Sunday, September 23, 2012

Makers, Takers, and Immoral Wealth Transfer

We’ve been hearing for years now: “47 percent of Americans don’t pay taxes.” Memes are hard to trace back, but this one seems to have started with a 2009 report by Tax Policy Center fellow Bob Williams, estimating that 47 % of “tax units” would pay no federal income tax in 2009. That number has shifted from year to year, but the 47% idea appears impervious to fact, and was solidified by launch of a "We are the 53%" Tumblr site: "Those of us who pay for those of you who whine about all of that . . . or that . . . or whatever."

We’ve also been hearing references to “makers and takers.” While this idea dates back as far as Ayn Rand (and probably far beyond that), it was affirmed and publicized by a 2008 book by Peter Schwizer called Makers and Takers: Why conservatives work harder, feel happier, have closer families, take fewer drugs, give more generously, value honesty more, are less materialistic and envious, whine less . . . and even hug their children more than liberals.” (And yes, that's all part of the title.

A Fox News editorial in July energized the "maker taker" discussion once again:
"'A house divided against itself cannot stand.'  Abe Lincoln used those words in 1858 to describe a country that was careening toward civil war. Now we’re a house divided again and another civil war is coming, with the 2012 election as its Gettysburg.
Call it America’s coming civil war between the Makers and the Takers. 
"On one side are those who create wealth, America’s private sector. . .
"On the other are the public employee unions; left-leaning intelligentsia who see the growth of government as index of progress; and the millions of Americans now dependent on government through a growing network of government transfer payments,  from Medicaid and Social Security to college loans and corporate bailouts and handouts (think GM and Solyndra).
"Over the past century America’s private sector has been the source of productivity, innovation, creativity, and growth–and gave us the iPhone and iPad. The public sector has been the engine of entitlement, stagnation, and decline -- and gave us Detroit and the South Bronx.   . . .
"That public sector . . . brought us to the point where 48% of Americans are now on some form of government handout."
New York Times, Business Daily, How Do the 47% Vote?
Arthur Herman’s comments were repeated, reposted, retweeted thousands of times, and the ideas he shared continue to surface in poltical speeches, both private and public. The takers, that lazy 47 or 48%, are ruining our economy, fueling our debt, dependent on government handouts.

Set aside, if you can, the damaging, deliberately divisive image of a coming civil war.

And set aside the misleading suggestion that those who don’t pay federal income taxes don’t pay taxes at all, and the reality that many pay state, local, social security and FICA taxes, and all except the most indigent pay sales taxes.

And set aside the mean-spirited idea that our retired, our young, our disabled, are simply “takers” because our contribution can be accurately measured by whether we pay federal income taxes.

And set aside the strange idea that somehow the “private sector” is always the good guy, and the “public sector” just gets in the way.

Or the mention of "handouts" to GM and Solindra, without honest acknowledgement of far larger handouts to fossil fuel, banks, agribusiness, and a host of other private sector enterprises never questioned by those decrying "the growth of government."

Who, really, are the “makers” and the “takers”?

And which direction is wealth being transferred?

This whole question of entitlements is at the heart of the upcoming election: aren’t we tired of the entitlements of the old, the sick, the poor? Aren’t we angry about grants for low income students, subsidized housing for low income families, nutrition assistance for those who don’t work hard enough to feed the children they brought into this world?

And isn’t it immoral to transfer wealth from one group to another?

There’s the question that interests me most: transfer of wealth. Isn’t that socialism?

We’ve been watching a transfer of wealth on a scale hard to imagine, made possible by globalization and the increasing mobility of the global elite.

Fueled and funded, in large part, by quiet shifts in rules that allow government handouts to those who need them least.

But the transfer isn’t the one “makers and takers” proponents have their spotlights on.

Just consider one small change: the capital-gains tax cut of 2003.

A May, 2003, the House Ways and Means committee reported: “In tax year 2003, the capital-gains tax cut which only covers eight months of the year is worth $30,700 to millionaires, but only $42 to households with incomes between $40,000 and $50,000.”

If the average millionaire saved $30,000 in 8 months, that’s $45,000 for the next full tax year. Not bad for a small tax sleight-of-hand.

