Taxation

Introduction

Taxation and how to implement it is a fundamental demarcation between the two parties and thus is frequently the basis on which citizens stake their claim. For example, some believe the rich should be taxed to redistribute wealth to the most disadvantaged (called a progressive tax). In contrast, others believe that the government should not be in the business of "stealing" from its most prosperous citizens. Instead, it should opt for a more uniform tax despite income (called proportional/flat tax). At the same time, even fewer prefer a system where taxation decreases as income increases (called a regressive tax). However, this is just the tip of the iceberg, and many moral considerations are involved, the most common of which we've outlined below.

Republican

Most Republicans believe in a free market with minimal government intervention. They claim that a free market promotes individual achievement and fiscal conservatism, which they would say are the primary factors behind economic prosperity. In pursuit of such a system, most conservatives argue for laissez-faire economics and the elimination of government-run welfare programs in favor of private-sector nonprofits and the encouragement of personal responsibility.

Most Republicans prefer supply-side economics. The idea is that reduced income taxes would contribute to economic growth and that the heightened economic activity would make up for the lower tax rate. In pursuit of this ideal, the Republican Party frequently advocates for tax cuts. Republicans are against graduated tax rates since they disproportionately target those who create jobs and wealth.

The Republican party also argues against a government-run single-payer healthcare system as it would constitute socialized medicine. Instead, they favor personal or employer-based insurance and argue against government funding for elective surgeries. For more information, check our brief on healthcare.

The case for a minimal state:

To understand the reasoning for this case, we must first turn to Robert Nozick, another Harvard philosophy professor, who makes the case against any form of redistributive taxes and argues for the existence of only a minimal state. His argument relies on the premise that humans own themselves; it supports the idea that there is intrinsic respect for individuals. Moreover, it argues for some of the rights we enjoy today, namely the rights to liberty and property.

If one owns themselves, then, by extension, they own their labor, and whatever they exchange or produce from that labor also belongs solely to the individual. Since property has been exchanged for labor, the right to property is also a fundamental part of this conversation. Furthermore, Nozick also argues against any form of taxation beyond what is necessary for upholding contracts and protecting individual rights (namely funding for police and courts). The reason that capital must have at one point been exchanged for labor and any form of taxation is, by this argument, theft. Nozick goes as far as to call it slavery since taxation amounts to the state forcefully taking someone's labor.

Democrat

A strong belief guides democratic economic policy in a robust social safety net, stronger social security, and a more extensive welfare program to reduce economic inequality. Accordingly, the party generally supports higher minimum wages, subsidized housing, and universal healthcare.

The Democratic party has frequently advocated for a higher minimum wage, which is usually fifteen dollars an hour but can be adjusted regularly based on changing economic conditions.

Democrats favor graduated tax rates to ensure that the wealthiest Americans pay the highest tax rate. They promote government spending on social services but oppose an increased defense budget.

Some Democrats have proposed market regulation as means to combat climate change. These regulations often form a carbon tax encouraging corporations to pursue renewable energy options and reduce dependency on fossil fuels. For more information, check our brief on climate change.

The case for redistribution:

To understand how this case breaks down, we must look at English Philosopher Jeremy Bentham. In his book An Introduction to the Principles of Morals and Legislation, Bentham claimed that "nature has placed mankind under the governance of two sovereign masters, pain and pleasure." Based on this observation, Bentham thought that "good" is whatever brings the greatest happiness to the most significant number of people. If we take this as the groundwork, it follows logically that some form of redistribution must be necessary since there are individuals with more wealth than what is needed for happiness. However, there are others whose misery would be alleviated if they had the funds to afford a higher standard of living.

Discussion Questions

• Should taxes exist?
  • Which taxes specifically? Federal, State, or Local
• What are tax dollars currently used for?
• How should tax money be spent?
  • Should taxes be used to help the poor or only to pay for a minimal state?
• How should our taxation system work?
  • Proportional/Flat tax vs. progressive taxation
• Should we prioritize the common good or individual rights?

Sources:

Fuhrmann, Ryan. "Republican and Democratic Approaches to Regulating the Economy." Investopedia, 2019. https://www.investopedia.com/ask/answers/regulating-economy.asp.

Gaudiano, Nicole. "Liberals Seek 'Ideological Shift' in the Democratic Party." USA TODAY, November 9, 2016. https://www.usatoday.com/story/news/politics/elections/2016/2016/11/09/liberals-seek-ideological-shift-democratic-party/93548156/.

NW, 1615 L. St, Suite 800Washington, and DC 20036USA202-419-4300 | Main202-857-8562 | Fax202-419-4372 | Media Inquiries. "Political Typology: Views of the Economy and the Social Safety Net." Pew Research Center - U.S. Politics & Policy, October 24, 2017. https://www.pewresearch.org/politics/2017/10/24/5-views-of-the-economy-and-the-social-safety-net/.

Pomerleau, Kyle. "What Are Flat Taxes?" Tax Foundation. Tax Foundation, May 19, 2015. https://taxfoundation.org/what-are-flat-taxes/.

Wikipedia Contributors. "Utilitarianism." Wikipedia. Wikimedia Foundation, January 7, 2019. https://en.wikipedia.org/wiki/Utilitarianism.