- The Washington Times - Monday, September 1, 2008



Sitting here in the great Twin Cities, where today the Republican convention kicks off, I am reminded of one of the most important distinctions between the parties; their stance on taxes. In this election, Democrats have argued that high income earners should shoulder a disproportionate share of the tax burden. Republicans, conversely, have argued for and received relatively lower tax rates on capital gains from business activity and some forms of personal income; their argument has been that lower taxes on business and investment leads to job and income growth in the economy at large. Both of these positions ignore a fundamental principle of our democracy and of justice in general: equal treatment under the law.

The fundamental moral and political philosophy of equality means that each individual should be treated the same under the law. Whether the citizen is an individual who earns minimum wage, or a multi-billion dollar corporation, they should be treated the same under the tax code. Discriminatory tax rates violate this principle and harm the economy by discouraging investment, advantaging one economic class over another.

A voter who goes into the voting booth without the corresponding responsibility to pay taxes, might be less likely to weigh the tax implications of a particular government program or political platform than a taxpaying voter. If the voter is off the tax rolls, or has taxable income capped at a certain numerical threshold, there is no cost to voting for the politician promising additional expensive government programs. A voter who is on the tax roll, is more likely to realize that the program has a cost, andcan then make a judgment whether the program is worth the additional tax dollars.

Tax inequality results in political arbitrage that ultimately disadvantages all citizens. Politicians believe that they can essentially buy the votes of the lower class by promising programs that primarily benefit low income tax voters, at the expense of middle and upper income taxpayers. Conversely, political campaign dollars are raised by politicians from middle and upper income taxpayers, who are promised large government contracts and favorable legislation that benefits corporations and high income individuals, and reduce government spending on needed infrastructure and social programs such as education.

For example, when Barack Obama says he is going to give all families a $1,000 subsidy for higher oil prices to be paid for by taxing windfall oil profits, he is trying to buy votes of low income voters with a subsidy paid for by middle and upper income taxpaying voters who own the stock of oil companies. On the other hand, when John McCain urges increased military spending for a war in Iraq that primarily benefits oil interests, and is funded by massive public debt, he diverts tax dollars away from education, domestic infrastructure, and other programs that are paid for by lower and middle income earners.

America’s corporate income tax rate is much higher than it should be. It is easy for politicians to raise the corporate tax rate because most individual taxpayers and voters do not understand or appreciate that they are hurt by high corporate tax rates in several ways. If corporations get a better after-tax return in a foreign country with a lower corporate tax rate, they tend to send profits from their businesses to jurisdictions with lower tax rates. This results in lower productivity and stagnant employment growth in the United States.

On the other hand, we all expect the government to provide public goods at a subsidized rate: these include roads and bridges, as well as to provide for the national defense. Often, these goods are critical to the functioning of the country and cannot be left up to market forces. Providing public goods almost always has a redistributive effect, in that users of the goods are not charged differently according to their use. Someone who uses a public swimming pool, for example, generally pays the same tax as someone who does not use the public pool. However, the inequality in cost allocation is generally understood as an inefficiency that is compensated for by the overall benefit to society.

Attention to the principle of equality under the law will help to cut through all of the propaganda surrounding the tax code. All income should be taxed at the same rate, and loopholes and deductions should be kept to a minimum. In that way, Americans will be able to move as one when it comes to matters of mutual concern. One thing is for sure, when it comes to America’s future, a divided stand on taxation will surely lead to our downfall.

rmstrong Williams’ column for The Washington Times appears on Mondays.

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