Most of the “entitlements” so hotly denounced yield small amounts for the families in question: the average SNAP (nutrition assistance) benefit for a family of four is about $6,000. A maximum Pell Grant for a full-time college student is $5,550.  The maximum SSI (social security income) for a disable individual is about $8,400 a year.

Where’s the outcry for the $45,000 a year in wealth transfer accomplished through the capital gains tax cut?

And that’s for the average millionaire. For those in even higher brackets, the take is far, far greater.

Another wealth transfer to consider: mortgage deductions. Why does the government subsidize home ownership, and at what cost? Who benefits?

Full disclosure: my husband and I own a home. We deduct our mortgage – which gives us a tax break each year of at most $2,000.

If we owned a larger, more expensive home, the break would be bigger: according to a recent Pew Charitable Trust study, families in the highest income categories receive a tax subsidy on average of almost $18,000.

I’m happy to see some of my tax dollars help provide housing for those most in need of it. In fact, yes, I’d be willing to give up my own mortgage deduction to ensure adequate housing for families I know who are currently living in substandard, crowded rentals.

But I’m not happy to think that tax subsidies are incentivizing purchase of second homes, or wasteful McMansions. And puzzled that the same people who object to small contributions to the poor are so unconcerned about very large contributions to the rich.

Last year four thousand families with net earnings of over a million each paid no federal income taxes at all. That’s a wealth transfer of hundreds of thousands per each “tax unit.” Do we care?

The difficulty in all of this is a distaste for numbers, a dislike for taxes, and a willingness to believe that “they” are stealing “my” money.  But who are “they”? And what can I do about it?

The Center on Budget and Policy Priorities works hard to make numbers visible: their contributions make clear that “the takers” are not always those struggling hardest to get by, and while there may be some “takers” at the low end of the economic ladder, the biggest takers, and the most dangerous to our economy, are at the other end:

Read that housing benefit chart carefully: last year, the goverment gave $105,000,000,000 - $105 billion - in tax benefits for mortgage deductions. Add all the other housing subsidies together, and the total is less than half that. Who are the takers? Where's the wealth transfer?

The current wealth transfer goes much deeper, though, than tax cuts for the wealthy. I’m still trying to understand: how did it become possible for CEOs to pay themselves hundreds of times more than their workers? Why do workers reap an increasingly small share of profit in companies with strong bottom lines? Why do almost one in three working families still struggle to make ends meet? Who benefits from pushing back worker protections, or holding the line on minimum wages?

Who are the takers: the Walmart employees who make $11.75 an hour, $20,000 per year, often paying a large percentage of their wages for health care benefits, often scheduled week to week, with shifting hours that make a second job impossible?

Or the six heirs to the Walmart fortune, who now have a net worth of 89.5 billion, equal to the bottom 41.5 percent of US families combined.

Justice Oliver Wendell Holmes, Jr. wrote in 1904, “taxes are the price we pay for a civilized society.” Who benefits from the argument against raising taxes in the upper brackets? Which loopholes are our politicians willing to close, and at what cost, what benefit?

Another Supreme Court justice,  Louis Brandeis, wrote in 1897, “we may have a democracy or we may have great wealth concentrated in the hands of a few, but we cannot have both.” That's even more true when that great wealth can be used, without limit, to influence elections, platforms, policies.

The Apostle James, two thousand years ago, wrote:
“Listen, my dear brothers and sisters: Has not God chosen those who are poor in the eyes of the world to be rich in faith and to inherit the kingdom he promised those who love him? But you have dishonored the poor. Is it not the rich who are exploiting you? Are they not the ones who are dragging you into court? Are they not the ones who are blaspheming the noble name of him to whom you belong? If you really keep the royal law found in Scripture, 'Love your neighbor as yourself,' you are doing right. But if you show favoritism, you sin and are convicted by the law as lawbreakers.”
Givers? There are many ways to give. Money is only one measure of our contribution.

Takers? We all take, some of us humbly, and with gratitude. Some of us on a far greater scale, with a far greater sense of entitlement, and far greater harm to those we take from.

Immoral wealth transfer?  The divide continues to grow. The question James asked the church has never been more relevant: “Is it not the rich who are exploiting you? . . . Are they not the ones who are blaspheming the noble name of him to whom you belong?”

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This is part of an continuing series about faith and politics: What's Your Platform?