The Sherwood Forest Legand and Tax Policy

by Neil H. Buchanan

I have recently been musing about reports that the Republicans' might propose yet another round of tax cuts.  The big-ish 2017 tax bill that they rushed through -- so quickly that one might imagine that Republicans had never heard of the law of unintended consequences,  or even the simple adage "look before you leap" -- remains distinctly unpopular, and Republicans' continue to lose elections and sink in the polls, no matter how much they lie about "middle-class tax cuts."

In a Verdict column (here) and two recent Dorf on Law posts (here and here), I discussed the political strategies of Republicans and Democrats with regard to this possible new round of cuts.  It seems that Republicans really have nothing else to talk about, and they have convinced themselves that they can always win by proposing to cut taxes, even though the evidence says otherwise.

My most recent Verdict column sets aside the partisan electoral angles to return to a fundamental question about the use of taxes to fight inequality.  Readers who recall the so-innocent-in-retrospect 2008 U.S. presidential election might be amused to think again about a man who became known as Joe the Plumber, a native of Toledo, Ohio (which happens also to be where I grew up), who confronted Senator Barack Obama about his economic platform during a campaign stop in the Glass City.  In his reply, Obama talked about "spreading the wealth around," and the Republicans went wild.

Obama's comment was somehow supposed to be a gaffe, apparently because he had admitted that liberals want to "take people's money and give it to other people."  Pictures of undeserving welfare cheats danced in the minds of Republican strategists.  But all of this was of course nothing more than a renewal of the Republicans' core argument that taxes are theft and that the government is taking "your money" and giving it to losers who have not earned it.  This was, and is, nonsense.

This week's Verdict column does not mention Joe's fifteen minutes of fame, but it does attack the key argument that Republicans take as a matter of faith: "It's your money."  Along with many other scholars, I have spent years trying to figure out a way to explain why that framing of the issue is so misleading.  With the inadvertent help of some conservative trolls, I am finally able to explain the issue in a new way.

The scholarly/wonkish response to "taxation is theft" has always boiled down to challenging the idea that wealthy people deserve "their" money.  This is tricky, because it is neither necessary nor strategically wise to say that wealthy people deserve nothing.  The point is to say that one's economic situation is a result of the rules of the game, and those rules are the result of political decisions.

For example, people who own property that sits on top of oil reserves have spent decades getting the government to favor oil over other forms of energy, including favoring private automobiles over public transportation and shifting the costs of pollution onto the public at large.  Different political outcomes -- even setting taxes aside -- would have resulted in very different distributions of wealth.

The problem is that this all sounds rather abstract.  Describing hypothetical alternative universes in which the Koch brothers are not mega-rich can be enlightening, but how does that lead to the conclusion that taxation is not "taking my money"?  The short answer is that the government played a key role in making it possible for you to make your money in the first place, and none of the decisions that the government made were required or inevitable.

I have lost count of how many times I have written about this "baseline" issue, both in online commentary and in my scholarly writings.  Because there is no natural default set of laws and thus no baseline distribution of wealth -- which would make it the standard against which everything else would be deemed redistribution -- there is no way to say meaningfully that the government has taken what should have been your money when it taxes you (or changes any other laws).

In this week's Verdict column, I duly credit Liam Murphy and Thomas Nagel's book The Myth of Ownership, but of course these arguments long predate their important 2002 work.  The baseline objection, in its full form, is not merely a response to arguments by "street libertarians" (Murphy and Nagel's term) about taxes.  The line of inquiry continues back to Frank Michelman's classic article from more than fifty years ago in which he discussed the arbitrariness of "just compensation" principles, which itself is merely one of many applications of the baseline problem that scholars have struggled to understand for centuries.

This, however, encounters a further objection from conservatives, who claim that the baseline argument somehow proves that liberals believe that the government owns everything.  We do not think any such thing, of course, because government's ability to set different rules that lead to different outcomes is not an argument in favor of government ownership but rather an argument against the inviolability of private ownership.  The answer to "It's mine!" is: "OK, but how did it become yours -- and why are those completely contingent (and often accidental) rules somehow now set in stone?"

One of the default rhetorical techniques for liberals is to describe conservatives' attempts to redistribute income upward as "reverse-Robin Hood" policy.  I frequently rely on that trope (e.g., here), because it captures the idea that Republicans have spent decades trying to transfer money upward from non-rich people to rich people -- taking from the poor and giving to the rich.

The street-libertarian objection to that argument has always been puzzling, because it essentially boils down to saying that the Republicans' redistributive project is not actually about "spreading the money around" in a different way but is instead merely setting the world aright.  That is, conservatives argue that the government cannot be "giving" to the rich when it is merely allowing them to keep what should have been theirs all along.

Thinking recently about that retort (which I frequently encounter), I finally saw how the debate over moral philosophy can be explained in simpler terms.  It turns out that the hero Robin Hood is in fact a villain -- if you look at it from the standpoint of the laws that existed in England at that time.  Robin was truly an outlaw, as he readily admitted.  He was not saying that the law had been misunderstood or misapplied.  He said that the law was wrong.

This is why I titled my Verdict column, "Wait … Was the Sheriff of Nottingham Somehow the Good Guy?"  Conservatives are ultimately relying on the idea that upward redistribution is merely restoring rich people's rightful ownership of what is theirs, which is the same logic that says that Robin deserved to go to the Sheriff's jail (or to the gallows).  Liberal efforts to use the apparatuses of government to change economic outcomes are, under this reading of the world, apparently nothing more than legalized theft.

But that is precisely what one can say about Prince John's laws in the first place -- they are legalized theft.  Of course, there was an entirely different set of questions about John's legitimacy.  But even if King Richard were instead deemed to be the legitimate monarch, that merely raises a raft of additional questions, most importantly including why there is even a monarchy in the first place.  (We can at least agree with Monty Python's argument that "strange women lying in ponds, distributing swords is no basis for a system of government.")

The point is that it does no good to argue that rich people deserve what they have because they have it, especially when their very wealth allows them to have such a strong influence to keep the laws (property laws, tax laws, and so on) exactly as they prefer -- and to change those laws even more favorably by supporting Republicans who promise to do things like passing the 2017 tax law over the objections of a clear majority of the American people.

In the end, tax policy is about distribution.  In fact, all policy is about redistribution.  There are better and worse legal systems for creating prosperity for as many people as possible, but blocking some ideas with the claim that "this stuff is mine and you can't take it" simply assumes its own result.