Tuesday, May 6, 2008

Personal Aside: What is Progressive About Taxation?


Answer: Nothing.

My thanks to those who sent in their erudite comments last week including John Powers who impressed us with his offhanded scholarly analysis of…I had to look him up…Vilfredo Pareto; Ralf Seiffe, Lovie’s Leather, Mark Harris, Leon Dixon.

The answer of course as all of you have agreed, is nothing. In 1980 during an overheated speech to the Democratic National convention, Sen. Edward Kennedy mocked Ronald Reagan for claiming “the progressive income tax was spawned by Karl Marx and declared by him to be the prime essential of a socialist state—the method prescribed for taxing the middle class out of existence.” Kennedy elicited laughter at the convention by saying “Mr. Reagan has confused Karl Marx with Theodore Roosevelt!” And the liberal columnist Richard Strout wrote, “Can America really elect a man as president who believed that the graduated income tax was invented by Karl Marx? Why does Reagan say such things?”

If Kennedy or Strout had read the Marx-Engels “Communist Manifesto” of 1848 they would find among the proposals 10 steps by which the proletariat would seize power from the despised middle class including the following:

“A heavy progressive or graduated income tax.”

As the astute late commentator Warren Brookes noted, Marx was too sophisticated to believe such a tax would gut the rich or middle class. He knw that progressive marginal tax rates punish tot al productivity and output but would not hurt the already rich who could find ways to avoid it—either by moving or sheltering their wealth in the underground economy or through legislative loopholes. But Marx understood sagely that the greatest threat to socialism was not the rich who were and are relatively few in number but from the upward aspirations and mobility of the vast middle class whose legitimate desire is to join the upper class.

Now the Next Question.

No looking up your old econ books or going to search engines, remember. What is/was the Phillips Curve?

No comments:

Post a Comment