The Absurd Teabag Protests

Nothing demonstrated the pathetic state of contemporary conservatism as yesterday’s teabag protests. Held in various cities, groups of conservatives gathered to protest their high taxes and the President’s budget priorities. They dumped teabags in public places to vent their outrage in a not-so-subtle echo of the Boston Tea Party in 1773.

Newt Gingrich, one of the organizers of the protests, has a degree in history so surely he will recall that the colonists in Boston were not arguing about money. They did not protest taxation per se, but taxation without representation. In short, they were arguing about the constitutional right of Englishmen not to be taxed without their consent, voted through their representatives in the House of Commons.

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No one likes paying taxes. But, the problem in America today is not that our taxes are too high but that they are too unfairly applied. The tax code has become Byzantine because vested interested with skilled tax lawyers and lobbyists have made it Byzantine. Those multiple volumes you see in legal offices are the result of lobbyists getting Congress to insert special provisions that help the companies that pay them. A simplified tax code without all the special tax breaks would not only be more fair, it might make companies spend less time trying to rig the tax code and more time trying to improve their performance.

I heard a news item yesterday on the radio about Goldman Sachs trying to give back the bailout money it took under the Toxic Assets Relief Program (TARP). They do not wish to be bound by the compensation requirements of TARP. They want to be able to pay obscene bonuses because, despite all the evidence of the past eight months, they think such bonuses will improve performance. Good luck with that.

But, there is a better way than TARP to force Wall Street to change the culture of greed that led to the economic meltdown that is affecting everyone and nearly bankrupting the federal government. Re-introduce higher marginal rates. Despite what the teabag protesters claimed yesterday, Americans are paying historically low rates today. During Dwight Eisenhower’s presidency, marginal rates topped out at 92 percent and no one threw tea bags at him nor called him a socialist.

President Obama is mired in an economic crisis right now and the last thing he needs is a fight over raising taxes. But, once the economy starts to improve he will have a political wind, as well as an economic one, at his back. That will be the time to make a proposal that tips its hat to both conservatives and liberals: radical simplification of the tax code combined with more progressive rates.

Voters currently feel powerless before the economic meltdown and the President’s flurry of activity has been warmly greeted not because most people understand the economics of the proposals but because at least he is demonstrating that we humans are not powerless before impersonal economic laws, that we are not homo economicus. Voters also feel powerless before a Byzantine tax code and the K Street lobbyists who created it. Demonstrating the power of the people to re-order the priorities of the nation by fixing the tax code has more in common with the cause of the Bostonians in 1773 than yesterday’s conservative tantrum.

 

