Tax cuts have received quite a bit of play in the media in the last month, and that’s not surprising. They’re a perennial favorite issue. Unfortunately, they tend to generate more heat than light in debate.
Most Republicans and many libertarians see government as only hindering the progress of business. In their view, the ultra-rich are there in spite of the state, not because of it. They’re victims of regulation, rather than receivers of massive amounts of cartelizing privilege.
Most Democrats and many progressives view the rich as utilizing an “exploitative free market” to rake in unearned loot. They’re bandits, and government stands — or should stand — between them and their victims, the lower and middle working classes.
Neither worldview captures the real truth of a complex ethical weave, hundreds of years in the making. That weave doesn’t fit conveniently on a class warrior’s bumper sticker or in his stump speech soundbyte. Some are successful despite the state’s parasitism. Others utilize state power for economic gain. Some fit both descriptions at different times.
It’s saddening to see Americans so unnecessarily divided. Excluding those who already believe taxes and statist organization are illegitimate, we haven’t even reached a point in our political development where more than a marginal fraction of people think that 310 million individuals voting on what to force each other to pay for is a bad system of societal organization.
So here we are, staring at a political landscape of second or third best options:
- Allow tax cuts for those making over $250,000/year to expire, keep tax cuts for those making under $250,000/year.
- Allow all the “Bush tax cuts” to expire. Borrow and print more money to make up the difference between revenues and expenditures.
- Cut expenditures, hopefully in combination with the above policies.
No politician feasibly has the ability to make anything besides superficial cuts to the budget for basic public choice reasons: Once a special interest has been established, a relatively small number of people have a very well-defined and large interest in protecting their privilege, while for everyone else the cost of this privilege is divided amongst all in small amounts, and the opportunity costs of ousting that one privilege is too great, and thus not a rational decision.
The same public choice principle also applies to politicians. Opposing special interests in any meaningful way and not just rhetorically, especially when they are so numerous and have other politicians waiting in line who are willing to play ball, isn’t conducive to re-election.
Printing and borrowing the money might temporarily allow the current tempo of state operation to continue, but it isn’t a sustainable solution. Refusing to acknowledge this will only postpone economic inevitability and stick average citizens with a larger bill, and thus should be rejected.
Our goal should be a completely privilege-free marketplace with no coerced payments (taxes), but ending corporate privilege doesn’t seem to be on the table and the choices are limited to the political. Since we’re in the realm of next-best options, the aforementioned class warriors should come together and support tax cuts for the middle class only. The ultra-rich receive the bulk of state privilege — let them pay the freight.
It brings me no joy to say this. I’d rather offer a simple bumper sticker solution, but there isn’t one. Unification against anti-market corporate privilege and centralization of the economy in the hands of the relatively few is a long-term project. Until we can strike to create an actually free and non-exploitative market, our next best option is softening the blow on those who live hand to mouth and letting that blow land on those who benefit hand over fist.