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Looking for tax fairness in all the wrong places

Looking for tax fairness in all the wrong places

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In recent columns, conservative political commentators George Will (Casper Star-Tribune, Jan. 9) and David Brooks (New York Times, Jan. 10) have weighed in on the issue of “tax fairness” — the idea that federal tax policy constitutes a series of transfer payments that distort the economy in the name of income redistribution.

In their view, tax policy has become an instrument at the hands of liberal groups to skew income distribution in favor of (in George Will’s words) “factions muscular enough in money or numbers or both to bend government to their advantage.”

This is an odd argument to be made by apologists for laissez-faire tax policies for the rich. We live at a time when the rest of the country is rightly demanding that the rich pay more of their fair share of federal taxes. And defenders of corporate tax breaks would choose this time to attack the federal tax code for ensconcing the advantages of vested interests? Why don’t they look in the mirror?

Advocates of drastic cuts in federal government spending will hear nothing of making corresponding revenue increases to help close the federal budget deficit — except when this involves tax relief for the middle class, as demonstrated in their recent opposition in Congress to an extension of the payroll tax cut. Here in Wyoming our own Sen. John Barrasso wants tax subsidies to remain in place for energy companies that are already making huge profits. And yet these same people would criticize the federal tax code for being skewed in favor of privileged groups!

For most, the argument that increased tax burdens on the rich constitute a drain on the economy by depriving it of the resources for job-creation rings terribly hollow. Even some Republicans are doing a pretty good job of knocking holes in this theory. As Mitt Romney’s Republican rivals are pointing out, some rich people don’t create jobs, they eliminate them, and then go on to make themselves richer. It is small-to-medium businesses which are the engines of job creation. Yet these are the very companies which are being denied access by big banks to capital that would enable them to expand.

There is no excuse for letting the rich off the hook at a time when the rest of us — households, seniors, public sector employees — are being asked to make sacrifices to restore our country’s solvency. Common sense tells us that there is no greater threat to our economic future than the insolvency of our public finances. This threat cannot be addressed through spending cuts alone — and it certainly cannot be solved by reducing the purchasing power of the middle class.

Not to challenge the rich to do their fair part will do more damage to our economic prospects than any corresponding tax hike might do to impede investment in job-creating expansion. If we are to believe some of our leading business experts, it is “economic uncertainties” — including the uncertain state of our public finances — which play the greatest role in holding back investment in job-creating economic growth. The first priority is to put our economic house in order through a strategy for federal deficit reduction which includes reasonable provisions for revenue increases, including tax increases for those most able to pay.

Critics like Will and Brooks are right to point out the dangers of government involvement in rigging economic outcomes. But those who live in glass houses should not throw rocks. Big business lives in a glass house of its own, reaping the benefit of tax subsidies not available to lower income groups. These beneficiaries of reverse “transfer payments” need to own up to their own role in protecting tax privileges which favor the rich, while impoverishing the federal treasury and endangering economic prospects for all ... including the rich in the long term.

David Wendt is president of the Jackson Hole Center for Global Affairs.

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