Radical Taxation

Radical Taxation

Taxes demonstrate the legitimacy of democratic control of the economy. This is what conservatives cannot accept—and what surviving climate change will require.

This spring, legislators of both parties, from Connecticut to Georgia, responded to higher energy prices with “gas tax holidays,” temporary tax reductions for consumers that provide an additional windfall to the immensely profitable fossil fuel industry at precisely the moment when we should be ending the global warming economy. Thirty-six years after Grover Norquist first introduced the “taxpayer protection pledge”—by which thousands of legislators have committed to oppose all tax increases—American policymaking remains trapped in an anti-tax paradigm that leaves us unable to cope with the crises we face.

Given that the stakes are the habitability of the planet, paradigms might seem a relatively minor concern. But conservative tax opposition can lead us to imagine barriers to climate action that are in fact no great obstacle at all. For instance, most Americans are far more willing to pay for government services, and far less thrilled by tax cuts, than is generally believed. Anti-tax thinking also, ironically, makes taxation loom excessively large in our policy imagination, as though taxes are the only power governments have over the economy.

The shortest road out of the anti-tax swamp is to face tax opposition head on. But to do so, we must grapple more seriously with what might seem like an easy question: what conservatives hate about taxes. The common but incomplete answer is that taxes can be progressive, and thereby reduce wealth concentration. But conservative tax antipathy is not simply a bulwark against a more equal distribution of wealth; it stems from a recognition that taxation, more than other economic policies that have an equal or greater redistributive capacity, rests on the principle that private property can be reassigned to public purposes—simply because public works are worthwhile.

In other words, taxes demonstrate the legitimacy of democratic control of the economy. This is what conservatives cannot accept, and what surviving climate change will require.

Anti-tax politics in the United States is often ascribed to an immutable aspect of the American character—either a laudable preference for individual effort or a childish unwillingness to pay bills. But these arguments lack an empirical foundation. In surveys, most Americans report that they are personally willing to pay more in taxes to improve education and healthcare and reduce poverty and homelessness; when it comes to Social Security and Medicare, more Republicans prefer tax increases to benefit cuts. About three-fifths of Americans say they are bothered “a lot” that corporations and the wealthy are not paying their share, compared to a third who say they are bothered “a lot” about the amount of taxes they themselves pay. Plans to tax the rich are consistently popular; they receive extremely high support from Democrats plus substantial support from working-class Republicans. Most low-income Republicans even support the estate tax once they learn it is only the very rich who pay it. Anti-tax hysteria is not a psychological condition of the American people; it is a pathology of American politics.

For at least twenty years, tax cuts have not been popular with voters. George W. Bush and Barack Obama both cut income taxes for the vast majority of Americans, but polling shows that most voters forgot about the breaks they had received long before the next election. When Hillary Clinton and John McCain each proposed a gas tax holiday in 2008, the idea was not popular with voters. The Trump-era Tax Cuts and Jobs Act fared even worse; the legislation is remarkable for having been less popular at the time of its passage than the tax increases under Bill Clinton and George H.W. Bush.

Conservative anti-tax rhetoric is not, therefore, tapping into some deep wellspring of popular hatred of taxation. Nonetheless, taxation remains a reliable bogeyman of the Republican Party. This winter, Florida Republican Senator Rick Scott learned this lesson the hard way when he advocated that “all Americans should pay some income tax,” a proposal that would raise taxes predominantly on the poor and working class. Scott may have thought he was safe with such a regressive plan, but he was wrong. He was immediately excoriated by Republican leadership and on Fox News for planning to raise taxes.

Scott’s heresy was suggesting that the income tax should ever be raised, under any circumstances, for anyone. Income taxes continue to abide in a special sub-basement in the lowest circle of conservative Hell. It might seem obvious why: put bluntly, income taxes could take money from rich people, and that money might be spent on poor people. The full answer is more subtle, and worth understanding if we are to have any hope of preventing civilizational collapse.

Tax policy can either buttress or undermine economic hierarchy. Usually, taxation is arranged to reinforce privilege. (The word privilège, meaning “private law,” referred to the special immunity nobles and the clergy had from paying taxes before the French Revolution.) In the United States today, the tax system heaps additional advantages onto the white and the wealthy. Income tax breaks for homeownership, health insurance, and college savings exacerbate the racial wealth gap. Grocery taxes make poor people go hungry. Still, the egalitarian potential of progressive taxation is extraordinary. For decades after the Second World War, progressive income and estate taxation kept America’s economic inequality in check. The rollback of those taxes led to our contemporary oligarchy. The last forty years of wealth concentration could have been almost entirely prevented by an annual wealth tax with a top rate of only 8 percent.

