Envy and income taxes

Posted: Sep 24, 2002 12:00 AM
When George Bush's tax cuts of last year expire in 2010 -- those cuts that top Democrats insist should die rather than live past the cutoff date -- 36 million taxpayers will be paying the "alternative minimum tax," a levy contrived in 1986 to make sure everybody pays something. Likely a distinct minority of Americans is aware such a tax exists. Ahem -- brace for the knowledge that bites. This joyful forecast comes from a new study by the Urban Institute and the Brookings Institution, neither one known as a constituent member of the vast right-wing conspiracy. At the point the alternative minimum tax reaches out to ensnare the middle class, deductions start to disappear -- poof! Deductions for children, for individual filers, and for state and local taxes, among other things. Tax rates reach 26-35 percent. According to the study, 97 percent of two-children families with incomes between $75,000 and $100,000 will qualify for the alternative minimum tax by 2010. They will lose 18 cents of every dollar in the Bush cuts if they earn between $50,000 and $100,000, 42 percent if they report between $75,000 and $100,000. So Congress steps in to amend all -- would that be a fair assumption? A tricky one, actually. The alternative minimum tax, in 2010, is expected to raise $141.4 billion (vs. $1 billion in 1986), which is a chunk of change to renounce without replenishing it from some other source. Or cutting spending, but let's get serious. The obvious alternative is to stick it, once more, to the "wealthy." That would seem an appealing notion in the age of greed and $2 million company-financed birthday parties for CEO wives, a la Tyco and Dennis Kozlowski. It would also be, at minimum, an evasive notion. The "wealthy" have caused all this consternation? Horse feathers! The cardinal sin of envy, exhibited in the context of democratic politics, has caused it -- and seems likely to prolong the performance to doomsday. Sigh. A decade or so ago, post-Ronald Reagan, there seemed some prospect of overhauling the tax code and eliminating its distortions. Reformers batted back and forth two ideas: a flat tax and a consumption tax. Either was clearly preferable to the progressive income tax, whereby we pretend to be allotting everyone his fair share of taxes, except that the system is ventilated with loopholes, "incentives," deductions, credits and such like. Nobody understands the tax code. Were there no tax code, half the certified public accountants in America would be working in teller cages or studying the viola. The progressive income tax, whatever the intentions of its original proponents, works to excite envy. Envy means wishing you had something that rich guy across town owns or wishing, alternatively, that fortune would take him down several pegs. Envy is ugly. It is also exquisitely human. This is why the progressive income tax won't go away. Its ugliness makes humans smile. And if they are slow to smile, a certain kind of "populist" politician is at hand to remind the underprivileged how privileged are those folk with large cars and jewels, paid for out of checking accounts. And how crooked and selfish most of them are! All those stock options! Those mega-houses! Democrats, who like to pose as the champions of the downtrodden (remembering how many downtrodden votes are out there) are especially adept at tax-code demagoguery. Aren't they, Sen. Daschle? The tax code, it seems, will give us conniption fits until envy dies out, and envy, engrained in our nature, is going no place. Editors know at least how they will fill their columns for decades to come, long after Saddam is history. There will be reports of the tax system's impending breakdown; congressional Democrats will emerge to throw rocks -- rhetorically speaking -- at passing limousines. Tax reform will be proposed, will falter and will give place to quick fixes and occasional cuts that Democrats will denounce as giveaways to the wealthy. One thing about this sterile and depleted terrain: It will seem very much like home.