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Déjà Vu: The Fight Over Taxes

Wed, Jan 30, 2013

In the 1936 presidential campaign, Franklin D. Roosevelt said these words.

In 1776 the fight was for democracy in taxation. In 1936 that is still the fight. Mr. Justice Oliver Wendell Holmes once said: ‘Taxes are the price we pay for civilized society.’

Taxes, after all, are the dues that we pay for the privileges of membership in an organized society.

As society becomes more civilized, Government—national, State and local government—is called on to assume more obligations to its citizens. The privileges of membership in a civilized society have vastly increased in modern times. But I am afraid we have many who still do not recognize their advantages and want to avoid paying their dues.

It is only in the past two generations that most local communities have paved and lighted their streets, put in town sewers, provided town water supplies, organized fire departments, established high schools and public libraries, created parks and playgrounds—undertaken, in short, all kinds of necessary new activities which, perforce, had to be paid for out of local taxes.

To divide fairly among the people the obligation to pay for these benefits has been a major part of our struggle to maintain democracy in America.

Ever since 1776 that struggle has been between two forces. On the one hand, there has been the vast majority of our citizens who believed that the benefits of democracy should be extended and who were willing to pay their fair share to extend them. On the other hand, there has been a small, but powerful group which has fought the extension of those benefits, because it did not want to pay a fair share of their cost.

Here is my principle: Taxes shall be levied according to ability to pay. That is the only American principle.

Deja vu! During the Great Depression, conservative Republicans wanted to cut taxes and federal spending to balance the budget. They strongly opposed FDR’s New Deal. They labeled him a socialist. Sound familiar?

FDR knew that taxes were essential to “maintain a democratic society.” Deep budget cuts (austerity) meant greater inequality and suffering for the public. Cutting taxes would obviously benefit the upper class that otherwise would pay a much greater share of the tax burden by virtue of the concentration of wealth and income in their hands. Tax cuts further would also exasperate the maldistribution of wealth and force reductions in social programs that benefit the lower middle and working classes. For FDR, tax cuts threatened his New Deal.

Today, 76 years later, we are facing the same debate. Republicans are demanding austerity and lower taxes for the wealthy. They want to cut a vast array of social programs including Social Security, Medicare, Medicaid, public transportation and education while fighting against efforts to raise taxes on the wealthiest Americans. So far President Obama and the Democrats have largely resisted austerity but the budget battle coming up this spring will test their resolve. Interestingly, throughout the current fight over taxes, Republicans have only demanded cuts in social programs but never military spending. At the heart of this debate over taxes and the budget is the future. Will we preserve a modicum of democracy or move ever closer to plutocracy?

Written by Tom Suhrbur,
StreetWise Contributor

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