We've been talking about "ideas" recently . . . ideas that highlight the difference between Republicans and Democrats (
real Democrats, anyway). So here's one . . . a tax policy that differentiates between "earned" and "unearned" income that is fair to
all Americans.
All "unearned incomes" ("capital gains" etc.) have a social component . . . there would not be even the "markets" in which they occur without regulation and a legal system to enforce regulation, without even a stable currency in which to denominate the "gain". For a more specific (and in the news) example, consider the increase in land value when society builds a freeway off-ramp. Clearly society is entitled to a share of such "capital gains".
Labor is more uniquely "yours", but of course even there a social component does exist. How much of your paycheck is the result of public education? Not much for an $8.00/hour "day laborer", perhaps, but as you rise up the income scale? Still, what a person labors to produce should remain, as much as possible while retaining an orderly society, hers (this is one area where Democrats and libertarians can agree . . . if you "own" your body, as libertarians generally put it, then you naturally "own" the product of your direct labor).
And this could, and should, be a clear distinction between Democrats and Republicans:
Democrats want to tax unearned income (capital gains, interest, dividends, outlandishly large inheritance etc.)
Republicans want to tax earned income (your paycheck)
And Bush has done exactly what that "formula" would predict . . . reduced taxes on capital gains and other unearned income, and increased taxes on earned income ("bracket creep" raises the labor tax rate as incomes rise to match government produced inflation).
A Democratic policy might, for example, effect a tax cut by raising the personal exemption (and perhaps the dependent allowance as well), while taxing all unearned income at (or higher than) the highest bracket for earned income.
It's a difference that's easy to explain . . . it's a difference that can guide a range of policy . . . and it's a difference that Democrats can win on.