A question for tax day: "Do you regard the income tax which you will have to pay this year as fair?"

[randomness]

Charles Franklin, on The Irony of Tax Cuts:

The Republican driven tax cuts have worked. Voters now have more faith that the federal income tax system is fair than at any other time since World War II. Moreover these changes in public opinion coincide with the Republican capture of the House in 1994 and accelerate with the Bush tax cuts. But the irony of this success is that the GOP finds it hard to claim credit for a job well done. Once the tax monster is slain, who do you fight next? Once the people are no longer grumpy about unfair taxation (tea parties notwithstanding), how do you keep the issue alive? By successfully shifting public views of the fairness and burden of federal income taxes through repeated cuts, Republicans inadvertently also reduced the salience of their best issue of the 29 years since the Reagan Revolution. The public now agrees that tax cuts are good, but they are no longer particularly angry about taxes.

Today Ari Fleischer, former press secretary to President Bush, offered an interesting proposal in the Wall Street Journal: raise income taxes on those who currently don't pay. That is a rather shocking proposition from the party that has spent nearly 30 years arguing that tax cuts are good for everyone. The very success of that political program has been to remove millions from the tax roles, and put nearly half within striking distance of paying no federal income taxes. So you'd think that would be cause for celebration among Republicans for a job well done and a lot of credit to claim with those voters.

Alas, those voters aren't voting Republican in overwhelming numbers. The way to not have to pay taxes is to not make a lot of money. And while these less taxed citizens appear to have been pleased with lower taxes, that hasn't translated into a majority of Republican votes among these non-taxpayers. So Mr. Fleischer has now taken on the burden of convincing nearly half of the public that it is not good for them to pay little or no income taxes. Instead, fairness demands that everyone pay taxes. That's a breathtaking argument for a Republican to make.

Fleischer goes on to argue that it is poor policy for the top 10% of earners to pay 72% of all income taxes, and that is probably a discussion worth having. But the argument for raising income taxes on the bottom 90% to provide a little more load sharing for the top 10% is an interesting electoral calculus to say the least.

Obama's plan to lower taxes for more of the lower 90% (or 95%, whatever) plays to the anti-tax momentum Bush built. And it means that Republicans don't have the angry taxpayer revolt of the late 1970s that helped build the Reagan platform that transformed tax policy for a generation of Republican politicians.

And so we are left with the irony of Republican success. How do you keep tax cuts at the center of your economics when nearly half don't pay, but aren't as grateful as they might be. And if the issue doesn't have the mass appeal it did for Reagan, can it still motivate the base (remember those tea parties!) enough to continue to have legs. But I have to wonder if Mr. Fleischer's plan is really the way for the anti-tax party to go.

I do think it's a bit simpler. The Wall Street Journal is read, by and large, by rich people, and Ari Fleischer wrote a nice little essay to make them happy. That it's political kryptonite doesn't concern him particularly.

He might even believe what he's saying is a good idea, but he doesn't have to try to sell it to the voters.

Comments

[r-ness.livejournal.com]

California taxation, and California governance in general, is deeply screwed up. However, there are side benefits to living there, which make everyone suck it up and deal. Massachusetts governance is similarly screwed up, and similarly, there are side benefits to living there.

You are totally right about the boneheadedness of the system. Doing my taxes myself was a great illustration of that. It's the kind of system that evolved by accretion, like many huge, complex systems. dpolicar (below) and I were talking about how the legal system got that way, and he made the analogy with crufty legacy code.

I am actually curious (as opposed to asking this question to make a point): how would you say UK taxation differs from that of the US? What are the differences and similarities in the tax systems in the two countries? I realize this is an enormous topic, but I missed my chance to have to deal with that system first hand when I passed up my opportunity to land a job there after leaving school, and I know you've dealt with it on the taxpayer level, which for my money is much more valuable than some academic's paper on the subject.

Besides, who knows, at some point I might have to gain more than a nodding acquaintance with http://www.hmrc.gov.uk, depending on who my employer becomes. It might be nice to get some warning.

[evilmagnus]

How does UK tax differ from the US?
Uniformity. :-)
No different state or local income taxes. The only real variance is the Council Tax, which replaces property taxes. But even that doesn't vary that much between locations (at least, not in the way property tax does).

This uniformity means everyone gets to suck up a 17.5% sales tax, higher income taxes at the higher bands, about the same payroll taxes, but no AMT.

If all you do is have a salaried income, then the tax witholdings are pretty much always right on the nose - or at least they were when I were a lad.

*Edit*: Oh, and no mortgage interest relief. None. Nada. Don't know what the homeowner percentage is back home, but I don't think it's too much lower than here in the US.

[r-ness.livejournal.com]

If all you do is have a salaried income, then the tax witholdings are pretty much always right on the nose - or at least they were when I were a lad.

Does that mean one doesn't end up having to mess about with these filed returns? Or does one still have to go through this ritual every year?

Don't know what the homeowner percentage is back home, but I don't think it's too much lower than here in the US.

My understanding is that the effect of mortgage interest relief is to increase the size of houses. Perhaps not the intended outcome.