November 11, 2012 § Leave a comment
There is an old complaint about lawyers: Frustrated clients often complain that they want to find a one-armed lawyer so they will not hear “On the other hand”. Randy Miller, Business Manager for the Teamster Local in Houston in the 50’s and 60’s, used to argue that labor lawyers’ function was not to advise clients how to stay out of trouble, but to get them out of trouble. Chris Dixie never agreed, but I remember a bar-room conversation between him and a friend: Chris made some statement about criminal law. His friend said, “Mr. Dixie, I thought you were a labor lawyer, not a criminal lawyer.” Chris replied, “Hell, when I started practicing labor law, it was criminal law.”
Well, this is about “On the other hand”.
First, let me explain something about the way I see things. Beginning in my twenties, while I was in college, I consciously and sub-consciously (as I now look backward) rejected absolutes and doctrines and philosophies that offered purity and certainty. I am not referring to the way I perceived the world, but to the way I perceived myself. This self-perception was not an event, but a life-long process.
I was attracted to the ideas of Carl G. Jung, who taught that every person is an amalgam of good and evil -angel and demon – light and shadow. He believed that acknowledging and claiming the shadow was essential to a balanced and mentally healthy personality. I was drawn to the Taoist ideas of Lao Tse and the I Ching, a book of changes translated by Richard Wilhelm, for which Jung wrote a long introduction. Taoists teach that reality is always a result of opposites, but not opposites in conflict with each other, but continually changing opposites tending toward each other.
Now, I want to be honest about this. These are slippery and morally dangerous concepts. They are capable of being used to excuse and rationalize trashy behavior, a convenience that, at times in my life, I have employed fully in stupid and self-destructive ways. I think I have survived those episodes in a two-step process: First, I stopped drinking alcohol. [This didn’t happen until I was 55 years old. I’m a slow learner.] Second, I had to spend several thousand hours painfully reviewing and reexamining the rationalizations that caused me and several others much pain and harm.
But, having made some progress, I still have to pause sometimes and remind myself that my judgments are always subject to review and reconsideration.
The reason for all this prelude is that my attack on the loophole solution to re-balancing our tax system drew spirited blow-back from people whose opinions I respect. I am not persuaded, but their ideas deserve consideration, especially because the loophole solution is probably most likely to be the one we get, whether we like it or not.
The great advantage of closing loopholes designed specifically to benefit the wealthiest 1% is that it would target those who have benefited most from the unfair taxation policies of the last decade or so. An increase in the top rate, on the other hand, would hit many who have not benefited from the loopholes and who have attained their level of wealth through personal effort and determination. For example, compare Barack Obama and George Romney. Is it fair for Obama and Romney to have identical increases in their taxes as a result of the current effort? Obama’s wealth results from two books and a lifetime of effort. Romney’s wealth results from cleverly taking advantage of every tax crack and crevice known to taxation experts and schemers. Should their wealth be treated the same by the tax code?
Also, consider the fact that state and local taxes vary widely between states and municipalities. An increase in the top federal income tax rate will affect equally those with high and low state and local taxes. Does that raise a fairness issue? The scalpel versus the meat-ax solution would mitigate this problem.
The specific facts about these issues are not yet public or, at least, not known to me. I assume that, during the next few weeks, we will have an avalanche of data to absorb concerning the relative results of these solutions. That may require us to re-assess our present preferences.
For now, although I acknowledge the above-stated arguments, I still believe that allowing the Bush tax cuts for the top rate to expire will be the best solution. I don’t trust the Congress to revise the tax code’s complexity in ways that will balance the kind of cuts in safety-net programs that Republicans will demand. The term “loopholes” fails to describe the kind of carefully crafted corporate welfare that has been stealthily inserted into the tax code. When that welfare is threatened, lobbyists will descend on Washington like locusts and threats to political careers will resemble the kind of “offer you cannot refuse” fictionalized in The Godfather.
Even more important, I don’t believe the loophole solution can be explained to the average American family like the top rate increase can. The top rate increase is simple and easily grasped, even by working people who have no time or inclination to become taxation mavins. I am hopeful that President Obama will make full use of his ability to stay in touch with the American voters who just re-hired him. If he does, I think he can negotiate from strength rather than weakness.
I have already heard from John Boehner and Lindsey Graham that “The President should lead by adopting Simpson-Bowles.” This apparently will be their version of a compromise. I have a proposal about that: The Simpson-Bowles recommendations should be re-analyzed according to a new set of facts.
Instead of analyzing them according to projections of dollars “saved” and available to pay down the deficit, they should be analyzed according to how many people will die as a result of inadequate health care; how many young people will be denied a college education as a result of cuts in grants for that purpose; how many children will go to bed hungry as a result of cuts in food stamp money; how many elderly people who do physically demanding work will be required to continue that work after they reach the age of 67. There are other consequences that I cannot think of now, but this suggests the idea. This information should become part of the public discussion about changes in so-called “entitlements”. Let those who insist on the cuts take responsibility for the human as well as the financial consequences.
On another note: I have looked at the present tax brackets. The top rate of 35% does not apply until adjusted gross income exceeds $388,250 for taxpayers filing jointly. Why is President Obama talking about people making “more than $250,000”? If allowing the Bush tax cuts for the wealthiest Americans would raise the top rate from 35% to 36.9% only on taxpayers filing jointly with adjusted gross incomes of over $388,250, why not say that. That would at least avoid opposition from most people making between $250,000 and $388,250, a $138,250 tranche. There may be something I’m missing here. If anyone reading this knows the answer, I’d appreciate it. Just leave me a comment.