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What Price ‘Fairness’?
A more progressive tax code doesn’t solve our debt problem.

Elizabeth Warren speaks at the 2012 Democratic National Convention.

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Mona Charen

Realistic Republicans understand that President Obama and the Democrats head into fiscal-cliff negotiations in a far stronger bargaining position now than in 2011. When voters were asked on November 6 whether they favored raising taxes to reduce the deficit, a total of 60 percent said yes (47 percent favored increasing taxes for those who earn $250,000 or more, and 13 percent approved tax increases for all).

So taxes will be going up. As a matter of political strategy — not to say survival — Republicans will have to agree to raise taxes on those defined as rich. It’s more than just the exit poll on support for tax increases. Republicans must also contend with the Pew poll that asked who would be more to blame if a fiscal-cliff deal were not reached. Before a single meeting has been held or talking point fed to the press, 29 percent said they’d blame President Obama, while 53 percent said they’d blame Republicans in Congress.

President Obama sounds so reasonable when he asks for a “balanced approach” to deficit reduction. Whether the implied spending cuts — the flip side of his balance — will materialize is the great question.

Obama is the anodyne face of a leftist party — a party perhaps best defined by newly elected Massachusetts senator Elizabeth Warren. Her speech to the Democratic convention in September was a protracted roar of grievance, a fulmination against the (imagined) entrenched interests who were “rigging the system” against the poor and the middle class.

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Wow. A nation that is skating to the brink of bankruptcy because it spends so much on the middle class is whipped into a righteous frenzy about how rigged the system is toward the rich? As the Washington Post’s Robert Samuelson wrote in April, 60 percent of the federal government’s non-interest spending goes to transfer payments to the poor and middle class. Spending on the ten largest means-tested programs — that is, programs for the poor — has increased from about $4,300 per person in 1980 to $13,000 per person in 2011 in inflation-adjusted dollars.

The bill for this spending is disproportionately paid by the wealthy. The top 20 percent of income earners pay 70 percent of the taxes. Soon they will pay even more. If this is what happens when the rich rig the system, the poor and the middle class should beg them to keep rigging it.

The Democratic party is consumed by the insatiable appetite to make America more “fair” — by which they mean taking from some to give to others. As noted above, the U.S. tax code is already steeply progressive. You needn’t love the rich to understand that chasing the goal of redistribution rather than growth can result only in everyone becoming poorer.

Like many European social-democratic countries, the U.S. has gotten into trouble by spending far more than it collects in taxes. Andrew Biggs, Kevin Hassett, and Matt Jensen examined studies on how other nations have recovered from their fiscal improvidence. Looking at 21 countries over 37 years, they concluded that 1) effective resolutions are rare, only about 20 percent of cases, and 2) successful attempts to balance budgets rely heavily on spending cuts, whereas failed ones rely on tax increases. What about the “balanced” approach? “On average,” the authors noted in the Wall Street Journal, “the typical unsuccessful consolidation consisted of 53% tax increases and 47% spending cuts.”

Yes, taxes are going up, but let’s remember, as we bow to the inevitable, that raising taxes on the rich will put only the most trivial dent ($80 billion, according to one proposal) in our trillion-dollar annual deficits. Thus is the great god “fairness” appeased while the demon debt continues to breathe fire.

The sane policy goals for a nation in the kind of trouble we’re in would be economic growth and entitlement reform. The progressive agenda, Richard Epstein writes in Why Progressive Institutions Are Unsustainable, supplies a “one-two punch.” First, it reduces the private sector by ill-advised regulation. “Second, it imposes extensive and counterproductive programs of redistribution that cannot be supported by a stagnant economy and a shrinking productive wealth base. As that base gets smaller, the demand for a stronger safety net induces yet another round of transfer payments and makes the tax burden heavier and the rate structure more progressive. The new redistributive tax regime in turn exerts greater negative pressures on production levels.”

And down we go. The worship of “fairness” is a death cult.

Mona Charen is a nationally syndicated columnist. © 2012 Creators Syndicate, Inc



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