Taxes are also egalitarian to the extent that they fund the welfare state, and this, too, provokes conservative ire. Aficionados of what is commonly but dubiously termed the “free market” actually favor heavy state involvement in the economy to create what Mike Konczal calls “market dependency”: systems of law under which people must rely on markets outside of their control to acquire things that they need to survive, like housing, healthcare, and food. In the place of a welfare state, conservatives argue poverty should be mitigated through charity (ensuring that access to both market and non-market subsistence is dominated by the preferences of the wealthy) and the traditional family (a system in which care for workers and non-workers—children, the sick, the elderly—is provided by women for free). Charity and family will never eliminate poverty, and poverty ensures business owners and consumers a pool of workers too desperate to contest their meager compensation. Tax-funded public goods and entitlement programs are effective at reducing poverty and therefore threaten the domination and exploitation that poverty makes possible.

Thus anti-tax rhetoric is intended both to shield the rich from taxation and to starve government services that increase the autonomy of poor and working people. It also usefully distracts from the government’s larger role in the economy. Although conservatives treat taxation and welfare spending as uniquely dangerous interventions in an otherwise self-regulating and natural economy, the government is in fact constantly engaged in the business of wealth distribution. The three largest redistributions of wealth in American history were the direct result of government action: the seizure of the land of native people and its division among white settlers and speculators; the defense of chattel slavery; and emancipation. But we need not look at the most extreme expropriations to recognize that politicians and bureaucrats constantly make decisions that rapidly alter the distribution of enormous sums of money. Billions of dollars hang in the balance when the U.S. government determines what is legal business (like marijuana sales or stock buybacks), decides what can be owned and how (like patents or emissions credits), or protects certain owners instead of others (like who gets bailed out or how the police behave). Government intervenes in the market in the same way your skeleton intervenes in your body; it is the organizing structure, not an external force. All economic allocations, from the greatest fortunes to the deepest poverty, are political products.

What is distinct about taxation is not that it somehow changes distributional outcomes more than other economic policies, but simply that it seems to occur after an initial distribution. Taxes therefore appear to reclaim private property and deliver it to the public. But taxes are not really an “after the fact” policy; they are generally predictable and therefore affect decision-making before the tax is applied. For example, high-income taxes reduce the incentive for corporate boards to overpay executives. More fundamentally, pre-tax income and wealth are fictions, because taxes fund the state that defines and defends property rights in the first place. As the philosophers Liam Murphy and Thomas Nagel point out, what most of us would earn absent taxation is nothing, because most of us would struggle to survive in a government-free state of nature.

Still, you can typically calculate how much more money you would have if for some reason you, alone, didn’t have to pay taxes on this paycheck or that purchase. Philosophers and economists can say what they will; taxes take money out of your pocket, or at least it feels like they do. In other words, taxes are unique because they remind us that private property, legitimately held, can nonetheless be redirected to public purposes.

What is more, taxes suggest that this fundamental primacy of the public interest is utterly ordinary. Where fines and forfeitures are premised on the putative misbehavior of the payer, most taxes (barring “sin” taxes) are applied on activities that are deemed respectable: legal ways of acquiring, selling, and owning. Taxes are not just both radical and boring; they are radical because they are boring. Taxes normalize the reassignment of private property to the state, and therefore wield the everyday power of the polity over the economy.

Because taxes are a daily demonstration that private gain is subordinate to the public interest, taxation becomes controversial when the scope of the public is contested—that is, when there is the potential for democratization. Taxes in America have not always been the subject of partisan vitriol; in the mid-twentieth century, federal tax policy was not a major component of the political platform of either the Democratic or the Republican Party. This period of fiscal consensus collapsed, not coincidentally, after the civil rights movement restored voting power to black people. The economic upheavals of the later twentieth century ensured that policymaking would have been complicated under any circumstances, but it is racial backlash that called into question the very project of democratic governance of the economy. In the Reagan era, as during the white supremacist reaction to Reconstruction, taxes were strategically useful to conservatives in turning working- and middle-class whites against tax-funded government spending that would benefit black people as well as whites. As anyone could guess who remembers Reagan’s dichotomy of the hard-working taxpayer and the welfare queen, anti-tax politics succeeds when it latches on to American racism in order to deem the entire endeavor of democratic government corrupt. Conservatives find taxes objectionable because they find democracy objectionable. They do not believe that the public interest, as determined by a democratic majority, should take precedence over private accumulation.

What is disheartening is that, for forty-some years, Democrats have rarely contested the Republicans’ core claim. The asymmetry here is important. Republicans design tax policies that predominantly aid the rich, but rhetorically, their antipathy is to all taxation. Democrats do not hold the opposite position. They favor taxes that fall primarily on the rich, but they do not defend taxation on principle.

