Paying A Fair Share

Paul Waldman

January 31, 2007

Paul Waldman is a senior fellow at Media Matters for America and the author of the new book, Being Right is Not Enough: What Progressives Can Learn From Conservative Success. The views expressed here are his own.

These are heady times for Democrats. They took back both houses of Congress, then immediately passed their 100 Hours Agenda through the House, just as they had promised. On the most important issue of our time—Iraq—their criticisms have been vindicated and the public is overwhelmingly on their side, not to mention the fact that Republicans are deserting President Bush like rats from a sinking ship. As the 2008 presidential campaign begins rolling, the Democratic hopefuls as a group far outshine their Republican counterparts in talent, experience, political smarts and even charisma (think about what a change that is).
 
So this is precisely the time to be thinking not just about what’s going to happen in this session of Congress or in the upcoming presidential campaign, but in the years and decades to come. This is the time to lay the foundation for enhancing and sustaining a long-term Democratic majority.
 
In recent years, the most cutting criticism of the Democratic Party has been that it doesn’t know what it stands for. This attack may have been exaggerated by a contemptuous press corps, but it contained some truth: Because Republicans have for so long defined their ideology in the simplest possible terms, by comparison Democrats have looked muddled, scattered and consumed with the dreaded “nuance.”
 
So now that they are in the best political position they’ve had in over a decade, Democrats need to start defining for the public—and for themselves—not just where they stand, but why they stand there. In the coming months in this space, I’ll be addressing this question as it relates to a number of different issues, but today’s topic is taxes.
 
As in so many other areas, what Democrats have lacked on taxes is a first principle, a fundamental statement of values that explains why they take the positions they do on the appropriate income tax rates, on whether the cap on payroll taxes should be raised, on whether the estate tax should be eliminated or on how much people should pay in capital gains taxes.
 
We all know what the Republican first principle on this issue is: Republicans believe in low taxes. Any position they taken on any tax issue can be—and is—justified by citing this principle. The result is not only that their position always sounds principled: By being so consistent, they have forced Democrats to continue arguing on their terms. If they can keep the operative question as, “Should taxes be high or low?” then Democrats remain in a bind, because Republicans will always want taxes to be lower than Democrats want.
 
So what is the Democratic first principle on taxes? It’s this: Everyone should pay their fair share. It’s a simple statement of values.
 
If you’re looking for something with a bit more policy meat on the philosophical bones, then the place to start is here: As progressives, we believe all income should be treated the same. Republicans spend their time trying to rig the tax system so that the kinds of income rich people get—capital gains, inheritances and the like—get taxed at a lower rate than the kind of income you get when you work for a living.
 
This is how Republican tax proposals should be confronted. Democrats shouldn’t get into arguments about whether the capital gains rate should be 15 percent or 20 percent, they should make the debate revolve around their first principle: What’s fair? When working people’s wages are taxed at a higher rate than what fortunate people get from their investments, is everyone paying their fair share?
 
Democrats can make this simple argument over and over: All income should be treated the same. They aren’t trying to punish rich people, they just think everyone should pay their fair share.
 
One advantage of framing the tax issue this way is that the public is already on Democrats’ side. While it’s certainly true that nobody likes paying taxes, contrary to what Republicans might believe, Americans don’t see high taxes as the biggest problem with the tax system. In a 2003 poll, respondents were asked what bothered them most about taxes: the amount they have to pay, the complexity of the system or the feeling that the wealthy pay less than their share. The response was telling:

But when Gallup asked people in 2006 whether they themselves were paying more or less than their fair share in federal income taxes, 36 percent said they were paying too much, one percent said they were paying too little, but a full 56 percent said the amount they paid was about right. What all these polls add up to is that most people aren’t steamed about their own tax bill, but they do think that the system is rigged in favor of corporations and the wealthy.
 
Even George W. Bush knows this. When he was campaigning against John Kerry in 2004, he used to respond to Kerry’s proposal to roll back tax cuts for the rich by saying, “The rich hire lawyers and accountants for a reason when it comes to taxes. That’s to slip the bill and stick you with it.” Anyone with the deductive powers of a turnip can see that Bush’s point is actually an argument in favor of increasing taxes on the wealthy, but the point is that if he simply wanted to show people he understood their concerns, he was pushing the right button.
 
You can proceed from the principle of tax fairness to a more detailed plan (click here to see one version, from the Center for American Progress). But the quickest way to change the debate on taxes is for those Democrats with the biggest megaphones—the ones running for president—to start talking about everyone paying their fair share of taxes. So what do they have to say on the issue? Good luck figuring it out. Here’s what their websites say about taxation:

In fact, the only candidate I could find who has any detailed statement about taxes on his or her site was Dennis Kucinich. Eventually, all of these candidates will come up with some statements, and even a few proposals here and there, on the issue. But just as all the Republican candidates will probably say they favor “lower taxes” regardless of their particular differences, all the Democrats should start with a statement of values: As progressives, we believe taxes should be fair, and all income should be taxed the same.

This is the time for Democrats to build on their 2006 victory by keeping conservatives, and conservatism, on the run. Talk of bipartisanship is all well and good, but a political party that wants to sustain a majority needs to make clear to the public why they believe what they do.