Arguments over the Bush tax cuts for the wealthy have ranged from economic to moral. Some argue that they do not represent the best interests of society.
Jonathan Cohn is a senior editor at The New Republic.
Congress adjourned last month without voting on whether to extend the Bush tax cuts. But the debate hasn't stopped, with prominent Republicans and most of their conservative supporters pushing hard to preserve the cuts that fall exclusively on high incomes. Letting those tax cuts lapse, these conservatives say, would not only be bad for the economy. It would also be unfair.
For the most part, President Obama and his supporters have responded with a pragmatic counter-argument: Preserving tax cuts for the wealthy would drive up the deficit without substantially improving the economy. I agree wholeheartedly. For those of you unfamiliar with the contours of the argument, I'd recommend reading through the literature on taxes at the Center on Budget and Policy Priorities.
But this debate isn't just about budget arithmetic. It's about morality, too. And I'm not sure that part of the debate is getting the attention it deserves.
According to the Republicans and many of their supporters, allowing tax rates on upper incomes to rise would punish the rich for their success, taking away money that the rich have earned. But this argument suffers from two key flaws.
One is that it fails to account for the power of luck. Almost by definition, people who are successful have benefited from some measure of good fortune. That fortune can take the form of obvious, material advantages — like access to advanced technology and good schools. Or it can take the form of more subtle, but still important, assets for moving forward in life — like good health or loving parents.
Yes, a good work ethic will take you far. And I know many well-educated professionals convinced that nobody works as hard as they do. (I've been known to indulge the thought myself.) But I've met many people at the bottom of the income ladder who work just as hard, for far less reward. Between 1980 and 2005, the richest one percent of Americans got more than four-fifths of the country's income gains. Does anybody seriously believe that the other 99 percent didn't deserve to take home a much larger share?
The other, albeit related, flaw in the conservative argument is that it fails to acknowledge the debt wealthy people owe to society. As Gar Alperovitz and Lew Daly argue in their 2008 book, Unjust Desserts, the proverbial self-made man is not exactly self-made. He (or she) is benefiting from the accomplishments of past generations, not to mention the support of public institutions (like the National Science Foundation) and services (like schools) that foster innovation and lead to greater productivity.
As Alperovtiz and Daly wrote in an excerpt
Warren Buffett, one of the wealthiest men in the nation, is worth over $60 billion. Does he "deserve" all this money? Why? Did he work so much harder than everyone else? Did he create something so extraordinary that no one else could have created? Ask Buffett himself and he will tell you that personally he thinks that "society is responsible for a very significant percentage of what I've earned."
But if this is true, doesn't society deserve a very significant share of what he has received?
You can take this argument too far, obviously. (For some intelligent criticism of Unjust Desserts, see here and here.) Then again, nobody is suggesting the rich to give up all the extra money they make. All anybody is asking is that the rich pay more in taxes — in effect, that they reinvest in society by a little more than they do now.
How much more? I'm honestly not sure. But restoring tax levels to what they were before the Bush tax cuts seems like a safe place to start.
Note: This is only marginally related, but if you haven't yet read Tim Noah's series on inequality, you really should.