I don't always read the work of other "community columnists" in the Journal Sentinel. I should do better with that, but I did note with interest today's contribution by George Wagner because it plays off a theme - perhaps the only theme - that might result in President Obama's reelection.
Mr. Wagner goes after the unequal distribution of income with about as nuance and appreciation for economics as does the President. "We" want incomes to be more equal so all that "we" must do is pass a law to make it so. All we need to is tax away what the awful one percenters don't need or, perhaps more accurately, whatever amount it is that "we" want.
It is not my intent to make a brief for the fireside equities of millionaires and billionaires. There is a case to be made but no one really wants to hear it. We live in coarse times in which the notion that someone has a right to keep what they earn is regarded as antiquated and insufficiently sophisticated. Because fortunes can't be accumulated without some publicly provided infrastructure and the rule of law enforced by the state, there is no such thing as property rights free from the claim of the state.
If the logic of that eludes you, you're not the first.
But, in fairness, no one (at least not since FDR) proposes to take it all and what could be the harm of evening things out a bit?
Within certain ranges, the answer, I suppose, is not all that much. We do it today. One of the most startling things about the Democratic calls for the rich to pay their "fair share" in taxes, by most measures they already do. Top income earners pay a higher share of both federal income tax than their share of the national income and, Warren Buffett notwithstanding, they pay, as a group, a higher percentage of their income in taxes than the less well to do.
So the issue is not whether our tax system should be progressive and redistributive, but whether it should be more progressive and redistributive.
Mr. Wagner thinks so but his argument assumes that wealth is simply "there" - something that can be allocated in any way that we want it to. It's not. Higher tax rates affect economic behavior. They create disincentives and distortions in the allocation of resources and effort which, as rates increase, shift from the most productive use to the most tax efficient use. While higher tax rates may lead to additional revenue, they may also lead to reduced economic growth.
We've seen this in the past. The confiscatory tax rates of old - 70, 80, 90 % - did not result in revenues that were much higher than the lower rates of the Reagan era.
You can take that observation too far. Higher rates can result in more revenue but there is a strong case to be made that lower rates on a broader base lead to more equitable and productive results.
Don't believe me? Yesterday I read an article in The Nation (yes I do) that commended a new form of class based progressivism drawing upon lessons from the UK. The point was that, since the rich will always find ways to avoid redistributive taxes, the better path is to control incomes, i.e.. prevent those high earners from getting the money in the first place.
This would, of course, be economic suicide and far worse than moderately progressive taxation, but you get the point. The rich are not necessarily the middle class' oyster.
In any event, the rosy scenario that Mr. Wagner envisions is befouled by the math. You could
double their current tax bills without coming close to eliminating the federal budget deficit or generating more than several hundred dollars per head to redistribute to everyone else.
Still, I give Mr. Wagner credit for moving the debate. My next Journal Sentinel column will be on the came topic.