The Therapy Sessions
Thursday, December 02, 2004
Taxes and saving the Democratic Party
I remember reading a story a few months ago about a Democrat paying her taxes.
When the accountant was done crunching her numbers, he proudly told her that - because of the new tax cuts - she would now have several thousand more dollars in her pocket.
She thought this outcome was immoral.
Without hesitation, he offered to recalculate her taxes at the old rate, so that she could pay what she felt was her fair share.
Outraged, she told him to leave the friendly calculations as they were.
The Democratic Party is currently searching for its soul, and it would do well to consider that people like that woman are doing it no favors.
I can't tell you how many times I've seen this sentiment in the papers and on blogs: what is with these dumb rednecks voting Republican, against their own interests?
A political party that is going down that road better get used to being the minority party.
Democrats are a fractious party united by a single idea: wealth redistribution. That is, it is right to take from the rich and give it to the poor, as long as the government does the taking.
This should be a winning message, they reason. After all, most of the nation is not rich.
So what's with the hicks in the sticks? These red state morons?
They have misdiagnosed the problem: the Democratic Party has a credibility problem when it comes to taxes. And there is a way to solve it and make the Democratic Party stronger.
First, the credibility problem. John Kerry proposed taxing the rich at a higher rate, to pay for expanded health care and benefits for the "middle class." At one point in a debate, he said that he felt that people like he and George Bush should pay more.
But there is a problem: in his tax bracket, his "fair share" should be about a third of his income. John Kerry did not pay anywhere near that. He did what rich people usually do. He hired accountants to whittle his share down, using clever deductions and loopholes.
When all was said and done, John Kerry only paid a third of the taxes he "really" owed.
John Edwards was even worse: his devilish accountants declared Edwards a corporation, and paid him dividends - an astounding tax dodge that prevented the trial lawyer from paying his Medicare taxes.
It was all legal, and dodges like this are quite common among the rich.
And that is the problem.
When Democrats talk about making the rich pay their "fair share," people don't believe them: cynical voters know that our tax code has become such a mess that people who can hire full time accountants will find loopholes, and they will pay a lot less than their bracket would seem to indicate they owe.
The Democratic Party - if it wishes to save itself - should make rectifying this its primary goal.
Sure, it will do better in rural areas if it moves to the right on guns, crime and national security. But embracing a doctrine of true tax fairness could really energize the party and make it viable.
I don't think they'll do it. It means embracing a tax system with NO deductions or loopholes (once you create one, you open the path for more): no deductions for paying mortgage interest or building a home office or raising a child, no credits to farmers, no subsidies for your solar water heaters, your beehives, or your llama farm, or your second home. Payroll taxes, FICA, Medicare taxes would all be rolled into one thing called the federal tax, assessed at a flat rate. Nothing there for accountants to work with.
That's tax fairness: the rich and connected paying their share.
The Democratic Party could take an issue from the Republicans and make it their own. After all, the Republicans have fumbled an issue of clear moral power and nobody thinks they're really going to do anything with it.
The Democrats could put their own spin on it: no taxes on people below the poverty line, 23% on people earning up to $250,000 and 25% on everybody above that.
It would increase fairness and revenue in one step.
No more IRS? No more audits? No more sneaky tax dodges?
That's a winning issue.
It could be a winning issue for the Democrats - exactly why they'll never embrace it. The modern Democratic Party's platform is virtually unchanged from the days of Walter Mondale. They keep waiting for the public to come embrace their point of view, and it isn't happening.
Interspersing Dukakis-rhetoric with references to the Almighty is not going to do it.
Defeat after defeat, the Democrats have kept their moral vanity: they would rather be right than be elected.
If they keep with their same model, they will be neither.