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Do the Rich Really "Need" Lower Taxes?

By Scott Gillette
sgillette@politicalusa.com

3/2/2001

 

President Bush’s speech before Congress pointed out tax cuts are required in order to jump-start a sputtering economy, and our surplus is large enough to support such a cut. This argument is so right that the tax cut should be much larger than it is. However, one aspect of the Democratic response to Bush’s speech needs to be critiqued on a philosophical basis. 

The long-running mantra of the Democratic Party is that Republicans want to cut taxes simply because they want to help the rich. Part of this is self-serving rhetoric; after all, Bush’s tax cut plan contains larger tax cuts for the middle-class than the Democratic counterpart does. The Bush tax plan also contains tax cuts for lower-income groups that are larger in percentage terms than the tax cuts for upper-income groups. However, this liberal criticism raises a legitimate question: why should rich people pay less in taxes?

One’s answer to this question depends to a great extent upon one’s ideological stance on the role of government. For those who believe that the less government the better, any loss of absolute or relative power of the government is a gain for society. However, for those who view government as an indispensable or just useful instrument for insuring equity within a society, any argument that the wealthy should pay less in taxes is not going to win any converts. This latter group is the one that has to be won over if deeper tax cuts are to be enacted, and because of that, I would argue that proclaiming the rich “deserve a tax cut” should be scrapped.

A leftist friend of mine believes that the Republican Party as a whole has a sense of entitlement about its “right” to rule and its right to provide itself with less taxes to its “clients”. I would counter that the Republican Party cannot merely be described as rich exclusively, because otherwise they would never win any elections. Most people who vote Republican are not rich. Many rich people do not vote Republican. Still, saying that the rich “deserve” a tax cut is to identify with a group of people who, when all is said and done, do not need any help.

Human beings have a tendency to identify themselves with the plight of the powerful. This tendency may be a natural one, as the instinct for survival and advancement leads people to cater their mindset to those who can help them instead of those who cannot. Maybe people are natural social climbers as well. (Anyone who has been employed anywhere will notice that certain people “kiss up” to those above them and
“kick down” those below them.) Or maybe society is responsible for this condition, as we place greater importance on those on the top, despite occasional platitudes to the contrary. (If you turn on a TV at any time, you’ll see entertainment shows that discuss the rich and powerful in Hollywood, political and business news shows that discuss the rich and powerful in Washington, and content that venerates the rich and powerful everywhere else.) 

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But regardless of whether human beings are born or bred to concern themselves with the fortunate, this is a mindset that should be counteracted whenever possible. The vast majority of people in this world are motivated by a desire for significance from others rather than by a love, broadly defined, for others, but this is a trend worth avoiding.

So what does this have to do with tax cuts? Well, if supporters for tax cuts argue that the rich deserve lower taxes on the basis that they’re the producers in our society and need to be rewarded for this reason, they won’t get very far. Such an argument assumes that other members of our society aren’t as productive, when in fact they make the wealth of capital-holders possible in the first place. It also leaves the impression, correctly or otherwise, that the rich have a special status just because they are rich.

It would be better to stress that tax cuts would benefit the bottom earners the most, precisely because we live in a hierarchical, top-down society. A tax cut may make a rich person richer, but more importantly, it may make the difference between someone keeping or losing his or her job. Indeed, a tax cut means hundreds of thousands of jobs gained or lost in the next couple of years alone. Labor depends on capital to exist, and if capital is less plentiful, then labor is less plentiful as well.

This insight may be very difficult to translate into a sunny and reassuring stump speech, but I believe it needs to be tried. A positive spin of this message is that “we are all in this together.” And we are. Rich people, like it or not, make large investments possible. Some merely will merely indulge themselves, but others will make the investments that will make the advancements in technologies like computer chips and wind and solar power, or new businesses and jobs: in short, our common future.

Much of what constitutes politics pits the strong against the strong, and I realize more and more every day that I have no dog in that fight. However, I am interested in seeing the economy resurrect itself, and in living in a society where tax revenues and private opportunities of all kinds are optimized. Bush’s plan is a small step in the right direction, but it should be defended for the right reasons.

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© Scott Gillette, 2001

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