Because the oped is entitled “Don’t Soak the Rich” and because Ed, IMHO, doesn’t articulate the nuances in his argument the way he needs to, the oped is being misrepresented as a call for a less progressive tax system (I also think Ed’s mistaken in his claim that the US tax system, all in, is the most progressive across advanced economies—in fact, it’s only mildly progressive…but more on that in a later post).
For example, responding to the oped, Len Berman, a DC tax expert, tweeted “a progressive’s call for less progressive taxation.”
I can see where Len gets that from the piece, and obviously Ed will have to speak for himself, but Ed’s book clearly supports progressive taxation. He may not see the need to make the tax system more progressive, though his book calls for just that in ways I’ll note in a moment. But he certainly does not call for less progressivity.
Ed’s argument, which is a good one, is that what matters in terms of progressivity at the end of the day is the not just taxing, but spending as well.
…achieving equality through the tax structure is the wrong way to think about the issue. Reformers have blundered by confusing what seems fair — more progressive taxation — with what is actually important, and lacking: a progressive fiscal system. As other developed countries have figured out, reducing inequality is not about where the money comes from, but where the money goes, and how much of it is spent.
Now, to be clear, the way things stand today, as I myself wrote in the NYT a few months ago, “To Lift the Poor, You Can’t Avoid Taxing the Rich.” The vast majority of growth in recent years has gone to those at the top of the scale, and since their income has grown faster than their tax liabilities, their effective tax rate—taxes paid as a share of income—has generally gone down over the decades. In the near term, it makes no sense to increase taxes on those who’ve seen so little pretax growth go their way.
And while Ed clearly doesn’t want to raise the marginal tax rates of the wealthy, he devotes a whole chapter of his book to cutting a boatload of their tax breaks in ways that would unquestionably raise their effective rates. If Len is thinking there’s a pending love match between Grover and Ed, I assure you, it ain’t happening.
Here’s what Ed says in defense of progressive taxation in his book:
If one accepts the fundamental premise of this book, that material outcomes are determined by an undifferentiated porridge of personal efforts and brute luck, by virtue of which we all have a bit less control over our material successes than we like to pretend, then some tax rate progression functions as a broad social insurance program to address the brute luck competent.
In fact, Ed advocates going back to the Clinton-era marginal tax rates, which would raise tax rates on more than just the rich, and here too he’s got an important point. As I wrote in my piece on this:
To be clear, the tax burden on all Americans, not just the wealthy, is low both in historical and international terms. We’re collecting less revenue than many other advanced economies and less than we have in the past. So it’s not just the rich that will ultimately have to pony up if we’re going to continue to fund the things we want and need in a sustainable way.
At any rate, it’s a nuanced argument, and Ed lost the nuance in his oped today. And as he’s probably finding out as we speak, the DC tax debate doesn’t do nuance.