst examples then afoot of "dishonest tax rhetoric." I singled out misleading methods of describing tax increases as the "largest ever," the games one can play to make sales tax rates seem smaller, and finished with the infamous death tax/estate tax ploy. In each of those cases, I described what was going on as dishonest because the purveyors of the rhetorical ploys were building on some element of truth in each case but were deliberately communicating utterly false conclusions.

For example, if one describes a tax increase as large or small by measuring it in dollar terms, then a $100 tax increase in a $10 trillion economy is "larger" than a $10 tax increase in a $100 economy. The reason for the false comparison is to mislead the unwary into thinking that the current tax increase is somehow unprecedented, dangerous, and venal. There might be reasons to oppose any particular tax change, but such false comparisons are clearly dishonest.

Another false comparison has resurfaced recently; and although it also qualifies as dishonest in the sense that I am using the term here, it is so qualitatively disgusting that it hardly deserves to be described in the same terms as these other, more pedestrian, rhetorical shell games.

Several years ago, Harper's included a transcript of an NPR interview in which Terry Gross was discussing the estate tax with the anti-tax activist Grover Norquist. (I am recounting this from memory.) Gross pointed out that the tax at that point affected only 2% of all estates, and Norquist casually suggested that targeting a small minority of people for harsh treatment was morally equivalent to the Holocaust. Gross, obviously incredulous, pressed the issue, giving Norquist every opportunity to say that he had misspoken. Surely, Gross offered generously, you cannot possibly be suggesting that taxing large estates at average rates of roughly fifty percent is the same as killing six million people because of their religious identity. Norquist was unfazed, insisting that this was exactly what he meant to say, because in both cases a majority was targeting an unfavored minority for harm.

I had stored that shocking exchange in the back of my memory files, thinking it an especially amazing example of how provocative Norquist was willing to be. Early in 2009, I started to see some references to this analogy in the hand-written signs at the anti-Obama rallies, but I still thought that this was limited to the most extreme crazies. A few weeks ago, however, "The Daily Show with Jon Stewart" showed clips of Laura Ingraham of Fox News invoking the famous poem: "First they came ..." Her point was Norquist's point, extended from the estate tax to progressive taxation more generally. That is, she argued unambiguously that "going after" a rich minority to pay higher taxes is morally equivalent to "going after" a religious minority for extermination.

As Stewart pointed out, the phrase "they came" in the famous poem refers to taking people away and killing them, whereas the worst that can be said about progressive taxation is that "they came" to collect more taxes from a rich person than from a poor person.

Beyond that rather important difference, it is also notable that American politics is hardly an unfriendly place for wealthy people. One can buy office if one has enough money (sometimes even three times -- in a city where mayors are limited to two terms), and virtually every aspect of the U.S. legislative process is awash in money. The idea that America's rich are somehow defenseless against the whims of the unwashed masses is beyond laughable.

Even setting aside the disgusting analogy between killing people and taxing people, however, the comparison is beyond dishonest. Progressive taxes do not turn rich people into non-rich people. For example, if the estate tax returns in 2011 in the form that it existed in 2001 (which is the current default), the effective tax rate on estates would pass 50% when the taxable estate (ignoring planning opportunities) reaches about $14 million (approaching a maximum rate of 55%). This means that the heirs to a $14 million fortune would receive at least $7 million that they did not earn. If, as the House health bill proposes, we raised tax rates on high-income people by roughly 4%, then a person whose taxable income rises from $300,000 to $310,000 would have roughly four hundred fewer dollars than if the bill had never passed.

But isn't the worry that we will not stop at the $300,000/year earners? That, in fact, is the larger point: The slippery slope is reversible. If "they come" for the rich, and then "they come" for the almost-rich, and then "they come" for the merely comfortable, etc., those people will still exist and will still be able to vote. Voters in lower income categories who see "them coming" will be able to stop the process, if the benefits of higher taxes are less than the costs. No matter what, the richest will still be the richest, even after taxes.

Our political system has many flaws, but failing to listen to anti-tax sentiment among the people is not one of them. Progressive taxation is not irreversible. Analogies to genocide are appalling. They also make no sense, even on their own terms.

10 comments:

Bob Hockett said...

Thanks for this lovely post, Neil. For what it is worth, I've long wondered why Grover isn't viewed universally as a best-ignored crank, rather than as a reputable sort of think-tank representative. It's odd, moreover, that he's counted as 'conservative' rather than as the unhinged radical that he is. To me he seems a sort of Dr. Strangelove without any of the brilliance that might partly have mitigated the lethal oddballery of Strangelove's prototype, Jan von Neumann. It's bad enough that we permit putative brilliance to excuse profoundly inhumane moral insanity, but to excuse the latter even without compensating characteristics is just beyond the pale.

All best,
Bob

Blogger said...

Thanks for this post. I found it very helpful -- until your last point.

Of course, it is tautologically true that "the richest will still be the richest," but I take the conservatives' concern to be that liberals want to re-distribute wealth such that everyone has about the same amount of it. Moreover, they argue, the benefits and costs of a tax are unequally distributed under a progressive scheme such that there is always an incentive to tax those who are richer than you. The highly-taxed people then, are almost by definition in the minority because they are the only group for whom the cost-benefit analysis does not clearly favor highly taxing the rich.

Those who were once rich, then, could be taxed into being less-than-rich and convert into advocates of highly taxing the rich because the cost benefit analysis for them has been altered by the tax itself.

Tam Ho said...

Great post, Neil.

Bob, not to be flip, but I really think about half this country is crazy, which is why they don't think Norquist is.

