We are so habituated to the progressive income-tax that most conservatives, fiddling at the margins, fail to focus their ire on the basic immorality of that progressive income-tax, and the social damage it has caused.
For decades, progressive economists have tried to make what one called "the uneasy case for the progressive income tax"--without success. That is why the debate about President Bush's tax reforms does not go nearly deep enough. The problem is the progressive income tax itself, and how it has become a cornerstone of the punish-the-rich mentality of the Democratic Party.
At some time during the 20th century, the Democratic Party came to believe that the state is not a fickle abuser of human liberty (as liberals once held); instead, the state could be an angel of good whose mission is to bring about the equality between rich and poor which dreamers have always dreamed about. The means: redistribution of income. For the left, redistribution became a rod of judgment, separating wolves from sheep. Those in favor are noble, those opposed "mean-spirited." Only by understanding this does one grasp the vituperation that Tom Daschle, Hillary Clinton, Ted Kennedy and others heap upon the Bush tax proposals.
What is lost in their "idealism" is the fact that to pay their bills, redistributionist states cannot tax only the rich. They must also tax way down into the middle class, stinging the single mom, policeman, and teacher as well. Meanwhile, many on welfare pay no income taxes at all, because they have no income. They have no income because (most often through no fault of their own) they do not work.
Virtually all households reporting less than $36,000 pay no income tax. About half of all households, those reporting an income of up to $40,000 per year, pay less than 5% of all income taxes. All households earning below $75,000 pay only 25% of our income taxes. The other 75% is paid by those 27 million households earning above $75,000. This income-level is reached by many a family with two full-time earners. Thus all those furious arguments about taxing "the rich" come down to arguments about which portion of those above $75,000 should pay more, and at which rate.
Should the top 0.5% (those who earn above $500,000) pay more than the 31% of all taxes they now pay? Should the next 5% shoulder a little more? Why not the entire top 10%? The essence of the progressive income tax then comes down to setting top group against top group, in the top 25% of households. Taking ever more revenue from the well-off is fine. But why set group against group? Wouldn't it be more intelligent to find a better way? When above-the-median earners all pay taxes at the same proportion, the feeling of justice spreads. As a social ideal, equality of income is far less admirable than equal treatment, universal self-betterment, and mutual respect for individual differences. The paramount good of a good society is this: To bring everybody together, so that the lives of all may be improved no matter what their station or wealth.
Michael Novak is the George Frederick Jewett Scholar at AEI.