Saturday, December 10, 2011

SAY "YES" TO CLASS WARFARE

In modern parlance, the phrase “class warfare” has a Marxist/Leninist origin and nothing but pejorative meanings in contemporary American discussion. But no one has to be communist or even a socialist to observe a fact as old as human pre-history: some have more and some have less.

Societies establish classes dividing the have-more from the have-less but enable some degree of socio-economic mobility, greater in many European countries than in the United States. Everywhere, a few doltish, lazy, or unlucky rich people lose what they have and drop down; a few talented, energetic, or lucky poor people get more and move up. But for the most part, “old money” families are old because they have maintained their wealth for generations. It remains to be seen whether the families of parvenus can keep their “new money.”

America honors itself an essentially middle-class country. By population distribution, middle-class people outnumber poor or rich people, and poor people outnumber rich people—a distribution graphed by a lop-sided Bell Curve left-leaning toward the poor. By wealth distribution, the rich have more than the middle-class, who have more than the poor—a distribution graphed by a lop-sided Bell Curve right-leaning toward the rich. Over the past 30 years, dramatic increases in the lop-sidedness of both Bell Curves show the growth of economic inequality. As the middle class becomes poorer, America becomes a two-class society of the rich and the not-rich.

Democrats and Republicans/Tea Partiers divide on their responses to this development. The divide appears in divergent preferences for progressive or flat, or regressive, tax rates. Democrats want to help the not-rich; they propose laws to raise revenues by raising progressive taxes and oppose laws for flat, or regressive, taxes—all to alleviate the tax burden on the not-rich. Republicans/Tea partiers want to promote the rich; they propose laws to reduce spending by reducing revenues and propose laws for flat, or regressive, taxes. They call progressive taxes the weapons of “class warfare,” a phrase slowly creeping into the Democrats’ political lexicon.

I have no problem with the phrase or the fact of “class warfare” if we understand what the fight is about. It is not about the fact that those who make more pay more if deductions or loopholes do not distort the tax structure. But it is about the fact that the meaning of fairness depends on the metric of the burden of taxes on the taxpayer. Pick tax rates scaled to income (progressive taxation), take one side; pick one tax rate applied to income (flat, or regressive, taxation), take another side. From the perspective of the preferred tax structure, the other is unfair.

The question is whether both perspectives are equally justified? Or, in other words, is it fair that some people pay, not less or more than others, but disproportionately less or more. The answer depends on how different tax regimes operate and affect people.

Progressive tax regimes establish tax brackets and tax rates for those brackets. Since 1945, we have gradually reduced both the number of brackets and lowered their rates. The effect has been to increase the tax burden on the non-rich. Further reductions in brackets and rates make a progressive tax regime like a flat, or regressive, tax regime. The problem with the latter is that it ignores a well-known economic principle about the value of money; money has not only a face value, but also a context value, and it is the context value which is the metric of tax burden.

The less money you have, the more you value it, and vice versa. If you have little, you pinch pennies; if you have a lot, you light cigars with $100 bills. So, at the same tax rate, taxes paid by the not-rich are more valuable than taxes paid by the rich, and the burden on the non-rich is greater than the burden on the rich. For the not-rich, flat-tax-rate payments may mean having less money for nutritious food; for the rich, flat-tax-rate payments may mean less money for a foreign vacation. If you prefer a flat-tax rate and dismiss its different effects, your sense of fairness, such as it is, lacks concern for different burdens on different classes, and discloses contempt for the not-rich.

What impresses me about Republicans/Tea Partiers on this issue is their intellectual confusion, moral callousness, and, of course, Christian hypocrisy. Most of them argue, or sympathize with the argument, that America is a Christian nation. Yet their real god is not one of love, but one of love of money. Mammon is their god; their Gospel is greed; and flat-tax rates, their creed. For the rest of us, the message at this time of year is charity for all; throughout the year, progressive tax rates. The poor should not inherit the earth, just get a fair share of it. My text is Matthew:

Jesus said unto him, If thou wilt be perfect, go sell that thou hast, and give to the poor, and though shalt have treasure in heaven: and come follow me. … Then said Jesus unto his disciples, Verily I say unto you, That a rich man shall hardly enter into the kingdom of heaven. And again I say unto you, It is easier for a camel to go through the eye of a needle, that for a rich man to enter into the kingdom of God. (19: 21, 23-24)

Jesus distinguishes between the rich and the not-rich, and thought that a redistribution of wealth would be good for all. In our idiom, higher taxes would improve the chances of the rich for an afterlife and the lot of the not-rich in their present life. The text says “yes” to “class warfare.” And so say I.

2 comments:

  1. couldn't find a place to comment on your editorial in the Sun-News edition of December 31, 2011, but I wanted to let you know I thought it was clear, cogent, and compelling.

    http://thinkingman-ron.blogspot.com/

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  2. Ron, thank you for your kind words and for signing up as a follower. BTW, if you go to LCS-N Opinion and click my column, you can put a comment at the bottom. The same procedure works for all other items.

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