Why I’m Not Laughing with Jon Stewart

19 Aug

Jon StewartJon Stewart’s takedown of conservatives who complain that 51 percent of American households don’t pay any income taxes is getting a lot of laughs from the left. Color me unamused. On this one, I’m with the right. Well, sort of. Let’s just say—as a teacher used to say of my papers—they’re right for the wrong reasons.

It actually is a scandal that 51 percent of American households are not paying income taxes. Not because it means the majority of Americans are free-loaders but because it means the majority of Americans don’t make enough to money to pay taxes. (Though as the Center on Budget and Policy Priorities points out, that statistic comes from 2009, which wasn’t a good year for most Americans. Usually, the figure is somewhere between 35 and 40 percent, which still sucks. Also, the poor pay all sorts of other taxes, but that is a different issue.) More broadly, it means 1/2 the population doesn’t have the wherewithal to fund and sustain the basic operating costs of a democracy.  That’s not a system liberals ought to be defending.

Ever since Bill Clinton, one of liberals’ main strategies to improve the condition of the working poor has been the Earned Income Tax Credit, which bumps up low wages by essentially giving workers money in the form of  a tax refund.  (The EITC is also one of the reasons so many households don’t pay any taxes). That’s not a bad thing, as anti-poverty programs go.  But it’s become something of a fetish for Democrats who can’t stomach a real confrontation with the employing classes in this country. And that is a bad thing. It’s no accident that the EITC was first instituted in 1975. Though it was meant to address other issues, it was well timed to become the emblematic policy of an economy built on stagnant wages and a New Deal state in retreat.

Four decades later, wages are still stagnant, and the New Deal state is all but dead. So while I appreciate the class warfare of Stewart’s satire, I’m not eager to join the encampment he’s defending.

8 Responses to “Why I’m Not Laughing with Jon Stewart”

  1. classstruggle2 August 19, 2011 at 10:46 pm #

    In theory, you need negative tax rates to have a reasonable amount of income redistribution. So how come income distribution has gotten so much worse with the EITC? Because tax rates on the super rich are so low. We would have better income distribution with low but positive rates on low income people and high, graduated rates on high income. Using Buffett’s income levels, I would say 40% at 1 million, and 70% at 10 million. With billion dollar incomes, you can’t stop there, you should get to at least 95%, probably 98% at a billion. Of course, if you had 70% rates at 10 million, you wouldn’t have the billion dollar incomes, which is precisely the point of high rates.

    • chrismealy August 19, 2011 at 11:33 pm #

      I think the point is that wages are simply too low. Higher taxes at the top are great for revenue, and for taking the rich down a peg (the best reason), but they don’t improve wages for working people. Redistribution is nice but higher wages are better. Increased bargaining power of labor against capital is probably what’s missing (yes, I waffle).

      • Jon August 20, 2011 at 1:54 am #

        Bingo.

        High taxes on the rich indeed serve political economy purposes.

        However, it is also financially and economically advantageous (see this: http://www.correntewire.com/why_obama_tax_deal_republicans_insane for a brief review).

        High taxes on wealthy citizens and large corporations provides an incentive (not completely a bad word!) to invest profits rather than extricate them. Ironically, this is largely an effect of future expectations of reduced taxes–but nonetheless provides a significant boost to the economy.

        So, raising taxes in of itself should increase middle class wages via increased real demand. Of course, strong labor policies would also help, but that isn’t any good if the rich dominate political economy (let us forsake the chicken-and-egg scenario for now).

        So it seems both policies reinforce each other. I’m not sure whether CS made the connection, but we shouldn’t be so inclined to embrace any particular policy that might be best. We should embrace all policies that help the working poor and middle class economically and politically.

  2. Bennett Lerner August 20, 2011 at 12:34 pm #

    how true. what’s actually funny in a perverse way of course is cutting taxes on corps and rich leading to prosperity for all. How about the new alternative income tax credit for harnessing human gas. have a sit, hook yourself up, and make a deposit. Very egalitarian.

  3. Stephen Zielinski August 22, 2011 at 10:20 am #

    “It actually is a scandal that 51 percent of American households are not paying income taxes. Not because it means the majority of Americans are free-loaders but because it means the majority of Americans don’t make enough to money to pay taxes.”

    I’d bet that Stewart would agree with this position. He’s just ridiculing the reactionary knuckledraggers who want to deepen the exploitation of the poor so that the rich can continue to benefit from their low-tax regime.

    Of course, the key long-term problem is job and income growth, not the effective tax rate paid by the working poor. It’s just vicious and silly to assume the labor market measures an individual’s true or real social value when the labor market cannot support a full-employment economy with a living wage for the least of Americans. America’s economic system is socially and politically destructive, and American’s have had ample time and reason to draw this conclusion.

Trackbacks/Pingbacks

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