Instead, Democrats are eager to insist that they will not raise your taxes. President Obama, for example, raised taxes on the rich while cutting taxes for everyone else. In his State of the Union Address, President Biden held a similar line, promising that “nobody earning less than $400,000 a year will pay an additional penny in new taxes.” Many progressive national Democrats twist themselves in knots rather than propose a broad-based tax increase. As recently as 2015, Bernie Sanders shied away from admitting his proposals would increase taxes on middle-class households. In 2019, Elizabeth Warren insisted her Medicare for All plan would not raise taxes on the middle class. This claim was strategically misguided both because it was unconvincing and because broad-based payroll taxes are among the most popular taxes Americans pay. But it was also a missed opportunity to make the affirmative case for public goods over private profit, and to defend the legitimacy of democracy in the economic sphere.

Rather than making a case for taxes, Democrats have, at best, demanded more progressive taxation. Doing so contests the inequity of Republican tax policy: good and important, but inadequate. There are any number of excellent reasons to make taxation progressive, from the mild (the rich can afford it) to the militant (the rich are only rich because they exploited the poor). My personal favorite is Thomas Paine’s: extreme wealth should be taxed away because it undermines the equality essential to the functioning of republican government. But the case for taxation is not, and should not be, simply that it is progressive. In a democracy, taxes assert the right of the people to prioritize the public welfare ahead of private accumulation. Focusing exclusively on raising taxes on the extremely wealthy studiously avoids the essential proposition that the public interest is worth paying for—and that we are all responsible for paying our share. 

In retrospect, it is obvious that the forty-year failure to defend democratic taxation would leave Democrats unprepared to defend democracy. Having for decades benefited from minoritarian institutions under the U.S. Constitution, Republicans have become increasingly willing to distort election rules to win, and to overturn election results if they lose. Democrats, on the other hand, have failed to pass legislation to ensure fair elections or make long-term material improvements in the lives of most Americans. Instead, we get gas tax holidays—an especially futile variation on the position that what middle America needs is a tax cut, and that the best government can do is to do less.

Conservative frothing over taxation serves many purposes. One is to naturalize and depoliticize “pre-tax” market distribution. In other words, an overemphasis on taxation distracts from the government’s many other powers over the distribution of wealth and the functioning of the economy. All of those powers—not just taxation—will be needed to limit the impending climate catastrophe.

Taxation on its own won’t stop climate change. Taxes are by their nature incremental, the ideal policy to help achieve steady outcomes over time, like ensuring well-funded child care or preventing wealth consolidation. A carbon tax could be a plausible solution to global warming only if it were accompanied by the time machine required to implement it fifty years ago. Today, the scale and speed of effective climate action is simply not well matched to fiscal policy solutions.

Global warming is an existential crisis and therefore requires an immediate wartime footing. War is the right metaphor, not only because it captures the scope of the endeavor and the destruction that will accompany our inaction, but because it lays out the fiscal strategy. In the face of cataclysm, you regulate, nationalize, conscript, and above all, spend . . . then you tax. Twentieth-century democracies only adopted and expanded progressive taxation once they were mobilized for a total war. And those taxes were popular, as political scientist Andrea Louise Campbell has demonstrated. In 1943, when Gallup asked Americans, most of whom had never paid federal income tax before the war, whether their taxes were fair, only 15 percent said no. (That figure is 43 percent today.)

What was it about mass warfare that made taxation—and progressive taxation—not only very popular, but possible? For one, a shared threat makes a compelling case for shared sacrifice. But I think there is more to it. We have no shortage of shared threats today, and markedly little shared sacrifice. Indeed, we have a major political party so preternaturally opposed to sharing that not even risks can be admitted to be held in common. And this is where the government actions associated with mass warfare are so important. The government’s response to war helps the citizenry recognize what is at stake; conditions become problems when we believe they can be solved. When war provokes governments to engage in massive, up-front public spending, it demonstrates what the country is capable of and allows people to choose action over denial. The result is high morale, even when difficult things are required.

By the end of the Second World War, the United States was spending 40 percent of GDP annually on the war, the equivalent of about $9 trillion a year today. I need hardly mention that our current plan to address climate change is nothing like the plan to defeat Hitler. What we are doing today is more like sending the Nazis a sternly worded letter and a blank check.

It is hard to keep faith in the power of ideas when what is so clearly needed is not talk but action. But I believe that the Herculean task ahead demands that we entirely overturn the anti-tax politics that has dominated American policymaking for my entire lifetime. That includes the misperception of Americans as unwilling to pay for public goods, the wrong-headed tactical assumption that low taxes are good politics, and the neoliberal sleight-of-hand that makes taxes appear as an exceptional interference in a natural economic order.

Ending the anti-tax era also requires recognizing that what is anathema to conservatives about taxation is not merely their economic effects but their political implications. Yes, conservatives dislike taxes because they are redistributive. But the redistribution they object to is not only from the rich to the poor. Taxes always, every day and by definition, redistribute wealth from private interests to the public. Taxes assert that private property is under the control of the polity—in a democracy, the people. This is precisely what we need to do if we are to preserve a livable planet. The principle of taxation so hated by conservatives is the principle that the common good comes first, and this is the principle for which we are fighting.

Vanessa Williamson is a senior fellow in governance studies at the Brookings Institution.