The American Enterprise Institute’s Arthur Brooks writes:
This morning on NPR, I heard my senator, Barbara Mikulski (D-MD) say that taxing rich people — just because they have more money than others — is “fair” and “is what America’s all about.”
Really? That’s not how I define “fair.” And I thought America was all about earned success, rewarding merit, and the right to rise on our merits.
Let me begin by saying that Mikulski acts as if we don’t have an exceptionally progressive tax system. We do. But the assumption that fairness is the same as redistribution of wealth is a common argument on the left.
But “fairness” is ever illusive and there is always more money to be gotten by those characterized as “rich.” Should the top one percent of taxpayers shoulder about 70 percent of the tax burden, as they do now, or 75 percent? Is eighty-percent fairer than 70 percent? Or put differently, is it fair to let the wealthy keep, say, half the money they earn?
There is another sort of fairness when it come to taxes that Mitt Romney, Rep. Paul Ryan (R-Wis.) and the Simpson-Bowles debt reduction commission recommended: Getting government out of the business of subsidizing one business over another, one segment of the economy over another or one form of energy over another.
As Ryan wrote in his budget: “The tax code has become a broken maze of complexity and political favoritism, overgrown with special-interest loopholes and high marginal rates that stifle economic growth and job creation.” Is it ”fair” that green job boondoggles get a tax break and other energy producers don’t?
Romney threw the critics for a loop when he made clear that he would phase out deductions and credits for the wealthy, in essence preserving the progressivity (“fairness” in liberal-speak ) of the tax code. He explained this all when he rolled out his tax plan, but the media either didn’t understand or pretended not to, I suppose.
The whole tax “fairness” argument is a bit of a dodge, of course. The more fundamental question is how much of our country’s wealth should go to the government. The debate on big vs. not-quite-as big government isn’t one the left likes to have because polls generally show voters would take small government with lower taxes over big government and higher taxes. Asking how much should be taken from the rich bypasses that discussion.
Conservatives argue we should keep government and revenue at modest, historic levels (20 percent or less). Within that guideline we need pro-growth policies (including a tax code consistent with those policies) to ensure job creation and sustain a healthy economy. Is that fair? Well, it’s coherent and rather popular among voters (who choose job creation over reducing income inequality in poll after poll).
That is more than you can say for the Democrats who have grown the size of government far beyond historic norms, and who now want to collect the taxes to fund it and are pretending only the rich will pay. Is that fair? If you consider the negative impact on employment, economic growth and prosperity to be fair.
Daniel J. Mitchell of Cato writes: “Do you think it is more important to have a tax policy that raises the most revenue at the least cost in order to maximize job growth and economic opportunity or to have a tax policy like the Buffett rule, which falsely claims it would make all millionaires pay a higher tax rate than their secretaries?” It is healthy and proper to have the debate, but everyone should be clear about what “fairness” means, at least to them.