Jewish World Review Oct. 9, 2003 / 13 Tishrei, 5764
Tax, lies and a few supply-side parables
The US tax debate is nastier and more theological than it has been in years. If you doubt that statement, have a look at Al Franken's Lies and the Lying Liars Who Tell Them.
The book, which ridicules the political right and is high on the amazon.com bestseller list, contains a number of short essays on tax. The most illuminating is a cartoon called "The Gospel of Supply-Side Jesus" (and you thought I was kidding about the theology).
Supply-Side Jesus turns prostitutes into pious women by exposing them to the virtue of work; he calms Rome's seething subjects with a promise of tax cuts. In short, he represents a parody of Christian bible compassion, even declaring that "it is easier for a rich man to enter heaven seated comfortably on the back of a camel than it is for a poor man to pass through the eye of a needle".
Supply-Side Jesus even announces: "He who gives a thousand shekels will become a supply-side Jesus pioneer and have access to me at our annual Yom Kippur 'break the fast' dinner."
In this tasteless way, Mr Franken seeks to address the central tax question: Which tax policies are more compassionate? Are they redistributive policies (which Mr Franken clearly deems the more Christian) or are they growth- and work-oriented policies that generate opportunity (the Protestant Ethic, itself squarely in Christian tradition)?
If you are in the redistributionist camp, you will probably be siding with the 9-plus "disciples" vying for the Democratic presidential nomination.
All spread their own version of the redistributionist gospel at a recent debate.
Perhaps the pithiest phrase came from Senator John Edwards, who said of Mr Bush that "what this president is doing is trying to shift the tax burden in this country from wealth to work". This makes sense only if you believe that: a) the economy is a finite pie that can never grow and so must always be redistributed; and b) that every tax cut to the wealthy means a tax cut foregone for lower earners.
That is a weird set of assumptions, since we are not the sorrowful citizens of the declining Roman Empire. Indeed, at the time
Mr Edwards made those remarks, the economy was expanding at a rate of about 3 per cent a year.
Another Democratic candidate, Rep. Richard Gephardt of Missouri, focused on the job losses the US has seen in the recent downturn: "How many jobs does America have to lose before George W. Bush loses his?" We all regret the loss of these jobs. But the fact remains that US workers are far more likely to find new jobs within a reasonable period than their unemployed European counterparts, and that third quarter data indicate unemployment in the US will drop soon.
Again, Mr Gephardt starts with the assumption that jobs are finite. And if you assume that no new jobs will ever be created by the market again, then the US does need a political leader to do the work.
If you are in the growth-leads-to-opportunity camp, you will look at the economy another way. For you, the most important data will be recent numbers coming out of the Joint Economic Committee. They show that the US tax code, even under Mr Bush, is already redistributionist - the top half of earners pay 96 per cent of the tax. But they also show that the median American family currently takes home more money than it did a year ago.
The increase is not a huge one: to Dollars 35,812 from Dollars 35,563 the year earlier. Nonetheless, as Jim Saxton, the Joint Economic Committee vice-chair, notes, it was the first real increase in after-tax median income since 1999. And it would not have happened without those tax cuts. So much for Mr Edwards on the worker.
The low-tax, high-opportunity view, by the way, was held by a number of Clinton Democrats, the same ones who backed free trade. In the 1990s, Treasury secretary Bob Rubin (where would he fit in Mr Franken's cartoon?) wisely cut the tax on capital gains and helped create a federal surplus. That cash inspired the redistributionists of both parties to consider adding a prescription drug entitlement to the American social welfare package. This programme clearly represents substantial charity for the current generation of seniors, who will get those drugs, but cruelty towards the next one (for whom there will be no cash or drugs left).
All of which reveals the hypocrisy of the current debate, but especially the hypocrisy of those who claim they are the only martyrs in the room, and everybody else is Pontius Pilate. Haggle all you want about the numbers, ladies and gents. But leave the religion out of it.
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JWR contributor Amity Shlaes is a columnist for Financial Times
. Her latest book is
The Greedy Hand: How Taxes Drive Americans Crazy and What to Do About It. Send your comments by clicking here.
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