I'm generally a fan of NPR's Planet Money, but I'm a little perplexed by what one of its founders, Adam Davidson, has been writing since he took up residence at the New York Times Magazine.
This weekend, for example, he argued that the middle class needs to get over the idea that rich people and corporations should pay higher taxes. And while he runs the numbers quite well, the conclusion are, to say the least, troubling:
It serves the interest of both parties to argue about taxes on corporations and the wealthy because neither wants to discuss the alternative, which is where things get touchy. To solve our debt problems, we have to go to where the money is — the middle class. People who earn between $30,000 and $200,000 a year make a total of around $5 trillion and pay less than 10 percent of that in taxes (owing mostly to tax incentives and the fact that most families make less than $68,000, where larger tax rates begin). Increasing the middle-class tax burden an additional 8 percent, however, would actually have a bigger impact than taxing millionaires at 100 percent.
It's a tough but manageable financial math problem. And America's middle class is actually a lot luckier than its counterparts in Greece, Spain or Ireland, who will be paying higher taxes while their countries' economies shrink, or stagnate. Even the Fed's dark forecasts anticipate that the U.S. economy will return to healthy growth (about 3 percent annually) within a couple of years. Unless we hold on to the fantasy that the solutions to our problems lie in the bank accounts of rich people and corporations.
Actually, it's not a tough math problem at all — if you set aside the arguments about who should pay taxes, how much they should pay, and who is or isn't paying their fair share.
To put it bluntly, above a certain level almost everyone should pay more. This is becoming apparent to anyone who thinks about this issue. Michael Bloomberg came out and said as much last week. And while raising taxes on the poorest taxpayers is a bad idea, many people in the American middle class recognize that they will need to pay more, in taxes, in the future for the things they want from government.
The rich, on the other hand, are for the most part determined to use the levers of policy to get their tax bills down as low as possible. At their worst — embodied by Republicans in Congress — they're determined to prevent the middle class from keeping tax cuts that they won as part of the government stimulus packages.
For the middle class, higher taxes aren't a subject for debate — although given the state of the economy at the moment, the middle class can reasonably expect a few years of tax breaks, to spur consumer demand. The middle class isn't going to fight a tax hike — it's going to fight tax cuts for corporations and a refusal to raise taxes, by a significant margin, on the wealthiest Americans.
The U.S. middle class doesn't mind shouldering a disproportionate burden.
It just doesn't want to shoulder most of the burden.
Davidson kinda sorta makes this point by pointing out that millionaires will, in the future, need to pay more — a whole 10 percent more! That would take them from their current 35 percent to 45. And do nothing about where much of the earnings of the wealthy come from: capital gains on investments, now taxed at a mere 15 percent (this figure has attracted ire from wild-haired lefty tax radicals like...Warren Buffett).
In an earlier column, Davidson also aligned himself with the idea that some Americans — the poor ones — should forget about a four-year college education, while others should give up the dream of living in a place like Washington, DC, New York, San Francisco, Los Angeles, Seattle, Portland, San Diego, Chicago, Detroit, Philadelphia, Boston, Atlanta, Charlotte, New Orleans, Miami, Houston, Dallas, San Antonio, St. Louis, or even...I don't know, Indianapolis and instead buy some steel-toed workboots and head for fracking country!
Some unfortunates will even be able to spend the worst downturn since the Great Depression contemplating higher taxes while picking up new skills. Woodworking, for example. Or advanced avionics:
We don't need to become a nation of app designers. An economic downturn is a great time to learn things — carpentry, say, or aerospace engineering — that others will eventually pay for: high-school dropouts should get their degrees and a year of specialized training; high-school grads who can't afford a four-year school should get a community-college degree. Life will be tougher for liberal-arts majors if they don't get training in how to apply a humanities education. Those who can't find a job where they live should consider moving to places where there are more jobs than applicants — the Dakotas, Nebraska, Wyoming.
When this crisis ends, we'll also be faced with other deep problems. Our tax code is a complex mess; we need a more effective education system; it's hard to picture a healthy United States in 2050 without some major change in health care. Unlike the short-term jobs crisis, these are areas where we can find compromise. Let's not do what we usually do by spending the bad times arguing over things that won't happen and the good times ignoring the things that should.
There are three major assumptions in there — tax code bad, education system broken, health care soon in crisis — but I'll focus on only one of them: the "complex mess" that is our tax code. In this, Davidson echoes the current crop of Republican presidential candidates and GOP congressman Paul Ryan.
But what if our tax code isn't too complex? And what if it could stand to become much more complex, technoloigically adjustable on a consistent basis, depending on how the overall economy is doing?
Darren Gersh of PBS's Nightly Business Report lays out why the tax code actually benefits from being complicated. The main reason is that it's about more than collecting taxes. In any case, I don't see why it couldn't become more profitably complex. At the personal level, nobody had TurboTax in 1945, when there were 25 federal tax brackets. They had pencils.
More complex could actually mean more fair. What you're paying would be more precisely correlated to your income, rather than lumping you into a broad bracket. And the tax code could be adjusted like a thermostat, to bring in more revenue — or less — as needed.
Davidson and the Planet Money crew has certainly provided plenty of insight, information, and, it should be noted, entertainment. But I'd be lying if I said I wasn't worried about these views on tax policy and education. They appear to suggest that it's not going to be much fun to be middle class in America anymore.