As The Washington Post editors themselves suggest, any debate where one side (W. R. Grace & Co.) must pay roughly $22,000, non deductible, for an advertisement to present its case, while the other (The Washington Post) can do so for zero out-of-pocket cost is not exactly in keeping with Robert's Rules of Order. Nor can anyone long afford to continue such an unequal joust. So The Post's advertising department can stop salivating as of now.
Since we cannot literally afford to have the last word, we shall be content with the next-to-last. And this is it.
Inflation hurts everyone, taxes or no taxes. Taxflation -- the combination of taxes and inflation -- hurts everyone even worse. In practice, the lower incomes are hurt the most because the so-called bracket creep keeps pushing them into high tax brackets, while some higher incomes have already reached the maxiumu 50 percent tax rate on earled income (70 percent on "unearned"), and there simply is no higher rate to go to.
Those simple facts aside, the Reagan tax proposals were not intrinsically designed to favor anyone except the economy. Not the rich. Not the poor. They are literally tax cuts "across the board," if a little shorter, otherwise virtually unchanged. If you think the present tax-rate structure favors the rich, then, as far as you are concerned, it still will. If you hold the opposite view, that for you will still be valid. If you choose to use buzzwords commandeered by the populists, such as "progressive" and "regressive," that too is your option, and they do not change.
What you cannot do is use one criterion to set up "the board" originally, i.e., the U.S. tax system, and another to measure the results after the cuts. If the rich pay higher taxes, any cut in their taxes measured in dollars will be greater. That, we maintain, is only fair. That, others maintain, is unfair. In the end, it's a little like faith: You really can't argue about it intellectually.
Leaving that interesting -- and expensive -- argument aside, the basic fact is that the Reagan tax proposals were designed not to redistribute wealth, following some egalitarian scheme, but to reduce the marginal, or highest, tax rate for everyone's last dollar of income so that there will be an incentive to work harder and invest more because everyone gets to keep more of additional earnings. And the Reagan proposals are not thereby heartless, as the opposition claims. They are in fact "compassionate" in the broadest sense of the word: compassionate toward all the citizens of our country who would benefit from a strong economy.
That is the administration's theory, and the resulting supply-side stimulation is believed to be the best medicine for the country's inflation. We don't know for sure that the supply-side theory will work. We hope it will. What we do know is that nothing else has.
We also know, parenthetically, that cutting the maximum tax on capital gains from 49 percent to 28 percent, which Congress did in late 1978, achieved its purpose. Equity capital raised by small companies to get started, one of the measures of the success of the tax-cut stimulus, was higher in 1980 than in 1978 by an astonishing 820 percent even though 1980 was a recession year.
Now to get back to our argument with The Washington Post in the only way we know how: with numbers.
While we disagreed with The Post's editorial, we were surprised and gratified that, if nothing else, our running argument had served to upgrade, in an economic sense at least, the quality of The Post's editorial style. It is now using numerical tables or charts in its editorial columns. We cannot remember the last time it did that. Anyone who uses charts can't be all bad.
But we must go one step further. We have to get The Post to use complete charts. In supporting the argument against us, The Post left out two essential columns in its chart. The missing columns compare -- as we do in columns 2 and 3 below -- tax rates that would apply to various earned income levels in 1984 if (a) the present law were to remain unchanged, and (b) the present law were to be changed according to President Reagan's proposals. That comparison, we submit, tells us who would receive the greater cut in tax rate, whatever the inflation, if the Reagan plan is enacted into law: [CHART OMITTED]
As compared with present law, the Reagan proposal would grant every income level a tax-rate reduction. And even allowing for the tax-bracket creep, which clearly hurts lower-income brackets, the largest percent reductions in 1984 would to to the lowest incomes -- 62 percent more for the $10,000 taxable income earner than for those in the $100,000 bracket.
Yet important segments of the media have reported -- and continued to report, feeding apparently on themselves -- that the Reagan tax-reduction plan is skewed in favor of the higher tax brackets. This conclusion results from an incorrect comparison of current law rates on 1980 income with the Reagan rates on inflated 1984 income . The proper comparison, of course, is to examine both the Reagan and current law tax rates on 1984 incomes as we have done.
And still The Washington Post in its April 9 editiorial rhetorically asks:
"Question: If Grace is right, why do the poor come out paying heavier tax rate at the end of those four years, while the wealthy pay lighter rates?"
The answer, as you can see, is simple. They don't.
On April 12, yet another article in The Post questioned the ability of the Reagan proposal to reduce marginal tax rates. We can't take on every Post argument (it is, in fact, the same old story: They compared disparate years, 1980 v. 1984, apples to oranges), but we did note one concession by Post writer John Berry. He wrote:
"Of course, the Reagan proposal would leave all taxpayers much better off in 1984 than if there were no cut at all."
We heartily agree.
So, let's quit arguing and let's get on with enacting legislation. Because the people -- the people who cared enough about the country to vote -- have indeed spoken.