Progressive Taxation

Here at the Third Way Center we are committed to controlling government spending, and protecting individual liberties against the State.  But we feel very strongly that our current tax system is retrograde and unfair.

The wealthiest one percent in this country owns over one-third of the countries wealth [http://blogs.wsj.com/wealth/2007/04/10/the-wealth-data-puzzle/?mod=WSJBlog ], yet paid less than a quarter of Federal taxes [  http://www.nationalreview.com/nrof_bartlett/bartlett200512070900.asp].  If we add in data from even-more regressive State taxes, the situation becomes even bleaker.

Looking to the top 10%, we find that it owns about half the country's wealth [ http://www.faculty.fairfield.edu/faculty/hodgson/Courses/so11/stratification/income&wealth.htm ], yet paid only 52.2 percent of federal taxes.  Again, this leaving out State taxes, which would drop the percentage paid down to around 40% or less.

If we think about these numbers in real terms, it becomes clear that those who own the majority of land and buildings in this country are not paying their share from the defense of this property.  To take an imaginative scenario:  the costs of a war which destroyed all personal property would be catastrophic from the rich; but assuming there was some new country where Americans could immigrate and ply their trade (and stipulating that the global economy would remain un-affected), such a war would have a rather negligible effect on the wealth of most everyone else.  The rich benefit much more from U.S. spending for protection of property rights than the rest of us.

One may counter that this point is moot since most U.S. spending is not on the military.  However, one must first of all note that much of the spending is there to maintain the economy which supports the military, and to maintain domestic peace that allows for protection of property rights (e.g., welfare spending to pacify the "lumpen proletariat").  Moreover, the poor are often hurt by excess non-military spending just as much as the rich.  As such, it is instructive to think of all U.S. spending as being direct or indirect supports for protection of property rights, plus an unavoidable surplus that is just like an extra inefficiency.  Yes, it would be great to have more efficiency in certain areas, but since we don't have this, we need to think about who is really benefiting the most from Federal spending as compared to how much they pay-in.  (And here one must consider points such as the following:  the middle class may receive more in the way of Social Security payments, but it is also more badly hurt by the damaged business climate that comes from Social Security taxes.  Etc.) 

Since the situation is muddled, we must look to the interests of the less well-off.  So long as we do not have a strict libertarian governmental situation, one cannot readily say that the rich are being "soaked" unfairly.  Rather, it is a simple question of how to extract a maximum of wealth from them over the long-term without having countering negative economic effects that offset the value of the increased tax revenues.

Yes, lowering taxes on the rich in the 1980's in the U.S. has led to them paying a higher percentage of taxes now.  However, the upper-bracket was 70% before Reagan.  That's a little excessive.  That sort of rate is certainly going to have too many negative effects on wealth accumulation and entrepreneurship.  Moreover, the simple fact is that lower-taxes for about 30 years plus massive borrowing plus any number of government schemes which hurt the poor and help the powerful and well-connected have let the very wealth earn more compared to the rest of us.  That's not exactly progress.

We need to bump the highest tax-bracket up to 50%.  Indeed, everyone earning over $100,000 a year ought to be in that bracket, as combined with an increased standard deduction for everyone.  This would garner over $200 billion annually, and probably quite a lot more than $200 billion.

Moreover, a tax on personal wealth for the top 1% is needed.  Perhaps a 2-3% tax on real estate, financial instruments, and cash on hand, with an exemption for the first million dollars of property and for all debt-financed property.  There's nothing unfair about this, and there is something quite fair about lowering taxes and other government interference for the bottom 99% by raising the standard deduction and balancing the budget.  Such a tax would garner over $300 billion per a year (although it is very difficult to estimate the precise number).

There is no reason that the bottom 50% of earners ought to pay Federal taxes in our current condition of wealth disparity.  The bottom 80% already pays only 20% of Federal taxes [ http://www.nationalreview.com/nrof_bartlett/bartlett200512070900.asp].  One might imagine that this number suggests that the situation is not as retrograde as one might think.  But another thing that is suggested is that the costs of lowering this number are not so great.  And once we consider that wealth disparity in the U.S.  is ultimately about personal wealth rather than personal income, we can see that lower this 20% figure would be the fair thing to do.

Moreover, looking beyond particular justice to general justice, we see that it is still the proper course of action.  More wealth left in the hands of the bottom 80% of earners would do wonders for improving our culture and for allowing broad-based wealth accumulation.  This will allow for a situation in which less government intervention is required in areas such as housing, health, and education, and ultimately lead to smaller government and lower taxes for all.