As per the title of Neil's post, to compare the estate tax, or any tax, to the Holocaust is not merely illogical; it's offensive.

Under normal circumstances, the proper response to people who are this far gone is not to respond, but because they now comprise about 50% of our country, that's not a viable option. On the other hand, as eloquent and logically sound as Neil's post is, it's pearls before swine.

I believe it was Mike who suggested a while back that we have to become as effective as the Right is in using rhetoric. I'll take it a step further: we have to become as effective as they are at using sophistry. And soon, maybe just flat out lying.

Prup (aka Jim Benton) said...

Excellent post as usual, and 'Blogger's' rambling nonsense only heightens the point you have made. Liberals are generally pro-capitalism, but believe it needs to be regulated and that tax increases should be used to avoid the growing gap between rich and poor and the growing concentration of wealth, and that, for certain necessities such as health care, access should not be determined by means. (A position taken by almost every other advanced country in the world.)

Even true socialists are not for 'wealth equalization' as 'Blogger' claims. I'd strongly suggest he look at the prosperity of the Eisenhower years and what the tax structure was then and he might see how absurd his arguments were -- and I lived through that era.

(Neil, ever thought of doing a post on the cost to businesses of the current health care insanity? The time and cost of union negotiations, the loss of productivity because uninsured or pooorly insured workers refuse or can't afford the time and cost to see a doctor, even the danger of an untreated communicable illness -- even a minor one -- going through the workplace all need to be factored in.)

Have to disagree on one thing, though. I'm a liberal Democrat, but I'm also a Brooklynite, and Bloomberg didn't 'but his reelection.' He's been far from perfect, but better than any of his predecessors at least since Lindsay's first term, and, if anything, his spending on the election probably cut into his margin of victory either because people were sick of his commercials or were convinced his election was a 'sure thing' given Thompson's almost invisible campaign. (I blush to say I was part of that last group.)

I would have never voted for Thompson because the only argument he made was pro-term limits, something Democrats had -- rightly, definitely rightly -- opposed until they could use them against an Independent. (Reminiscent of Romney or Pawlenty figuring out what his hearers wanted to hear and feeding it to them).

Bob Hockett said...

Blogger, I don't think that progressives have any interest in redistribution to the point that all have the same. In fact they don't seem to want even to get anywhere near that point. (I wish they wanted to get closer to it than they do.) It looks to me as though progressives simply think that there is something very unhealthy, not to mention unjust (where wealth is simply inherited), when the top 1/2 of one percent of the population control close to 90% of the wealth of the nation. It surely is no accident that the five countries at the top of the OECD's standard of living index are also those with the least dramatically skewed wealth distributions -- which distributions are nevertheless very far from equality.

Tam Ho, I hope you're not right about half the country being crazy, but I have to admit that the evidence seems to point that way more and more every day! Seemingly incorrigible optimist that I am, I keep hoping for, and keep almost willfully seeing, reasons to think things will soon get much better!

All best,
Bob

Blogger said...

Prup, which part of my post was "rambling nonsense"? I'd be happy to clarify if you are interested in engaging.

But to start, I was attempting to characterize the views of some conservatives (or perhaps more accurately, economic libertarians), not my own. My purpose for doing so was to question whether the last point in Neil's post was truly responsive to those concerns. I'll try to restate briefly.

These conservatives are worried that there is always an incentive to tax those who make more than you do, whether you're rich or not. The concern is that the majority has the incentive to seize the rich minority's property through taxes, not that the richest will stop being the richest. For example, if a person with a $1 million income could be taxed down to $250,000, she would still be among the richest Americans, but she might nonetheless feel wronged because 3/4ths of her income was seized. And she, herself, has the incentive to vote for higher taxes on those who make $2 million.

I didn't intend to claim that liberals/progressives want to completely equalize wealth, but that conservatives fear this as a possible result of unrestrained "progression" in income taxation. And, for the reasons I've stated above, they don't think that there would be a natural brake on this progression as Neil contends there would be.

Paul Scott said...

Bob,
Perhaps you could help me. I found your comment about the Standard of Living interesting and wanted to explore it further. To do so, I thought I should start at the start and go to OECD and determine 1. what the Standard of Living rankings were and 2. how OECD defines Standard of Living.

Going to www.oecd.org and searching for Standard of living under both their general home page and under there statistical glossary, however, produces no results. Exploring the site manually also, for me, produced nothing useful.

Could you direct me to your source, please? Thanks so much.

Neil H. Buchanan said...

Many thanks for all responses. I'll attempt to add to the discussion about libertarians' concerns about there being no "natural brake" on progressivity in future posts (and perhaps on FindLaw).

Neil H. Buchanan said...

Thanks also to Prup for the suggestion to write about the costs to business of our current malfunctioning health care system. I'll collect some of the various estimates of some of those costs (which various think tanks have generated), and I'll then try to write something coherent in a future post.

michael a. livingston said...

But which is a greater problem, that there are undoubtedly cranks out there, or that supporters of this Administration have made a repeated and systematic effort to tar any and all opponents with this brush? Consider the pattern: a legislature that rams through a series of almost entirely one party measures; attacks on opponents of the regime as cranks, racists, or worse; and the mobilization of substantial intellectual resources, at balkinization, dorfonlaw (admittedly less so), and other blogs to discredit longstanding procedural or substantive rules (the filibuster, the Senate itself, the Supreme Court) which may stand in the way. Where have we seen this before, and isn't it more frightening than the supposed cranks who, if they really are such, will likely be revealed so long before they cause damage?