The totally baffling idea of a flat tax

Rick Perry, Newt Gingrich, and Herman Cain have all put out a flat tax plan of one sort or another. If you want to see what this will mean for you, here are the savings you can expect organized by economic quintile:

As you can see, if you are not rich, don’t expect much. But if you are rich, you will be rolling in it. Now usually I would just note that Americans already pay flat taxes if you take into consideration all taxes, not just income tax. That means introducing a flat income tax would just make the overall tax system regressive.

But what I want to get at in this post is the strangeness of flat taxes in general. When someone advocates for flat taxes, their arguments invariably rely on the idea that everyone should be paying the same rate, that we should not be punishing people who make more, and that it is unfair to do otherwise.

But these moral kinds of arguments for flat taxes are completely confused. If you wanted to make sure that we are not punishing those with high incomes by making them pay more, the flat tax does not achieve that. The flat tax does make rich people pay more. A rich person who made $1 million will pay $100,000 in taxes under a 10% flat tax, while someone making $10,000 will only pay $1,000. The rich person is being made to pay $99,000 more! Surely if you were interested in making sure people did not have to shoulder a higher tax burden due to income, you would favor taxing a specific amount of money, not a percentage of income.

But flat tax advocates ultimately balk at this idea. If you offered an alternative tax plan where everyone paid $10,000 in taxes no matter how much income they made, almost no flat tax supporter would support you. But why? I suspect it is because flat tax advocates already buy into the idea that $1 to a poor person is not the same as $1 to a rich person. In economic terms, income has diminishing marginal utility. The richer you are, the less losing a dollar will hurt you.

But the response to this observation is not to impose a flat tax. That does not equalize burdens. Just like $1 to a poor person is not the same as $1 to a rich person, 15% of income to a poor person is not the same as 15% of income to a rich person. Broadly speaking, losing 15% of your income while making $10,000 per year will impose a much greater burden than losing 15% of your income while making $1 million per year. So, under the theory that we want everyone to shoulder an equal tax burden, a progressive tax system where the rich are taxed more is the only one that makes sense.

Thus the flat tax advocate is in a weird position. If he thinks rich people should not have to pay higher taxes, then he should favor taxing a flat amount, not a flat percentage. But he doesn’t favor that. If he thinks everyone should shoulder the same personal burden for taxes, then he should favor a progressive tax. But he doesn’t favor that either. So instead, the flat tax advocate winds up in this weird no-man’s land where no moral justification for his preferred taxing system really exists.

Arguing about property

There are many different philosophical ways to arrive at an economically leftist political position. One of those philosophical approaches — which I think has been somewhat neglected — is centered on the issue of property ownership. Unfortunately, many — even on the left — will concede that property rights exist, and that the institution of property makes sense. Those on the left who accept property rights typically argue that those rights are qualified by some other countervailing social concerns.

I think this is the wrong move: the issue of property should be attacked head on for the incoherent mess that it is. In the above video, G.A. Cohen gives a very simple explanation of the issues with property ownership. Political conservatives — especially libertarians — really like to emphasize the right of individuals to own enormous sums of resources by appealing to certain processes. They will typically talk about voluntary transactions and mutually beneficial exchange.

These talking points have all sorts of responses, but the quickest one is just to attack ownership outright. You cannot justify ownership based on free exchange because ownership necessarily does not originate from free exchange: at some initial point, someone had to just grab some piece of land without exchanging with anybody. This is logically unavoidable.

So the question then becomes: how can that possibly happen? If property is justified by voluntary exchange, then how can property ever come into existence at all given that the first owner did not voluntarily exchange with anybody? Now, there are all sorts of efforts to explain how that initial appropriation can occur. Philosophers like John Locke, Murray Rothbard, and Robert Nozick give famous accounts, and there is significant amounts of literature explaining just how spectacularly they all fail.

But the easiest way to understand how original appropriation cannot be justified within a conservative/libertarian framework is by focusing on the idea of opportunity loss. When an individual declares perpetual ownership of some piece of unowned land, every other human being on earth suffers an opportunity loss: their opportunity to use that land has now disappeared. Opportunity losses are real economic harms.

To be concrete about this, consider an example. The piece of land down by the river is owned by no one; so everyone can use it. Sarah declares — on whatever property theory she prefers — that the piece of land by the river now belongs to her exclusively. But, wait a minute. The previous ability of others to use the land by the river has now vanished! They have been hit with opportunity losses. If one of the dispossessed were to say “this is silly, I do not consent to giving up my pre-existing opportunity to use the land down by the river,” Sarah uses violence (typically state violence) to keep the dispossessed out.

Unless unanimous consent exists, the original grabbing up of property results in violent, non-consensual theft from others. It is really just that simple. What follows from that conclusion is that the conservative/libertarian positions that depend on the sanctity of property rights are totally bogus. For instance, you cannot complain that taxes violently take material resources from you without your consent when property itself is predicated on just that. You cannot claim your enormous wealth was gotten fairly when the ownership of that wealth is predicated upon the non-consensual violence just discussed.

