We hear the mantra “tax cuts for the rich” over and over again. The Bush tax cuts, we are repetitively told, favored the wealthy. And Republicans, because they passed “tax cuts for the rich,” are for the 1% while Democrats, who opposed those “tax cuts for the rich,” are for the 99%. Citizens for Tax Justice, a liberal tax advocacy group, illustrates the argument this way:
Now comes the Romney-Ryan team and their proposal for tax cuts. Mitt Romney characterizes his tax plan as follows: Make permanent, across-the-board 20 percent cut in marginal rates. In other words, he proposes a 20% tax cut for everyone who pays federal income taxes.
Everyone. Across the board.
President Obama and his fellow Democrats, sure as the sun came up this morning, calls Romney’s proposal “a tax cut for the rich.” The President says “the bulk of this tax cut would go to the very top…a lot of it going to the wealthiest 1% of all households.” The way the President puts it, it sounds really unfair. But is it? That depends on your point of reference, and your point of reference depends on the moral compass that guides you.
The matter is easily understood with a little demonstration.
Is Romney actually proposing a tax cut that unfairly favors the wealthy?
To keep this simple, I will answer the question and make my point by using the principle of the tithe to illustrate. The Lord’s tithe is a very simple 10% of an earner’s income. The tithe is the same percentage for everyone, no matter how much or how little they earn.
We will compare two tithe payers: Steve, who earned $3,000,000 last year, and Bill, who earned $30,000. Steve paid $300,000, while Bill paid $3,000 in tithes. Of course, Steve earned 100 times more than Bill and, consequently, paid 100 times more in tithes.
Now, let’s imagine what would happen if the Lord let it be known that he was calling for an across the board reduction of 20% in the tithe. In other words, he was reducing the tithe from 10% to 8% for all tithe payers. That would reduce Steve’s tithe from $300,000 to $240,000, a tithing cut of $60,000. Bill would see his tithe reduced from $3,000 to $2,400, a tithing cut of $600.
There are two ways you can look at this tithing cut. You can either say “it is fair and equitable to both Steve and Bill because they were treated equally, the tithing percentage was reduced by an equal amount for each of them,” or you can say “this is a tithing cut which favors the rich because Steve saw a $60,000 cut while Bill only saw a $600 cut.”
This is the essence of the charge that the Romney tax cut proposal, like the Bush tax cuts, is a tax cut for the rich. The Romney proposal is to cut marginal federal income tax rates by 20% across the board for everyone who pays federal incomes taxes. This proposal would treat everyone equally. But the dollar amounts would differ depending on a person’s taxable income.
The moral linchpin upon which this debate turns is this: which should we institutionalize in our laws in America? Equality of treatment of all people? Or equality of outcomes?
Equality of treatment of all people is the American ideal, and is morally right. Equality of outcomes, imposed by compulsory rather than by voluntary means, is tyranny, and is morally repugnant.
“Tax cuts for the rich” has an unseemly appeal for some Americans. But it is the mantra of cunning demagogues who are determined to bury the traditional American ideal of equality under the law by imposing equality of outcomes under the law. Whether or not America continues to be the shining city on a hill will depend on how many of us recognize the demagoguery and reject it at the polls.