Politics

Democrats and Taxes

An interesting confluence of media inputs prompts this post about the Democrats and taxation. One was an op-ed piece in today’s WaPo by David Broder, the other a hilarious speech by Thomas Frank heard on NPR (haven’t been able to find a free version, paid for audio here).

Broder basically asks what plan the Democrats will propose to right the fiscal wreck of the Bush administation and the bloated deficits it has offered the country. The answer, from the DLC, is "short-term tax increases in return for long-term savings on entitlement
programs and improvements in the administration of government."

Frank’s radio lecture was basically a recapitulation of the themes of his book; how Republicans have won over working class voters with "moral values" rhetoric, despite the fact the Republican economic agenda is antithetic to their well-being.

I believe Frank is correct in some degree in his diagnosis, but his proposed cure — Democrats being Democrats, and offering a traditionally liberal economic agenda — would probably result in Walter Mondale/Michael Dukakis electoral drubbings.

The key issue here is taxes. The Republicans’ key economic plank that has appealed to working class voters (and many, many others) is "lower taxes." Most voters already feel like they pay a lot to the government when it’s all added up (federal income tax, social security, state income tax, property tax, and so on). Republicans have cleverly and effectively used the issue as a wedge for twenty five years.

This is not an issue most Democrats intuitively understand, so classicly illustrated in Broder’s column. Our knee-jerk reaction is to balance the budget through higher taxes. A year ago, commiserating over and analysing the 2004 election results with college friends, one, a senior political correspondent for the WaPo, asked (heretically!): "Don’t we already pay too much in taxes?" I was living in the UK at that time, thought about his question, and realized that indeed I was paying about the same (or less) in total taxes than I had living in the United States when local, social security, and property taxes were all included. And, arguably, I was getting far more value for my taxes in the UK — free medical care, free education (more or less) for my children had we stayed, a far better public transportation network, lower crime.

Balancing the budget, and getting our financial house in order, must be priorities for the Democrats. But it would be a mistake for the Democrats to even think about tax increases at this point, except very small, targeted ones that don’t affect most voters (like the estate tax). Far better to address spending, to propose difficult (and certainly hard) reductions where possible, and to offer innovative ideas on how to harmonize local government and federal spending so that the cumulative burden is lessened.

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