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8 years 8 months ago
I usually comment about tax policy at the Tax Policy Center blog. Tax reform is vitally necessary - both to make taxes more comprehensible and to shift the focus of tax expenditure from corporate welfare to income support measures that will reduce abortions. This reform could even be dovetailed with entitlement reform, so that instead of providing food stamps and Section 8 vouchers to the poor and mortgage interest deductions to the middle and upper classes, we can provide a larger refundable Child Tax Credit to everyone who works or who engages in remedial education, college, or job training. Adding this credit to an expanded Business Income Tax, which would be collected from all businesses (not just corporations) and would include labor costs (like a VAT) would allow employers to more directly link pay to family size. A higher credit may cause a redistribution of wage levels within the company, but would ultimately lead to more consumer spending, better housing and more economic growth. This would put some teeth into the Option for the Poor found in Catholic Social Encyclicals. A VAT could be included to keep reduce business tax rates and make taxation more visible to the masses, while a progressive income surtax could be retained on high income individuals ($75,0000/yr) and families ($150,000/yr) of between 6% and 15%. The income surtax could be set aside for net interest, debt repayment, foreign aid, naval sea operations and foreign deployments (Pentagon-speak for war).
8 years 8 months ago
You sort of missed the point... the main issue that seemed to be making people mad (at least the 5,000 people who protested here in Cleveland) was not so much paying taxes as out-of-control spending, Tax Day notwithstanding. After all, as you point out, our current tax rates are quite reasonable. It's all about spending. "Bailout" is a very dirty word right now, and everything and everyone associated with it. Even more than that, the anger seems to be rooted in this feeling that the powers-that-be... the brain trust, the "wise old men" who are supposed to know how to run things and fix things so that they work, don't have the slightest clue what they are doing. And I have to admit that although I wouldn't be caught dead at a populist "tea party," I am sympathetic to their point of view. Out here in the blue collar boonies we are not policy wonks. I do not know anyone who is a fan of the President's economic moves (fans of the president himself, yes; his economic policy, no). Out here all we see is that we are approaching 100 days and our unemployment rate is still sky high, our 401ks are still in the trash and nobody seems to be getting any real help except the Secretary of the Treasury's banker friends. And the recession stretches on. So you can see how people who feel that way would be motivated to go for an anti-government march on a rainy Wednesday afternoon. The more interesting story behind this is that the conservative movement appears to have caught up with Democratic groups in harnessing technology at the grassroots level... this all started with a cable-TV rant that was posted to YouTube and then blown up on txt on mobile phones, blogs and elsewhere online.
8 years 8 months ago
If the tea bag protesters wanted to actually speak out against taxation without representation, they should have been talking about voting rights for the District of Columbia. 600,000 DC residents pay federal taxes but have no representation in the Senate and only a non-voting delegate in the House. That situation should be unthinkable in the United States of America. Instead, we get these infantile exercises in anti-Obama whining.
8 years 8 months ago
" . . . and the last thing he needs is a fight over raising taxes." Yes, wouldn't want the President to have face democracy. How horrible.
8 years 8 months ago
Call me crazy, but I'd cheerfully trade away my representation for no taxation.
8 years 8 months ago
Let's not forget that raising taxes and supporting the bailout were the main issues in the last election (not abortion or FOCA as some would have you believe). The voters said yes to both raising taxes on the wealthy and doing more on the economy. Elections matter.
8 years 8 months ago
''Out here all we see is that we are approaching 100 days and our unemployment rate is still sky high, our 401ks are still in the trash and nobody seems to be getting any real help except the Secretary of the Treasury's banker friends.'' Good heavens! It's taken us *years* to get into this mess. Does anyone truly think it can be fixed in 100 days?
8 years 8 months ago
Michael, Lately I find it hard to agree with you and your TARP-harping. I fail to see how higher marginal tax rates will do anything to temper the greed factor on Wall Street or any street in America. Real reform will have to come from the shareholders of these companies. And until recently, I though that improbable. But we are seeing companies reaching out to their shareholders to engage on the subject of executive compensation. So I suggest that if you want to make an impact on the obscene compensation packages of corporations, you should buy some stock, make up some billboards and go to the annual shareholders meeting. Make some noise where it will get some results. I do agree, however, with your assertion that conservatism is bankrupt of ideas, and that this teabag episode is typical of the Ginrich stuntism that gave us the contract with America. Simply stupid. I further agree that the tax code is in need of radical simplification, and that it needs to be a progressive tax code, not a flat one. For that, Michael, you'll need to turn to the Congress. But, as I'm sure you know, Nancy Pelosi and Harry Reid (and the Republican leadership as well) love the tax system as it is. It is the principle way they wield power--carving out tax cuts for favored groups or for certain types of economic activities--trying to manipulate the levers of our society and economy.
8 years 8 months ago
To #2 Magdalena Democracy works because we get the chance to elect a new "brain trust" every four years. That's representative democracy. I grew up in Blue-Collarville, too, but I wouldn't want my high school friends (or me) running the U.S. Treasury or the Federal Reserve. And please tell me you don't believe that 100 days is supposed to enough time to dig this nation out of a hole it took eight years to dig.
8 years 7 months ago
This is a catholic publication huh? Figures the writer of the article frowns on people standing up for a cause. The Tea parties aren't all about taxes. I'm glad that a Catholic publication is willing to defend a politican that's pro-abortion.

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