In addressing national debt without considering taxes, American politicians are willfully and irrationally ignoring one of two levers that bring budgets back to balance. They are not only making the problem twice as hard by rejecting half the solution, they are shifting all the pain of debt reduction onto those least able to bear it (recipients of government service) while holding harmless those best able to contribute: the super wealthy.
Reactionary conservatives try to have it both ways by scaring voters into believing that any proposed federal income tax increase would apply to a broad swathe of the middle class, while at the same time complaining that the majority of federal taxes are paid by a minority of citizens at the top of the income scale. The reality is that federal income taxes (though not payroll taxes, state and local sales taxes, and other regressive levies) are predominately a burden of the relatively well-off...as they should be.
Poorer people have a hard enough time just getting by (including paying all those regressive taxes); federal income taxes should be borne principally by those who have benefitted most from our national polity and culture. The simple theory behind progressive taxation--that is, taxing richer people at higher rates--is that taxes come from surpluses: what’s left over after you’ve fed, clothed and housed yourself and your family. Poorer people have very little or nothing left after meeting the bare necessities; richer people have a lot, so they should contribute more of it to the common good in the form of taxation.
And yet in the past 30 years, taxes on the wealthy and the kinds of income on which they chiefly rely (dividends and capital gains) have plummeted: the top tax rate is half what it was when Ronald Reagan took office, and unearned income--money that money makes--is now taxed at lower rates than working people’s paychecks.
The inability of most voters to conceptualize the dizzying wealth of some of their fellow citizens aids the anti-tax zealots in making taxes politically toxic. Hearing that taxes may go up on the wealthy, average Americans might picture the intended targets as people like their Uncle Harry, who owns a hardware store, two cars and a boat. They don’t think about the hyper-rich: those with hundreds of millions or billions of dollars in assets, enjoying the annual income of small countries, who could easily pay much more without impinging in any way on their way of life or desire to invest in the economy.
Before we wrest one more dollar from Head Start and winter fuel subsidies, let’s cast our eyes to the other side of the ledger, bringing this whole budget-balancing exercise into rational balance by making higher taxes on the rich part of the equation.