Tax day nears, a day most Americans loathe, even if they're due for a return. As a political issue, taxes are baked into the nation's DNA, as today's TDIH will show, and Americans are still obsessed with - and perhaps misinformed about - how taxes are collected and what they're used for.
As always, happy Wednesday and happy reading.
This Day in History
1765 - Britain's Parliament passes the Stamp Act, taxing American colonists for printed materials, and imposing a hefty burden on the colonial economy. The Stamp Act, among others, spurred the American Revolution, as colonists angry about being ruled by an overseas government they deemed arbitrary began to agitate for independence. Taxation continues to be a key element of both political and economic conversations today.
American colonists tar and feather a tax collector.
Too Little, Too Much
The fundamental political and economic argument about taxes is what rate one should tax whom, and in what manner. However since most people pay federal income tax, that is the primary tax that many voters are considering. States governed by Republicans tend to favor lower tax rates for individuals, while states governed by Democrats tend to favor slightly higher rates, particularly for the wealthiest. Which is better, to tax too much or to tax too little?
Neither is ideal, of course, but since states act as laboratories for taxation and other policies, we can learn from their experiments. So the data on Kansas and Louisiana, both of whom cut taxes to extreme degrees, is revealing (from Tax Justice). The economic argument for low taxes is that lower tax rates will unleash economic growth which will allow government to maintain revenue through a broader tax base rather than higher tax rates. In theory this makes sense, but in practice it has been found wanting.
The underlying economic factors that cause this to be true require their own discussion, but incredibly low tax rates, particularly for the wealthy, have proven to be poor drivers of economic growth in the post-industrial world.
An Ideological Battle
Although the evidence has shown that massive, top-heavy tax cuts don't spur economic growth, many adhere religiously to the mantra of low taxes as a motor for growth. Many Republicans have backed themselves into an ideological corner, committing to never raising any sort of tax ever for any reason, a economic and political position that forces them into impossible positions such as the ones in Kansas and Louisiana (from Vox). Such inane commitments are neither fiscally nor economically prudent. But they do provide an example of how fanatical commitment can lead to poor outcomes, a narrative we are seeing play out in areas other than tax policy.
Who Pays What to Whom and Where
An analysis of which states are most dependent on the federal government also tells an interesting, if more complex story. While many of the most dependent states are governed by conservatives, there are many discrepancies on the list that highlight the intricacies of economic and tax policy, and reveal why this is such an important debate (from Wallet Hub).
The Legacy of Wealth
One reason tax policy is so important is because the manner in which we tax and redistribute wealth determines if there is actually a chance for people to work hard and work their way into better circumstances. If wealth is hoarded by a small number of families over generations then social and economic mobility become impossible. Ossification occurs, or worse. A great example is Florence, where the wealthiest families in the late 15th century are still the wealthiest families today (from Quartz). Consider what it does for stability and peace when wealth is concentrated in such an inequitable manner.
Have You Seen This Dog?
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Will's Weekly Trivia - Spread the Word!
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IF you choose to answer the question, respond to staton.will@gmail.com with your answer. Please note that by competing you are giving me permission to publish your first name in the trivia leader board each week.
Last Week:
1. What year did the Reichstag fire take place? ONE POINT
2. Along with Brutus, who is the other famous co-conspirator in Caesar's assassination? ONE POINT
3. Whose assassination sparked WWI? ONE POINT
Answers:
1. The Reichstag fire was in 1933.
2. Cassius was the other prominent co-conspirator, although there were dozens involved.
3. Archduke Franz Ferdinand was assassinated in Sarajevo in 1914, sparking WWI.
This Week:
1. Which President signed the first federal income tax? HINT: It was to raise money during war time ONE POINT
2. Which branch of government levies taxes? ONE POINT
3. Which famed anti-tax advocate has gotten many Republicans to sign a pledge to never raise taxes? ONE POINT
LEADER BOARD Check out the Leader Board! Is your name on it!?
