The Counsel of Trent

writing is thinking

Tuesday, December 20, 2005

Taxes and Fairness: A Plea for Sanity

It is *highly debatable* which economic policies benefit the needy. I work with some *extremely* high level economists here at the U and the macro-economic models are very complex and often contain surprising results. Ultimately, tax policy should be set by an apolitical entity like the interest rates are at the Fed. Democrats and Republicans can agree about this: they all love Greenspan. What a disaster for the economy if interest rates were set by congress! Which tax policies best help the needy is an empirical matter and should be decided by social scientists in an apolitical manner. If income caps of a million dollars a year would best help the needy, then I’d be for them. The problem is that that’s not what the data suggests. As JFK suggested forty years ago, tax-cuts can increase revenue. This also happened under Reagan. I haven’t seen the numbers on the Bush tax-cuts yet. The idea that tax policy fairness is measured by the difference in who gets what back is, from a social science point of view, as different from economics as astrology is from astronomy. Look man, here’s the pie
http://mwhodges.home.att.net/95budget.gif
What are the percentages of? They are percentages of money spent. Where does the money come from? Primarily tax revenues. So the question for those who want to use the tax policy to achieve fairness is how to get X, the total money spent, to be the biggest it can be so that .59*X is bigger. If tax cuts increase X, then they increase social spending. History has shown that this can and does happen. Some macroeconomic models show that this is almost guaranteed to happen. Maybe not, it’s highly debatable and in the end an empirical matter. It’s a really difficult issue for those of us—like myself—who believe in redistributive taxation for the sake of fairness (i.e. leveling the playing field). I’m not interested in partisan politics. I want to help the needy and I want to do it in the most effective way. If national health-care would make people better off, then I’d be for it. It’s far from obvious whether it would, it doesn’t always seem to do so in other countries. So here’s the bottom line. On certain socioeconomic issues—like taxation and healthcare—it is a matter of considerable unclearness what the best course of action is so accusing either party of not caring is childish (individual persons might have evidence brought against them). Both sides have a theory of how to help the needy: the Left’s is fairly common sense: rob from the rich and give to the poor. Maybe that will work, maybe not. The Right’s is fairly common sense: a rising tide lifts all boats. Maybe that will work, maybe not. Like most complex issues, lots of maybes. But here’s something that’s not complex, it’s simple and there are no maybes: ABORTION KILLS BABIES. I’m not about to let the things I’m NOT sure about—whether the Left or the Right is working with the better theory of economic justice—derail what I AM sure about—that abortion is murder. I vote from what I know, not from what I don’t know (I also try not to pretend I know what in fact I don’t).

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