Progressive Taxation: Some Hidden Truths

At this time of year it seems there are only two things certain in life, taxes and anxiety about taxes. Instead of the perennial talk of a simplified tax form, how about a simplified understanding of the progressive values that underlie our tradition of progressive taxation?

Such an understanding won't move the tax deadline. But it might eliminate some of the anxiety. Understanding the hidden truths behind progressive taxation might also lead to more coherent -- and more just -- tax policies.

Progressive taxation -- taxing the wealthy at higher rates than the poor -- is a moral issue. Like many moral issues, it sparks heated debate. The debate is borne of conflicting worldviews, values, and understandings of values. But as we at the Rockridge Institute have written, when progressives understand the values and ideas that underlie their positions on issues, they can articulate arguments authentically and with greater persuasive force. These arguments will appeal to those whom we call biconceptuals -- the great majority of Americans whose worldviews borrow in various ways from both progressive and conservative values.

America's government has at least two fundamental functions, protection and empowerment. Protection includes the police, firefighters, emergency services, public health, the military, and so on. Empowerment includes the infrastructure needed for business and everyday life: roads, communications systems, water supplies, public education, the banking system for loans and economic stability, the SEC for the stock market, the courts for enforcing contracts, air traffic control, support for basic science, our national parks and public buildings, and more. We are usually aware of protection. But the empowerment infrastructure, provided by taxes, is usually taken for granted, hidden, or ignored. Yet it is absolutely crucial, a fundamental truth about America and why America provides opportunity.

This is a basic truth. That is what framing should be about: revealing truths and allowing us to reason using them.

Taxes are part of our common wealth, what we all share. Protection and empowerment serve the common good. Because of our common wealth, we are all protected and America's empowering infrastructure is available to all. That is a fundamental America value: the common wealth should serve the common good. It benefits everyone.

Citizens are financially responsible to maintain this common wealth. If we shirked this responsibility, we could not maintain our roads, fund our schools, protect ourselves from military threats, enforce our laws, and so on. Equally importantly, we could not create prosperity for ourselves, because we would have no protection of our intellectual property, no oversight of our markets, no means to enforce our contracts, no way to educate most of our children.

Several main progressive values support the idea of progressive taxation. One is the belief that the common wealth should be used for the common good. Another is responsibility, the responsibility that citizens have to pay for the benefits we receive from our common wealth. And still another is fairness. These values intertwine on the question of progressive taxation.

Few people dispute this responsibility at some level. Disagreements generally arise over the amount and the relative apportionment of the responsibility. Differing concepts of fairness drive this debate. While many progressives say it is only fair that those who earn more pay a higher percentage of their earnings as taxes compared to those who have difficulty making ends meet, conservatives respond by asserting that it is unfair to "punish" the financially successful by making them pay more.

An important point often lost in this debate is an appreciation that the common wealth, which our taxes create and sustain, empowers the wealthy in myriad ways to create their wealth. We call this compound empowerment -- the compounded use of the common wealth by corporations, their investors, and other wealthy individuals.