Taxing the System

Edward J. Dodson

[A letter to the editor, City Paper, October 8-15, 1998]

The stories last week by Mark Naymik ("Living Wager," Cover Story, Oct. 2) and Gwen Shaffer ("Aiming For A Poor Turnout," City Beat) deal with specific aspects of the same disease - a society seemingly unable to produce more jobs than people needing jobs. With so many people doing so well, denying those at the bottom enough of an income to live decently is, to be sure, immoral and criminal. Yet, there seems to be no one to blame.

The poor have always been with us, and despite 60 years of an expanding role for the federal government, there are numerically more people living in poverty than ever before, even when they are working full-time at one or more jobs. What the hell is wrong with this picture? Well, a good deal is wrong. But the underlying causes are hidden from view by the complexity of our laws and our institutions - and the way many "experts" talk about the problems and how to mitigate them.

Democratic reformers have, since the war for independence against Britain, waged a grudging battle in our society against privilege. There have been notable victories on the side of civil rights (i.e., equality under the law, if not equality of treatment in the administration of law). The laws that have created and nurtured economic privilege have been far more difficult to dislodge. Every attempt to do so has been met with the fierce resistance that the privileged can exert financially and politically.

The tax system is the storehouse of privilege. Yet, this fact is obscured by the economics-speak we hear and read every day. Everyone argues against this or that type of tax, and the economists line up on every side and in the middle of the debates. And so, when changes in taxes are adopted, they are done piecemeal. What we must change are the ways we allow government to raise revenue.

Not all assets or activities ought to have equal protection from taxation. There is a truism about taxation (it's true but must be explained); which is, tax what we don't want and don't tax what we want. We want commerce and jobs and housing and shopping centers and office buildings. So, we should not be burdening these kinds of things with taxes. Sales taxes, income taxes and taxes on property improvements ought to be very low or zero.

Not much left to tax, right? Wrong.

We don't want pollution. We don't want people to waste natural resources. We don't want crime. So, why not tax people according to how much pollution they generate or how much natural resources they consume in production, or how many crimes they commit. There is another source of revenue that largely goes untapped by government, remaining in private hands. This is the revenue associated with the buying and selling and leasing of land. Those of us who own land ought to pay the rest of society for the privilege. How much should we pay? Tom Paine wrote that we each owed society a "ground rent" for the land we held.

Taxation is a complicated business. Our tax system is upside down. It is a primary cause of the ups and downs of the so-called business cycle, high unemployment and poverty that lingers on even as civil rights lessens the direct impact of racism on people. A higher minimum wage law will not help for very long. When landlords find out their tenants are getting higher incomes, guess what goes up - the rent! We need to stop playing around with these temporary fixes and get down to fighting for the real solutions to the problems we have.