Screeds
Sunday, September 26, 2004
A Taxing Question
July 20, 2002
“Follow the money.”—unidentified Nixon Administration insider “Deep Throat” to Washington Post reporter Bob Woodward, 1972.
It’s amazing how many human decisions—and battles over public policy—are covertly driven by taxation.
In Ann Coulter’s recent bestseller Slander: Liberal Lies About The American Right, she cites a fascinating blindness evidenced by opponents of the 2001 Bush tax cut: a professed inability to see “how exactly it would help anyone.” That was no challenge for Miss Coulter:
To state the manifestly obvious: People would have more money. That’s an improvement right there. Liberals are so blocked on the idea that people’s money should be their own, they can’t see the big fat reward: more money! It’s some metaphysical thing with liberals. More money will give people more money. Isn’t that the goal? What am I missing?
Of course, an intelligent commentator wouldn’t really be baffled by the Left’s obtuseness about the point of the tax cut. But there’s a certain pleasure available from reddening the faces of the pro-tax brigade, when one knows that their reasons for opposing all tax cuts are things they would never discuss in public.
One effect of high taxation is to create an Establishment, whose status is guarded in part by the State’s rapacity. The notion of “old money” and “new money” owes a lot to the income tax. In the Victorian times that birthed these phrases, “old money” referred to the accumulations from noble estates, whose provenance was Crown privilege, whereas “new money” had been earned in trade, with which the nobility would not deign to soil its hands. After the income tax was laid upon the backs of Englishmen, “new money” was far harder to come by, and “old money” nobles regained some of their lost patina. Something similar happened in the United States, though we never had a landed aristocracy, unless one counts the rail barons.
There is, of course, an American Establishment, and its gates are as firmly secured by taxation as by any other means. Together, corporate and personal taxation bar all but a supremely talented or fortunate few. Sole-proprietor businesses, once the multigenerational highway to family prosperity and security, are assaulted a third time at the owner’s death, such that few pass to their inheritors in viable form. One is likelier to amass a fortune by playing the lottery than by dedicating oneself to growing a new business.
Behind the gates, Establishmentarians are pleased, for their status is diluted by the ascension of others to financial success. If you needed an explanation for why so many wealthy celebrities seem to smirk at the recent catastrophic decline of equity values, you have it here.
It would be misguided to infer that this was a design goal of the American tax system. It was an unintended consequence, as far as I can tell. Even so, once its dynamics had produced a barrier between the aspiring many and the established few, the few were happy to see it continue, even at cost to themselves.
The tax system, in particular the income tax, has had other unintended effects. One of them propels the gay-marriage movement.
Gay columnist Andrew Sullivan, much of whose work I admire greatly, has been beating the drum for legal marriage for homosexuals for some time. Here’s a slice of his most recent argument:
Homosexuals are non-citizens of this country in one of the most fundamental ways imaginable - they are barred from having any actual chosen family. Think about that for a minute. They have one fewer option than a polygamist.... That’s worse than discrimination. It’s being erased from citizenship in one of its most important manifestations. [from www.andrewsullivan.com, 07/19/2002]
This non-argument is typical of the advocacy of legally recognized gay marriage. What are homosexuals’ real reasons for demanding it so stridently?
Certainly, gay marriage would not serve the function for which marriage was devised: to protect women and children from abandonment by their husbands. Marriage arose at a time when the protection and support of a man was all but indispensable to the well-being of a woman and the nurturance of children. Unions between members of the same sex cannot produce children without technological intervention and a contribution of tissue by a third party. Moreover, the parties to such unions are presumably equals, so neither one could reasonably claim alimony from the other in the event of a parting of the ways. How would legal marriage improve these unions?
Follow the money, friends. Think about the insurance benefits provided to the spouses of married corporate employees. Think about the survivor’s benefits paid out to widows by Social Security. Think about the inheritance rights that pass to bereaved spouses in the absence of willed instructions to the contrary. Ask a gay advocate of gay marriage how these things figure into his position, and brace yourself.
All of these things arose because of taxation. Indeed, public acceptance that marriage was a legal rather than a religious matter was driven by taxation. When the income tax started to soar during the New Deal, employers began to offer noncash benefits—life and medical insurance—to employees and their families, as a way of bypassing the government’s bite. Prior to that, many marriages were formed without bothering to obtain a State license. Everyone in town knew who’d stood before the preacher and said “I do”; why was raised-seal paperwork required?
If it were not for the income tax, noncash compensation might never have arisen in corporate America. If not for noncash compensation and Social Security survivor’s benefits—another tax matter—homosexuals would not press for their sterile and often fleeting unions to be called marriages. So in addition to creating an Establishment and preventing us from securing our futures or building a patrimony for our children, we can blame the income tax for inflicting on us one of the most irrational public-policy issues in living memory. Irrational, that is, until you follow the money.
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