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TAXES AND ANTHROPOLOGY
Robert Snower (rs219@IDIR.NET)
Mon, 15 Apr 1996 10:04:45 -0500
Today is April 15, tax day in the U. S. Taxes have compelled little
interest among cultural anthropologists. But they should. They now take
more of the income of the average inhabitant of the developed world than his
total expenditures for food, clothing, and shelter combined. This is
strictly a 20th century phenomenon. It represents a cultural sea-change.
And also an ethical one. Ethics is a large component of culture; this is an
understatement, of course: more precisely, culture is the esthetic
expression of ethics.
Nowadays, yet another sea-change is taking place in this ethic, as expressed
in taxes, notably the "flat tax" which was the theme of a presidential
candidate's campaign, and is increasingly the subject of discussion in
Congress and elsewhere. This change, I believe, is brought to light in the
following quoted article, and also in the comments which follow. The
article is by the author of The Sociobiology of Homo Sapiens, and if any of
you are not familiar with this book, you should get hold of it. Written in
1978, it is poles apart from Wilson's last chapter discourse on humans in
his famous work, and I believe so much more important. (It is in print, and
cheap.) Not to impugn Wilson; the rest of his work is great, and very
important.
>TAXES AND THE NEW FAIRNESS
>THE FLAT TAX
>The supporters of the flat tax are all Libertarians. The real, seldom
articulated, basis of the flat tax is the belief that government must treat
everyone equally, except in the case of wrong-doing. (Obviously, law
breakers must be treated differently from others.) According to the
Libertarian creed, there shall be no discrimination among its citizens by
government on account of individual differences: race, color, or creed;
rich or poor, smart or dumb, tall or short.
Progressive taxation violates this Libertarian principle, attending to the
economic differences in the conditions of each person and class instead of
treating people alike. The device of the flat tax, on the other hand,
provides that no one man's vote can favor a tax on what somebody ELSE has;
it prevents the legislator's vote to tax only those OUTSIDE his constituency.
Of all governments, that of the United States is probably the least guilty
of the routine travesty, world-wide, of the above principle, and also one of
the least burdened by the class and ethnic divisions so prevalent on our
globe. It is not unreasonable to think there is a correlation.
It may well be economic discrimination which leads, perversely, to many of
the other kinds. PEOPLE ARE DENIED OPPORTUNITY BECAUSE THEY ARE FEARED.
The Libertarian creed which validates the flat tax is in direct opposition
to a more notorious principle: to each according to his needs, from each
according to his ability. Each of these principles implies a different
definition of 'equality' in the economic domain. The latter definition,
when it became a working one, in what must be the supreme irony of recorded
history, ended in economic and environmental disaster, in nationalistic and
ethnic horror stories. The former definition is giving signs of working better.
>CONSUMPTION TAXES
>Consumption taxes, on the other hand, do not validate this Libertarian
principle. They are incurably regressive. No matter how many essential
consumer items, such as food, medical services, housing, are exempted from
the levy, there can be no construction of the consumer tax which will not
bear regressively on incomes above a threshold level, and increasingly so.
Regressive taxes are the mirror image of progressive taxes, generating the
same political and ethnic difficulties.
The advocates of consumption taxes usually draw their enthusiasm from these
kinds of taxes' luring promise of simplification. But after all,
simplification is pretty far down on the list of priorities to which we have
been making reference.
The supply-siders think a consumption tax, as against the progressive income
tax, stimulates the economy by discouraging consumption in favor of saving
and investment. Keynesian-type thinking, on the other hand, holds that an
encouragement of consumer spending stimulates the economy, and therefore
favors governmental deficit spending and money creation. It is likely both
sides are wrong, since, other things being equal, any increase in saving is
at the expense of an increase in consumption, and vice-versa; and if other
things are not equal, then it is on these other things which our attention
must focus.
>THE BIG PICTURE
>It is one thing to advocate a flat tax, it is another to compute it. The
flatness of a flat income tax must not be calculated in isolation from all
other taxes, nor from the benefits they buy. Otherwise, its flatness is a
sham. By definition, a flat tax takes an equal percentage of all incomes.
Social Security and Medicare taxes are sharply regressive, though the trend
of revisions is constantly to make them less so. However, the equally
regressive dispensing of their benefits probably makes it a wash: the
poorer man pays a higher percentage of current income, but the value of the
benefits ultimately received comes to an also higher percent of past income.
