It’s election season, and taxes are on everyone’s mind.
There are those (Republicans) who tend to claim that the wealthy should pay the same amount or less in taxes than poor or middle class people. And, there are those (largely Democrats) who argue that the rich should pay more.
There are points to be made for each side, to be sure.
The former model, which we can call “conservative,” preaches that tax cuts to the wealthy promote business growth, job growth, and overall economic growth because businesses will be more likely to spend the saved money on increasing employment and expansion. There are also those who say that this type of plan is more “fair,” as it allows those who have earned their wealth to keep more of it.
The latter model, “liberal” (though not in the traditional sense of the word), argues that government programs (such as welfare, education, etc.) require higher investments from the wealthy, as they are designed to give disadvantaged people a leg up. This in turn allows the game of capitalism to be played on a level field, and it also promotes economic growth, since those with lower incomes will as a result have more money to spend in the market.
Economists have argued over the validity of both conservative and liberal tax plans for decades in an attempt to discover which method will yield more growth. There seems to be no definitive answer (though there will surely be those who will try to tell you otherwise); the trouble is that our economic system, capitalism, works in waves, no matter which tax plan is enacted. The competitive nature of capitalism requires that there always be poor people and rich people, in fluctuating numbers depending on whether the market is in a period of growth or decline. So, regardless of tax plan, the market seems to fluctuate in much the same, somewhat unpredictable way, as there are so many other factors at play (peoples’ moods, new technology, war, famine, disease, etc.). Still, economists labor to discover the secrets of the exact causes of these ebbs and flows. Many will tell you it’s very nearly random.
Annual GDP since 1980
If that’s the case, then the economic merit of either tax plan is rendered more or less irrelevant. The question to ask when choosing an economic plan, then, is this: what do we value as a society? Because, inarguably, there are certain values attached to each plan, and the plan we choose as a nation says more about our values than it does about our working knowledge of economics. It is therefore much more important to assess the values attached to each economic philosophy.
What values does a conservative tax plan promote, and what values does a liberal one promote? While tax codes and economics may be too meticulously detailed and complex of areas for the average American to understand in depth, the values encoded in each basic structure are not. They are, in fact, rather simple.
The conservative plan’s main value-based argument (as opposed to economics-based) is that the wealthy deserve to keep and accumulate most (if not all) of their wealth, because they have earned it. The liberal plan’s major value-based argument is that the non-wealthy (poor/middle class) deserve an equal opportunity at success and well-being. Both of these sets of beliefs claim to form a significant part of the “American Dream,” in an attempt to appeal to the American voter.
So, again, what do we value as a society?
You’ll notice that a conservative plan’s value system addresses only wealth; it is concerned only with the individual and his or her accumulated capital. This set of values does not take into account concepts such as standard of living, health, happiness, shelter, education, or an individual’s relationship to society as a whole. It does not ask the individual to contribute or be a part of his or her society, community, culture, or government in any significant way. It, in effect, excuses the individual from the social contract and allows him or her to pursue selfish economic gain without regard to other aspects of life.
It does not take into account the fact that often, wealth is inherited. Or often, wealth may be truly gained by the individual, but largely due to the fact that that individual had an unfair advantage of some sort (race, gender, economic status, geographical location, place of birth, etc.). These factors play a large part in a person’s ability to succeed; a man born into an upper-middle class white family in a suburb of the United States inevitably has a better chance to become wealthy than a woman born into a lower class urban family, especially if she was not born in the U.S. and/or if she is a woman of color. These factors are not taken into account in a conservative economic system.
A conservative economic plan does not consider the following a human right: shelter, food, water, security, education, legal equality. Instead, the only human right is the right to accumulate wealth.
A conservative economic plan is not a human plan. Its sole encoded value is greed.
A liberal plan, on the other hand, values human life over the accumulation of wealth. That’s not to say it is socialist, as many have accused, as it is still very much rooted in the capitalistic system. However, it takes into account the existence of wealth disparity and the necessity for basic human needs to be met, in addition to the goal of economic growth.
The wealthy are asked to contribute more to government programs in the form of taxes, even if they may not benefit personally from all of the programs being funded. Accumulation of wealth is not the main goal in this set of values; rather, human welfare and equality are. Taxes are viewed as a part of the social contract – if one wishes to live and become prosperous in the United States, one must contribute to society as much as one can. If an individual can afford to pay more, he or she should. Every individual, wealthy or not, benefits daily from the presence of a government and its programs: it provides national and local security, a fair, regulated market, clean streets, education, a postal service, quality control over the foods we consume, student grants and loans, national and local parks, and yes, National Public Radio and the Public Broadcasting System. Many consider some of these programs to be unnecessary, but those who do fail to realize that human rights must encompass much more than just food, water, and shelter.
A liberal economic plan’s value system believes that the American Dream means that everyone can and should live a happy and healthy life, regardless of economic status. A lack of wealth should not mean a lack of access to healthcare, education, or any other social program mentioned here. This higher standard of living comes with a small price, and those who are the wealthiest can certainly afford to pay it.
So, now that we have assessed the values encoded in each economic plan, which can we say is more in line with what our country and culture aspires to be? The United States professes itself to be a democracy and a nation that fights tirelessly for equality, yet clearly the conservative plan is neither democratic nor equal. Conservativism’s one and only true value is greed, and democracy and greed are antithetical. A true democracy would defend to the death government and social programs, rather than attack them so that the government can afford to give its wealthiest citizens tax cuts. These programs are part of what defines us as a nation because they are the main arbiters of equality in our society.
So the Left and Right may argue endlessly about which plan will be more effective in causing economic growth, but they are likely to have approximately the same result in that regard. These arguments only generate a smoke screen that conceals the true values embedded in each plan. In reality, the value placed on human welfare – as opposed to human wealth – is where the true differences between the two plans lie.
Footnote: The following is a map indicating the GINI coefficient of most of the countries in the world. A lower number (purples and blues) indicates more income equality in that country. A higher number (yellows and reds) indicates a large disparity. Countries following the Nordic Model, in which individuals pay higher taxes in order to subsidize government programs that promote equality, tend to have very low (purple) GINI coefficients and very high standards of living. It is important to note that the United States is in yellow.