Robin Hoodwinked

It is one of those myths that Hollywood just can’t get enough of; Robin Hood and his merry band of woodsmen. Different writers, directors, and actors have put their stamp on the character; some looking to create good entertainment, others trying to be “true” to history, still more trying to make a statement about the world. It is the latter, those entertainers that dare to dabble in allegory, that built the simple character of English folklore into a powerful symbol of political strife.

The various stories leave us with a multitude of questions, and all have a bearing on the politics of our 21st Century democracy. Did Robin Hood steal from the rich and give to the poor? If he was the earliest example of wealth redistribution, was his pursuit noble or nefarious? Did Robin Hood simply steal back money taken by the rich from the poor through evil taxation? Was Robin Hood the first know example of a liberal Democrat, or were the dashing rogue and his merry band the earliest incarnation of the Tea Party?

The relationship between a government and the governed, and the role of taxation in that relationship, are the foundational elements of all politics. Is the government a separate entity from the people, and what right to taxation does that government have? Liberals like myself are strident believers in the notion of public investment and public utility. We believe that publicly funded and employed police, firefighters, military, and teachers are better than market driven alternatives. We believe that the democracy is meaningful only when it possesses a real voice in the marketplace, because the marketplace defines our lives. All of this requires taxation, and taxation is a tricky notion.

How much is fair, and how much is enough? We the people are subject to regular tirades about businesses and high achievers being penalized for their success; conservatives are subject to regular tirades about rich folks destroying the world. Democracies are, at the core, driven and sustained by their ability to stay in balance. If he works for the people, how much money can Robin Hood take from the landed gentry before they are unable or unwilling to play their part in the enterprise? How much do the landed gentry and the people need each other to be successful?

It is this final question that cuts to the core of this debate. For all of our fanciful battles about tax thugs and government waste, shiftless layabouts and welfare states, we rarely approach the simple notion of what we the people mutually need. The focus in our politics is placed on the glitz and character of campaigns and political branding; both sides are either wrong on policy, or the manifestation of evil on the physical plane. But our democracy is no Hollywood movie; there are many ways to achieve our mutual goals, and most of the characters are not planning world domination. On the subject of taxation, we have been Robin Hoodwinked.

In my little neighborhood, the campaign to unseat the Congressional Democrat who represented us was ultimately successful. One of the most effective weapons in this battle appeared to be a series of billboards that showed an infant girl and a price tag listing how much her share of the national debt totaled. The advertisement encapsulates our shared view on taxation, warts and all. It didn’t speak to the fluctuations over time in debt levels, the ease with which we the people have paid it down in the past, or even what share of that number was do to the actions of the Congressman the ad was attacking. But the biggest “fail” with the ad was that it missed the asset side of the equation; if you are going to make a financial argument, you must show the positives as well as the negatives. We the people focus on what others tell us regarding our tax bills, but rarely pay heed to all around us that is the product of public investment.

Those rich and powerful did, by and large, work both hard and smart for what they have. But they did not reach the summit on their own. Much like the landed gentry of Robin Hood’s time, the woodsmen, tradesman, farmers, soldiers, blacksmiths, and bakers that surround our contemporary castles serve as both producers and consumers. The notion of wealth being “created” by business is not entirely accurate, as this recession serves to illustrate. In the midst of a 30 year orgy of tax cutting, the United States stopped developing its economic infrastructure. Wages for working class households (the 50% of U.S. households with income between $25,000 and $99,999 per year) stagnated, while primary costs like transportation and medical care rose at two and three times the annual rate of inflation. Once the consumption of the working class was stopped by the collapse of the asset bubble in 2007, the economic “progress” that all those tax cuts were thought to drive was revealed as a mirage.

In thinking about taxation and tax policy, as we the people must now do in earnest, the above facts must stay at the forefront of our minds. Tax rates must be determined by the careful consideration of a given taxpayer’s ability to meet their goals. Tax rates should never be driven by arbitrary notions of fairness; this is a straightforward calculation, of the kind done in every business every year, on capital investment and its sourcing. President Obama has committed to attempting tax reform next year; he has made this commitment knowing such work will have to be done with a Republican Congress. Given the recent compromise between the Republicans and the President (one that some 60% of Americans are in favor of), the chances of real progress on this issue seem fair.

Since we can’t rely on the heroic bow shots of the Sherwood Bandit, we the people will have to manage tax policy on our own. Over the next several weeks, this space will be home to posts describing The Rational Middle’s Tax Plan, and it is my hope that the members of the Middle will chip in with detailed comments describing their own ideas. Anyone feeling energetic may also write and submit their own guest post on the subject of tax policy; just register with the blog and I will contact you by email. In the meantime…

The Rational Middle is listening…