It is important to remember the flat tax is an ideal which can be corrupted
by other taxes, and by the distribution of the benefits they buy. The flat
tax must be viewed as a parameter to which all taxes, and the actuarially
adjusted benefits they buy, must be subordinated.
by Mark Shapiro
(author of THE SOCIOBIOLOGY OF HOMO SAPIENS)
Phone: (913)362-2986
FAQs about the article TAXES AND THE NEW FAIRNESS
Answers by Robert Snower rs219@idir.net
I do not understand the paragraph below on consumption taxes. Why
are consumption taxes regressive? They would seem flat to me, because they
take the same percentage from what everybody spends.
CONSUMPTION TAXES ARE NOT FLAT BECAUSE HIGH INCOME PEOPLE DEVOTE
A SMALL PORTION OF THEIR INCOME TO COMSUMPTION, AND LOW INCOME PEOPLE
DEVOTE A LARGE PORTION OF THEIR INCOME TO CONSUMPTION. THEREFORE, THE
CONSUMPTION TAX IS REGRESSIVE, TAKING A SMALL PERCENTAGE OF THE RICH
MAN'S INCOME, AND A LARGE PERCENTAGE OF THE POOR MAN'S. THIS
INJUSTICE CAN BE CORRECTED FOR VERY LOW INCOME PEOPLE BY EXEMPTING
NECESSITIES, BUT AT SOME THRESHOLD OF INCOME THIS NO LONGER WORKS,
AND THE TAX IS THEN REGRESSIVE. THAT CONDEMNS IT.
What does the flat tax have to do with ethnic discrimination?
Nativism and the intense opposition to immigration provide a good example.
Why are so many of us in favor of DENYING OPPORTUNITY TO emerging peoples?
Because we are AFRAID. We are afraid of the prospect of greater and greater
claims on US by growing hoards of immigrants, with a corresponding growth in
the political power of these people.. In short, we are afraid of
REDISTRIBUTION. Progressive taxation is the device by which society, and
government, rediistribute. Progressive taxation, calculated on a net basis
in respect to benefits dispensed, is the ONLY method of redistribution by
governments. Change that, and the opposition to immigration, and many other
forms of discrimination, lose their REASON FOR EXISTENCE.
WHAT DOES THE FLAT TAX HAVE TO DO WITH THE ENVIRONMENT?
The long term threat to the environment comes not from misuse, which can be
controlled by law, but from overuse. The long term threat of overuse
cannot be solved by conservation. Conservation is necessarily a short term
solution, obviously. The long term threat to the environment finds its
source in the ethic of governmental entitlement: the theory that each and
everyone of us is entitled; that individual failure, unlike institutional
failure, must be prohibited by law. The successful fulfillment of such a
program would clearly be an environmental catastrophe.
Robert Snower rs219@idir.net
"Thomas L. Wayne" <tlwayne@nando.net> wrote:
>I have never been a big fan of Lester Thurow. He does raise some valid
points in his latest book.
Surprising. You really sound like one.
>As long as economic growth is limited to 2% by the Fed any efforts by
public policy to increase the overall welfare of wage earners will be
punished and eventually thwarted with higher interest rates. A zero sum
game as Lester put it.
What is wrong with a zero sum game? Look at the alternative. Endless
expansion of everyithing, ad infinitum, is such an absurdity, from the point
of view of the environment, social well-being, etc., that there is really
no excuse for the intellectually competent to advocate it.
Besides, biological evolution is a zero sum game, you know. That's how we
got here. Don't knock it.
>In this environment personal gains over 2% can only be had at the expense
of another.
We just answered this one.
>Productivity gains have led to lower real wages for all except managers who
are rewarded for being in the right place at the right time. In my service
(Mortgage Banking) employee requirements have been cut by over 50% in the
last ten years. I am continually faced with the option of releasing
employees or increasing market share. Any increase in market share
naturally means that someone from another company gets walking papers.
Quite a situation.
If what you imply were correct unemployment would have imcreased rapidly
over the past ten years. It hasn't, of course. Job creation, you know.
The doomsters alway forget about job creation.
>As these productivity gains displace people the under and unemployed
numbers increase, driving down the wages they can command.
It is not true that "unemployed numbers" have increased. It is true that
the real wages of many have not increased. But you are not even close to
the reason. Perhaps you and Thurow should get together with Buchanan, and
take it out on the immigrants.
>Thurow aptly stated that the social contract of Post WWII (full employment
and growing real income) has been abandoned and replaced by international
contract of free, unrestricted markets. In this environment the current
restrictive Fed policies (which would not have been tolerated 25 years ago)
go unchallenged by public policy makers.
So socialism is dead. You may be sorry, but most of us are not. It doesn't
work; have you noticed? There really are alternatives to the old old recipe
of consumer hype via easy money, union pressure, and political control of
industry. Get with it.
Robert Snower rs219@idir.net
>TL Wayne
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