  

Anthony Giddens

See http://en.wikipedia.org/wiki/Anthony_Giddens#The_Third_Way

Giddens has many interesting ideas and certainly one can endorse his rejection of "market socialism."  

One suspects, though, that he places the "Third Way" too far to the Left.  In particular, his emphasis on anti-traditionalist transformation in the area of gender and his appeal to Habermas are suspect.  Habermas is not "Third Way"; Habermas is the extreme Left.  So is most of what passes for "feminism" today.

I think the major idea between the "Third Way" term is that earlier Leftist politics need to be limited, even as the militaristic Right needs to be rejected and even as broader non-acceptance (in something of a libertarian mold) of "conservative" thought on social issues needs to be maintained.  There is then much dithering on how far socialism needs to be curtailed at the moment, and on much disagreement on social issues such as abortion, school prayer, etc. (although no major "Third Way" thinker today consistently and ardently take the "conservative" side of these issues). 

There is also a generally taken-for-granted rejection of what we might term "strict libertarianism":  the view that, in almost all cases, the option of immediately moving toward limiting the government's to protection of property rights is the better option.  This type of libertarianism just isn't on the radar for most, but I think it is fairly evident that the Third Way is not compatible with this libertarian option (an attractive one, in many ways, at least as compared to the type of government we typically get in the U.S.).

One might distinguish between "Left Third Way" and "Right Third Way."  Left Third Way wants to disguise its socialism under new colors, the better to sell it.  It's not so much that socialism failed, as that the public gagged on it.  Right Third Way honestly doesn't want substantial, long-term increases in the percentage of GDP devoted to government, but it does want the massive amount of wealth the government takes in to be well-spent and procured progressively.

Third Way Center on Zimbio

http://www.zimbio.com/Third+Way 

Libertarianism and the Third Way

"Third Way" is a terribly vague term, insofar its positioning between socialism and the unrestrained free market captures the de facto political position of almost every major party in the West.  So, to help flesh things out a bit, I envision "Third Way" as standing for centrism, gradualism, and as being tied to certain political figures such as Bill Clinton and Gordon Brown.  In this sense, "Third Way" ties in very well with the historic, pre-New-Deal character of the Democratic Party, and is more generally representing the Right-side of many major Center-Left parties.

What, then, is the relation of a Third Way so-conceived to libertarianism?  I think that Bill Clinton's comment, "the era of Big Government is over" provides the most important clue here.  Third Way thinking opposes a further long-term slide toward socialist levels of public expenditure, even as it perhaps does not oppose past movement in a socialist direction.  Third Way thinking also aims at innovation that makes use of the free market (capitalist exchange) and at representing the spirit of individualist liberalism.  As such, the Third Way involves a moment of libertarianism, perhaps more of the CATO-style than of more strident and purist forms.

Two factors might be motivating this moment of libertarianism.  One is a simple ascension to political reality:  we are not going to achieve the pure, Nozickean libertarian situation anytime soon, so one might as well offer guidance to the government on how it is to spend our money.  And guidance that emphasizes education and health spending, along with historical respect for individual liberties, is preferable to guidance that emphasizes the need for new armor divisions and spying powers.  

But a second motive is possible:  one might take libertarianism, and, in particular, property-rights anarchism, to represent an ideal for which we are not yet ready.  And so one might wish to move toward the libertarian situation (relative to some hypothetical socialist state) without going all the way just yet.  I think this first view, regarding the currently non-practical nature of libertarianism, must be the view of any true Third Way thinker.  The Third Way is not merely claiming that social spending--e.g., for public education and housing--is preferable to military spending, but that the restraint on the market represented by such spending is needed for the present moment.  Some might further be drawn away from more socialist ideologies by an interest in partially achieving the libertarian situation here and now (but only partly).

I would suggest that a situation of anarchy does indeed represent an ideal, the way in which communism represented a superior stage in history for Marx.  One cannot move to the ideal directly, but must pass through the necessary stages.  These would be Feudalism, Classical Liberal Capitalism, Restrained Free Market (Third Way), Classical Liberal Free Market, and finally, anarchy (the dismantling of government in totum).  The Libertarian Third Way thinker is then claiming that we have not properly achieved "Restrained Free Market" and must stay in this stage until we reach a level of culture such that, for example, private charity really would cover the educational and housing needs of civilization.  

