Wonder of wonders! Are there heroes in our midst? Modern day X-Men endowed with the special powers of civic responsibility and charity? Condemned to be hated by society because they are different? Do we non-rich citizens owe our wealthy brothers and sisters a debt of gratitude for their admirable political contributions? Should we propose to them a Bob Cratchet-esque toast around the Christmas table? Am I going to keep asking questions?
Follow me over the jump for a look at Deroy Murdock's fascinatingly misguided attempt to suggest that non-wealthy Americans owe a great deal of gratitude to the top 10%.
Deroy Murdock, in a recent post (Merry Christmas to America's Top 1 Percent, http://www.nationalreview.com/... ) appearing in the online edition of the National Review, decries what he perceives as a troublesome uptick in the vilification of the top 10% of income earners. Murdock holds that the top 10%, since they are responsible for paying a disproportionate share of income taxes, and, further, are responsible for a disproportionately large percentage of charitable donations and volunteering, should be thought of “...much less like Scrooge and much more like Santa.” On his account we should be much more grateful to the rich – despite a few bad apples like Bernie Madoff (he and his ilk are, according to Murdock, “...exceptions, not the rule...” – a small group of troublemakers who give the rich a bad name).
Let's look at his argument more closely:
- The Rich Generously Keep Government Afloat
Murdock claims that we do wrong when we fail to credit the rich for their generous contributions to government:
The top 10 percent (with incomes above $113,799) earned 45.8 percent of AGI [Adjusted Gross Income] and paid 69.9 percent of federal income taxes.
So, do these rich people pay their “fair share?” If not, should the top 10 percent finance 75 percent of income taxes? Eighty percent?
In contrast, the bottom 50 percent of taxpayers generated 12.8 percent of AGI and paid 2.7 percent of all federal income taxes.
High-income taxpayers also cough up state and local levies and often pay taxes on sales, property, capital gains, dividends, partnerships, and corporate income. Their wealth floods public coffers and flows into government programs, many targeted at low-income Americans.
So what? Generosity is a snap when tax authorities demand tribute. How do the rich behave absent government coercion?
…
To be surgically precise, as Ryan Ellis of Americans for Tax Reform notes, an IRS review of Returns with Itemized Deductions (columns CI and CJ) indicates that in tax year 2008, Americans who earned at least $200,000 filed 3,912,225 tax returns or 9.96 percent of that year’s 39,250,369 total returns. This group deducted $72,336,640,000 in charity, or 41.83 percent of the $172,936,002,000 for such deductions that all filers claimed. In short, the top 10 percent of taxpayers paid 42 percent of all charitable deductions, worth $72 billion in 2008 alone.”
This is essentially the whole of Murdock's argument: We often forget how much the rich do for us and for our government. Without their disproportionately large contributions to the income tax we'd all be sunk. We should therefore thank the rich for keeping the government (and especially all of those programs targeted at “low-income Americans”) running.
Murdock's argument is flawed insofar as it fails to understand the logic of fairness (as opposed to generosity) which underlies the graduated tax system.
To begin with the obvious question: What justifies higher tax rates for higher income brackets? Why should the rich be punished for being successful?
The answer, of course, is that meritorious action (in almost all cases) is not the cause of extreme, or even moderate, wealth. Becoming wealthy, instead, is largely a function of enjoying inequitably distributed socio-economic conditions and opportunities. These include, but are not limited to, access to a high-quality education, considerable family resources and connections, a sense of security, and regular nourishment.
The list above is comprised of background conditions – not always immediately visible – which are also excellent predictors for future economic success (and an undeniable part of the daily life of the richest ten percent in America). But, given the realities of capitalism, these conditions are, often, not present (or at least not regularly present) for non-wealthy citizens (and especially for those “low-income Americans” who should, on Murdock's account, be much more appreciative of the wealthy's largesse).
So what? Some people get lucky and have lots of opportunities. Others don't. Should we penalize the lucky few for accidental circumstances which happen to be in their favor (by making them, in this case, pay a higher percentage on their income)?
- A Brief Sojourn Into Social Contract Theory
On my understanding of social-contract theory (which functions as the political theory at the basis of the American founders', and especially Thomas Jefferson's, liberalism) the answer to this question is, at least sometimes (when the circumstances drastically influence the likelihood of economic success), yes.
Why?
The answer involves imagining serious inequalities of opportunity in the state of nature.
Imagine, for instance, that I have some accidental advantage over my neighbor. Say that I am lucky to make my home next to land which turns out to be exceptionally fertile, while he makes his home near land which produces next to nothing.
My neighbor, if he could find no other way to ensure his survival, might ask me to share my land with him. His reasoning would be that I don't deserve the land anymore than he does – I was just lucky to make my home on land which happened to be fertile. If I refused he might attempt to take my land from me. The result would be a state of war. (And, even if I defeated my neighbor and retained my land, I would always have to worry about a third neighbor, and a fourth, and so on).
Since people are rational we come to understand that fairness (and especially a strong government to act as the arbiter and enforcer of fairness) is preferable to total freedom (in which one could exploit momentary/accidental advantages, but would have to worry that disadvantaged neighbors would attempt to claim these advantages for themselves).
We thus form a government to protect the rights (in this case property rights) of each citizen, and, at the same time, to make sure that every citizen has opportunities that are as good and as plentiful as every other (note here that the inequalities that are ruled out under social contract theory are those of opportunity as opposed to inequalities of merit. Very few people would claim that, other things equal, if I work much harder than my neighbor there is something wrong with me having more wealth than he does.).
Since systemic inequalities of opportunity cannot be justified on the social-contract narrative, the rich, who are almost always wealthy because of greater opportunities (which are also usually systemic insofar as they result from capital accumulation and familial inheritance), are required to pay a higher percentage of their income in taxes than are the non-rich. The inequalities of opportunity which contribute to making the rich wealthy are then supposed to be corrected for by the government.
So there is nothing generous about the rich paying a higher percentage of their income in taxes. Nor is there anything generous about them paying a much larger amount of money in taxes than the poor. Indeed, what is quite generous is the restraint of the non-wealthy. Non-wealthy Americans, generally, do not riot or seize the property of their rich neighbors (despite the fact that the rich continue to enjoy opportunities which easily outstrip those of the non-wealthy).
They (non-wealthy Americans) expect, at a minimum, that the rich recognize that they do not deserve to possess double or triple the wealth of their fellow citizens, that this is unfair and thus contrary to the social contract.
On this basis non-wealthy Americans should expect that the wealthy will take steps to correct for their competitive advantages by contributing to providing the rest of the nation with the opportunities necessary to compete with them on an even playing field. Instead of thinking of themselves as quite generous, then, the rich should think of their disproportionately large contribution to the income tax as a civic duty demanded by the basic principle of fairness (and of their disproportionately large contribution to charity as essentially the same).