Coyote Blog

Many government programs have both a stated justification as well as a second, unstated justification which is the real reason that politicians support the program.  For example, many regulations are portrayed as pro-consumer when in fact their real utility is in protecting a favored company or political donor from new competition.

The same is true for progressive taxation.  The public logic is usually about the rich paying a "fair share" or reducing income inequality (by cutting down the oaks to give the maples more sunshine).  However, progressive taxation pays rich dividends to politicians looking to increase the size of government and their own personal power.  Some time in the last 10 years, we crossed an invisible line where less than half of American families pay for effectively all government programs (leaving aside Social Security). 

This means that when any politician stands up and proposes a new program, a majority of Americans know that they are not going to pay for it.  In fact, the situation is even more obvious when you consider new programs at the margin.  If you listen to the Democratic debates, nearly every candidate is proposing to pay for his or her expensive programs via new taxes aimed solely at the top 10 or 20% of earners.  Every time they propose a program, there is an unstated but increasing clear clause "and 80% of you won't have to pay anything for this."  Already, we see many states funding new programs with surcharges on the rich.  Here is but one example:

California voters agreed to tax the rich to support public mental health
services. 

More than half of them (53.3 percent) voted last month in favor of
Proposition 63, which will impose a tax surcharge of 1 percent on the taxable
personal income above $1 million to pay for services offered through the
state's existing mental health system. The initiative will generate an
estimated $700 million a year....

Richard A. Shadoan, M.D., a past president of the CPA, wrote in Viewpoints
in the September 3 issue of Psychiatric News, "The scope of the
program and its tax-the-rich source will provoke a debate. But it's an
argument worth having to make California face the neglect of not providing
treatment to more than 1 million people with mental illness."

So what happened?  I don't know how many people make a million dollars in California, but it is certainly less than 5% of the population.  So the headline should read "53.3% of people voted to have less than 5% of the people pay for an expensive new program."  If the 53.3% thought it was so valuable, why didn't they pay for it?  Well, it is clear from the article that the populace in general has been asked to do so in the past and refused.  So only when offered the chance to approve the program if a small minority paid for it did they finally agree.  This is the real reason for progressive taxation.  (by the way, these 53.3% will now feel really good about themselves, despite the fact they will contribute nothing, and will likely piss on millionaires next chance they get, despite the fact that they are the ones who will pay for the program).

Ultimate Example of Progressive Taxation

My story today comes from the Roman Empire just after the death of Julius Caesar.   At the time, three groups vied for power:  Octavian (Augustus) Caesar, Mark Antony, and republican senators under Brutus and Cassius.   Long story short, Octavian and Antony join forces, and try to raise an army to fight the republicans, who have fled Italy.  They needed money, but worried that a general tax would turn shaky public opinion in Rome against them.  So they settled on the ultimate progressive tax:  They named about 2500 rich men and ordered them killed, with their estates confiscated by the state. 

This approach of "proscriptions" had been used before (e.g. Sulla) but never quite as obviously just for the money.  In the case of Octavian and Antony, though nominally sold to the public as a way to eliminate enemies of Rome, the purpose was very clearly to raise money.  All of their really dangerous foes had left Rome with the Republicans.  The proscriptions targeted men of wealth, some of whom had been irritants to Octavian or Antony in the past (e.g. Cicero) but many of whom had nothing to do with anything.  Proscribed men were quoted as saying "I have been killed by my estates."

I wonder how many of today's progressives would be secretly pleased by this approach?