Given that this absolutist property rights position is totally untenable, the only remaining issue is what do you put in its place. Exasperated libertarians — unable to actually defend ownership — will typically shoot back that there is no other way to do it. If ownership is by definition a form of opportunity theft, then how do we ever move forward?

The alternative is not that complicated: subject resource use — both production and distribution — to social negotiation, i.e. democracy. This is basically the position of anarchists on property use. It is also at the core of left-liberal contractarian theories like those of John Rawls, and neatly folds into discursive democratic theories like those of Jürgen Habermas. The basic point though is simple: resource use and access is not something for which there is an objective answer; the answer is democratic decision-making. Now, we can roughly imagine what a democratic decision-making process about resource use would come up with. It would almost certainly be more egalitarian both in production and distribution than the system we currently have.

By rejecting the underlying property assumptions, we can open up a very clear avenue towards understanding that resource use must be governed by social negotiation. As I said at the top, this is not the only way to arrive at an economically left position, but I do think it is a particularly fruitful one.

The American Dream and other attacks on deliberative democracy

The trope of the American Dream, or at least the phrase itself, has been making a comeback within the organizations that represent the American left. Most notably, Van Jones has dubbed his new project The American Dream Movement, and has established as its goal to “rebuild the dream.” What is the dream that we are rebuilding? Van Jones explains:

It’s the dream of a country where, if you work hard and play by the rules, you can live with dignity, provide for your family, and give your kids a better life. A country where we strive for greatness–and take care of each other when times get hard.

The American Dream Movement — assuming we can call a letterhead coalition built around a cult of personality a movement — is certainly not the only group that has summoned the American Dream trope in its messaging. Earlier this year, MoveOn.org put out two calls to action in response to the Wisconsin labor battles, one titled “Defend the American Dream” and the other titled “Rally to Save the American Dream.” Even less prominent groups are getting in on the game: the Caring Across Generations campaign recently put out an emergency call to action to “Protect the American Dream” in response to the now-resolved debt-ceiling theatre.

The first thing that strikes me about this messaging is that it is amusingly inconsistent. What are we supposed to be doing with the American Dream exactly? On some sides it appears that we are protecting, saving, and defending it — this implying that it presently exists, but is under attack. On other sides, specifically Jones’ organization, it appears that the American Dream has already been destroyed, and that we are trying to revive it. The communications professionals shaping this messaging need to come together to figure out which line they want to use.

On a more substantive note, using this trope in a way that implies it actually describes the reality of any time in the past or present is marginalizing and simply historically false. The American Dream has always been a myth for all but a select few in the population. Those who call upon the trope typically have in mind the post-WWII era as the period in which the Dream reigned. For groups that are supposed to be leftist in orientation, you would think that romanticizing the 1950s would be something obviously problematic. Suggesting that the time period was one where hard work paid coincidentally ignores the plight of women, people of color, and the poor white underclass, the very constituencies that these organizations attempt to represent.

Of course, dissecting the follies involved in relying on the rhetoric of The American Dream is a fruitless enterprise. It assumes wrongly that the public relations messaging, soundbites, and talking points put out by organizations actually attempt to make substantive points. We have reached a point — or maybe it has always been the case — where all of the communications coming from any prominent group, politician, or company are smothered in sugary manipulation that specifically intends to mislead.

Sadly, we have an entire profession — the public relations profession — whose sole purpose is to pollute public dialogue with slogans and phrases that score well with focus groups while simultaneously being completely devoid of content. Public figures are drilled to stick to limited talking points, and never genuinely engage with ideas or others. You can see this phenomenon in play in any speech, press release, or other communication coming from almost any organization or politician. You can also see it in the presidential debates, a quadrennial spectacle so awful that it can only properly be described as a mind-numbing show of talking point call and response.

What is most troubling about these practices is how functionally anti-democratic they are. Contemporary political philosophers have converged upon a definition of democracy as being “government by discussion.” This understanding of democracy — sometimes referred to as deliberative or discursive democracy — places public deliberation and reasoning at the center of an actually democratic state. The achievement of this state requires certain discourse norms or ethics, a point most prominently brought out by the philosopher Jürgen Habermas.

One does not need to delve too deeply into the idea of discourse ethics to realize that the present state of dialogue in American politics is antithetical to what would be required for a government by discussion — that is, a democracy. What kind of discussion is it when the most prominent and loudest voices are rattling off slogans and platitudes with the specific intent to avoid substantive ideas and positions? It is not a discussion at all. These “discussions” do not mimic discourse or reasoning; instead, they mimic corporate branding and advertisement.

If we hope to pursue an actual deliberative democracy — one that involves more than filling out ballots — this whole approach to communication needs to be done away with. When an organization uses messaging and communication that is only barely related to its own internal discussions and ideas, that is misleading and anti-democratic. It makes public reasoning and discourse impossible. All sides are guilty of this kind of discourse pollution, but the resurgence of the American Dream trope on the left is unfortunately the most recent instance of it.