Common sense in tax debate

What's fair?

Upon that question revolved a presidential election and the economic future of America. What's not fair, we're told, is rich people not paying higher taxes. But no one seems able to say just how much more they should cough up.

The fairness argument won President Barack Obama re-election as the Republicans doggedly fought to keep taxes low on the rich, just as Obama fought obsessively to raise them. Even if an agreement to avoid going over the fiscal cliff is reached, the fairness issue won't go away. It has permeated one political issue after another, from Obama whining about the unfairness of the Catholic Church's defense of its principled opposition to subsidizing contraceptive and certain abortifacients, to the Paycheck Fairness Act, to the Warren "Buffett Rule" against the billionaire paying a lower tax rate than his secretary.

"It's not fair" has become as ubiquitous as a child's whine when told, "it's bedtime" or "eat your spinach." But if the current income tax rate for "rich" people is unfair, what rate is fair — 50 percent, 75 percent? No one says, or can say. The answer usually is simply "more."

So, where do we turn to insert some reason into the debate? It turns out that philosophers have spilled billions of words trying to define fairness.

One definition asserts that fairness means everyone is equally subject to the requirements and benefits of the law. It's unfair to construct barriers to voting based on race. Job discrimination based on physical handicaps is unfair. Thus the Equal Protection Clause of the 14th Amendment.

One problem, though: On its face, a progressive income tax, which imposes higher tax rates on higher earners, is theoretically unfair. And it provides us little guidance about what level of taxation on the wealthy is fair.

Another test of fairness is what philosophers call "desert claims" — the idea that people should have what they're due. They "deserve" the rewards of their labors or a life sentence for a heinous crime. Hard work yields a promotion; slacking on the job gets you a pink slip. Buffett "deserves" to be wealthy because he is talented and skilled.

Which leads us to: Why did Buffett, Steve Jobs and Michael Jordan deserve to have more talent than the rest of us? How fair is that? Shouldn't we all be equal? "Egalitarians" would redress the lack of talent or luck through government leveling actions to benefit those who, through no fault of their own or not by choice, end up on the lowest rung.

Which leads to Karl Marx's formulation: "From each according to his ability, to each according to his need." Or to the Catholic Church's teachings on "distributive justice."

Maybe fairness is based on what someone contributes to society; so it's not fair that teachers are not among the highest paid and least taxed. By that measure, the mega-rich who have created millions of jobs by investing and managing wisely deserve their extra rewards.

Clearly I'm in over my head. Just as those who deploy what amounts to a too-simple argument that fairness requires that the rich give up a lot more of their wealth because having it "is not fair."

Fairness is a double-edged sword. Is it fair that the Obama administration "absolutely" (Treasury Secretary Timothy Geithner's word) would take us over the fiscal cliff if Republicans don't surrender unconditionally? The consequences would fall heavily on the middle class, in that the regressive payroll tax would kick in. Would it be fair to tax dividends at a higher rate when they are a major source of retirement income for so many struggling seniors?

Fairness is a moral concept that is unconscionably being used for political purposes. Said former President Jimmy Carter, a Democrat, "… many things in life are not fair, that wealthy people can afford and poor people can't. But I don't believe that the federal government should take action to try to make these opportunities exactly equal, particularly when there is a moral factor involved."

I'll note that Carter gave the rich a capital gains tax cut, to 28 percent from 39 percent, the first cut they had received in 15 years.

Dennis Byrne, a Chicago writer, blogs in The Barbershop on chicagonow.com.

dennis@dennisbyrne.net

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