Taxing the Rich – A Solution?

Of all the prevailing discourse concerning the question of class struggle in modern society, perhaps no proposition is more voiced by the “socialists” of the social-democratic and petty-bourgeois shade than the assertion that “taxing the rich is the solution.”  It is as if all the historical experience of class struggle has no prevalence in the modern economic situation, and “taxing the rich” is that ideal method by which to alleviate the glaring problems of inequality, exploitation, and rampant poverty that are trademark of our predicament today.

Reality, however, is unavoidable, no matter how hard the idealists and intellectual economists try to step around it, and the fact of the matter is that the theory and practice of taxing the rich as an alternative to a radical solution to capitalism’s flaws could not be any further divorced from the actual, concrete conditions of reality.  The essence of taxing the rich as opposed to revolutionary, qualitative change of the capitalist system quite actually constitutes just another fundamental argument over reformism versus revolution, and as such, it deserves to be handled properly, with scientific argument, and unfortunately for our “tax the rich” proponents, such a practice is just not enough to really solve the problems facing the working class in the struggle against capitalism’s inherent system of injustice and inequality, and objective analysis cannot but discredit such a thesis.  

The most cursory glance at the current crisis of capitalism reveals this to be a fact.

Unemployment and underemployment are facts of life, corporations immediately responsible for the crisis are being bailed out to the tune of billions, crucial social services and programs are being discontinued because of their lack of profitability, education is under ruthless attack, democratic rights are being encroached on more and more, sweeping austerity measures are always in the works, and the prospects for any quick recovery are if not at least slim and far off, unimaginable.  It is in this context, the actually existing conditions of our situation, that taxing the rich must be examined as a measure that is undeniably insufficient.

There are several conventional propositions that are often put forward to justify and explain the “theory” of “taxing the wealthy”, and these deserve analysis for the sake of refuting them.

Firstly, there is the widespread notion that “if only” the rich were taxed [more], inequality could be remedied. Reality, however, shows something different.  The fact of the matter is that the rich have been increasingly taxed based on income over the last several decades, despite policies here and there that guarantee temporary tax cuts, and yet, there are still Mitt Romneys that run around flaunting excessive wealth in spite of progressive income taxes.  It’s simply a historical fact that the rich have been taxed before, and are being taxed now, in an attempt to alleviate economic and social problems, regardless of the variation in policies on the matter posed from administration to administration.  In fact, even now, when the top 5% are being taxed more than they’ve been in the last several decades, inequality and income disparity are so grossly exacerbated and atrocious that in the last year, millions of student youth, workers, and impoverished have hit the streets with placards and signs decrying such in one of the largest social movements in recent years.


It thus follows that the practice of taxing the rich, as confirmed by real experience, has not, is not, and most certainly will not prevent the problems inherent to capitalism – poverty, disproportionate distribution of wealth, economic crisis, etc.  Even the Wall Street Journal has been able to admit that: “The tax system narrows the gap between economic winners and losers, but not enough to stop the gap from widening.  Because the tax code takes more from the top than from the bottom (“progressive,” in tax jargon), it significantly reduces inequality.  Comparing income before and after taxes, CBO [Congressional budget Office] says the tax system cut the share of income going to the top 20% by about seven percentage points in 2007, most of that coming from the top 1%. Everyone else’s share of income increased. But the market and social forces widening the inequality gap have been so strong, though, that after-tax inequality by CBO’s measure still is higher than at any time in the past 30 years.”

Secondly, there also exists the notion in need of rebuttal that if the rich were to be taxed more intensely, at least an ample portion of the national debt could be relieved, and thus a huge burden could be lifted off of the backs of workers and capitalists alike.  This, of course, is also false.  Obama’s “Buffet Plan”, which was proposed to Congress in April, 2012 (and subsequently defeated) as a plan for taxing millionaires considerably more profusely is a most perfect example of this thinking which, in the last analysis, really doesn’t match up with concrete facts and reality.  Such a tax plan proposed by Obama, the same plan praised by our “tax the rich” theorists as “the solution”, when compared against both immediate and long-turn developments, fails to meet par in the slightest.  Even the “Buffet Plan”, analyzed by the U.S. Congress Joint Committee on Taxation and which would place a minimum tax of 30% on American millionaires, would, by generating approximately $47 billion over the next 10 years, still only amount to roughly 0.7 % of the estimated $6.4 trillion in spending planned by the Obama administration over the same period.  Thus, the second “genius” idea of our infatuated “tax the rich” champions falls short in similar step with the others, unable to cope with factual statistics.

By understanding such fundamental problems and shortcomings of the actual practical application of increased taxation indexed to wealth accumulation as a primary method of resolving current economic, and therefore social contradictions, the unsound character of such in theory becomes all the more clear.

Such a reformist method of class struggle is by no means a new phenomenon.  And as such, its development as an ideological trend has been similarly bound up with the paralleled criticism and refutation of it by the scientific analysis of Marxism-Leninism, the only ideology that has solved the problems of modern society by scientifically analyzing historical experience and correctly pointing the way forward for the workers of the world against their parasitic exploiters, who, according to our tax the rich champions, simply need to have more financial burden pressed upon them.  At the foundation of such a notion lies the misconception that the propertied, wealthy, power-wielding classes of modern capitalist society will willingly allow their wealth to be taken from them by means of petty policies and decrees on the part of the very political and economic system that their class dominates.

Nothing more is required than the simple acceptance and recognition of hundreds of years of experience of class struggle and the theoretical and practical lessons derived thereof to refute the absurd thesis that increased taxation is the preferable approach to emancipating the working masses from the grips of the inequality, exploitation, and subjugation that principally characterize the capitalist system.

To limit the scope and manner of our struggle for emancipation to the theoretical and practical quality of increased taxation on the wealthy is to limit ourselves to guess-work, indeed flattering, charming, and intriguing guess-work, but guess-work all the same.

Sources Used:
http://online.wsj.com/article/SB10000872396390444246904577571042249868040.html

http://moneyland.time.com/2011/08/16/why-buffetts-plan-to-tax-the-rich-wont-work/

http://www.washingtonpost.com/business/economy/obama-proposes-new-taxes-on-wealthy-for-half-of-debt-plan/2011/09/19/gIQATnkNfK_story.html

http://www.usforacle.com/opinion/taxing-the-wealthy-won-t-fix-economy-1.2731313#.UEErHKR2b49

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