As to why anarchy:  it is a given that less coercion is better than more, all things being equal.  As such, if one can have a situation free from private coercion without the public coercion of the police and military, that is to be preferred.  If one can also have this situation be equal or better than one with public coercion when it comes to issues of support for the less-well-off, then that is an ideal which does not seem matchable by government.  Perhaps this is an un-attainable ideal, and perhaps one can admit to this (breaking somewhat the analogy with Marxism) as a Third Way libertarian, but this does not mean the ideal is without theoretical or political interest.      

Does this ideal of anarchy--de facto, an ideal of as little government "as possible"--already inform many Third Way thinkers?  I believe so.  But it might be useful for them to consider the situation more consciously.

Can Labour Provide a Model for the Democratic Party?

Britain's Labour Party under Gordon Brown has been described as "Third Way."  Mixing socialist and free market ideologies to offer intelligent policies for a suitably restrained free market society.  Can Labour's model work in the U.S.?

Tony Blair and Bill Clinton have also been cast as "Third Way."  One might imagine that the Third Way model employed by Brown is already at work in the campaigns of Obama and H. Clinton.  At the same time, Obama would take us much further to the Left than did Brown's coming-into-leadership as Prime Minister.  One might say that Obama does not fully match up with the Third Way needs for moderate change and free market commitments.  

An Obama who offered half as large increases in healthcare and the total of remaining proposed increases on social spending would have been a much stronger and "more Third Way" candidate.  

At the same time, in 2012, there may not be as great an anti-militarism stance available to the Democratic Party, and there is always a need to distinguish the DP stance from that of the GOP.  I have suggested previously that more progressive taxation, in the form of tax cuts aimed at the lower income brackets, would be a useful substitute issue.  One wonders how this compares with Labour plans for the UK.

Is Hillary Finished?; And Looking to 2012

Hillary Clinton does not seem to be building up a sizeable lead over Obama in Pennsylvania.  Obama has recovered remarkably quickly from his "gaffe" problems.  This portends the end for Hillary Clinton.  

Such an event is important for our country.  With Obama's leadership, we likely will see a Democratic Party that is not scared to challenge the military-industrial complex, and that promotes issues of substance and idealism in place of a simple stance of "we are not the Republicans."

I think Obama will still lose the general election, because he doesn't have anything to fully offset Republican's Arab-phobia, but also because voters just don't like the Dem.'s healthcare plans.  Indeed, McCain's healthcare proposals are much more sensible and demonstrate a kind of innovate, pro-free-market approach that we endorse here at Third Way Center.  On the other hand, one must accept that there are certain built-in lobbies within the Democratic Party, and one such lobby is the medical industry, and, in particular, that segment of it that has to deal with illegal immigrants, their children, and other groups likely to be outside standard insurance situations.  Moreover, the Dem.'s proposals would have a lot of useful benefits when it comes to supporting education and reducing inequality; as compared to Republican's retrograde tax plans, these proposals may look quite attractive in 2012, when the country will likely be substantially better-off and so more willing and more able to accept $150 billion per year, new Federal healthcare spending. 

Why Hillary Does Not Deserve Your Vote

Hillary Clinton stands for nothing but post-menopausal feminism.  Her entire raison d'etre is to show "the girls" can finish first--but she's not going to win.  Whether Obama or McCain defeats her, she will lose.  Feminists should look elsewhere for a leader.  Perhaps in the GOP.

Hillary Clinton has changed her opinion countless times on countless issues and has absolutely no guiding ideology.  She just copied everything from her husband, as he seemed to do well.  She could just as well run as a Republican, if she had had a different husband and if the GOP had been open to man-hating feminism.

Hillary supported the war and would have continued to do so if it had not been such difficult going for our fighting men in action.  She is essentially a coward.  She cannot be trusted as commander-in-chief.  It is true that there have been great women leaders in the past in the English-speaking world, but they had almost a superhuman status.  Thatcher might be an exception, but we don't need another Thatcher and Hillary does have the brains or will-power of Thatcher in any case.  Hillary is nothing like them.  As to other women leaders in the West--they all command nations with limited military activity.   In any case, Hillary has not made the transformation away from traditional female traits toward the type of being who can command armies.

Obama ought not say he would support Hillary as DP candidate.  She doesn't deserve anyone's vote.  Obama needs to take Hillary out--out of the race--by going all out against her.  Perhaps he ought to contact the Republicans for some notes on dirty laundry, as I am sure they would much rather run against "the Black Man"--who, realistically speaking, has absolutely no chance of becoming President in today's racist America--than against Hillary, who might have some infinitesimal chance of beating of McCain.