"Resistance Is Futile!"

A reader felt that in my last post I had oversimplified Seligman’s point when he said that “wherever we find the spread of democracy, we find the growth of income taxation.”  I said that Seligman was saying that we need to jump on the bandwagon because “everybody’s doing it!”  The reader felt that the point Seligman was making was that “income taxation is a system more in harmony with a democratic society because, in theory, it spreads the tax burden more equitably across the classes, such that all income levels bear a more or less equal weight.”

And yet, with the way the tax is administered and enforced, it is one of the most draconian forms of taxation we've stumbled upon.  We imperil our rights to our property and our own physical freedom for the sake of a money maker.  We hang our families and livelihoods over a barrel for revenue that could be collected as we shop.  Could it be that those on the receiving end have the most to gain and, therefore, the most to lose without the income tax?  Is it really about democracy, or is it yet another example of the few manipulating the system for their own benefit while using populist window dressing to avoid a rebellion by the many?

The reader was actually correct when he shared what he thought was Seligman’s deeper point, that income taxation is the “democratic” thing to do.  I would argue that, unfortunately, that is the oversimplification of the matter.

Nothing happens in government, especially at the highest levels, by accident.  They happen because real people sit down at a table and say concrete things to each other until an agreement is reached.  Everything flows from that very deliberate process.  Bearing in mind Seligman's connection to the powerbrokers of his day (the robber barons his father, a banker, had worked with as customers and partners), listen to another recap at the very end of his book:

"[T]he income tax is coming.  Sooner or later the constitutional or political difficulties will be surmounted, and the United States will fall in line with every other important country of the world.  Economic conditions have everywhere engendered a shifting of the basis of taxable faculty, and democracy has declared that the best criterion, on the whole, is to be found in income.  Whether we like it or not, the development is irresistible, and the income tax will come to stay until some new criterion of ability approves itself to the democracy of the future.”

Spoken like an insider; such resolute language.  If you read that paragraph with a German accent and as if spoken through a bullhorn, you get the idea.  I’m only half-joking.  “Resistance is futile!”

And, it just begs to be asked: how does “whether we like it or not” fit into the democratic principle?

It gets even more comforting.  He then talks about how wherever the income tax is introduced (and always strongly opposed by the public, remember), the tax works better and better (rakes in more dough) from year to year and decade to decade.  “This is due partly to the fact that business conditions are apt to adjust themselves to long-continued laws [do they have a choice?], partly to the fact that in progressive communities a gradual improvement in administrative methods may be expected [this is how death camps became more efficient over time], and partly to the fact that public sentiment slowly accommodates itself to a fait accompli.”  Let us pause here to define that French term.

fait accompli: An accomplished, presumably irreversible deed or fact.

So, Seligman assures us that we will eventually be worn down and accommodate ourselves to what we presumably cannot change.  So long as we think something is unchangeable, we will adjust to it and resign ourselves.  Again, I’m trying to find the democratic principle in this.

 

After having practically ordered us to “fall in line” in his previous paragraph, Seligman seems to be trying to soften our inevitable submission with the old, “Everyone eventually comes to their senses, and so will you” approach.  Can you see him standing close to you under the harsh light, speaking in comforting tones and smiling?  Here’s how the fait accompli paragraph finishes.

“For the present generation in England or Germany to read of the imprecations [curses] heaped upon the income tax by an earlier generation is almost to read an unfamiliar language, so completely has both the governmental and the individual attitude changed.  Is it unreasonable to expect that the similarly extreme opposition which is still manifested by certain individuals or classes in France and in the United States will be regarded with the same feelings of wonder by a future generation?”  Perhaps here Seligman offers you a cigarette.

We are the future generation and, from the question Seligman has just posed, I gather we are to regard as a quaint oddball the U.S. senator who pointed out that France had no income tax in the 1890’s because she had “learned to love liberty, to hate inquisitions, to detest class legislation, and to respect the rights of property.”  By now, according to Seligman, those sentiments are supposed to hit us as alien, as foreign, as unrecognizable – yes, to fill us with wonder.

“Finally,” he concludes, “the success of an income tax depends, perhaps more than almost any other modern institution, upon administrative machinery.”  There, did that make the pit in your stomach go away?  “…Certain methods, which promise well from the point of view of the symmetry of the tax, work badly amid a democratic environment.”

Earlier in the book, Seligman lamented: “Administration in a democracy is proverbially difficult.  In a community where everyone considers himself as good as his neighbor, respect for expert knowledge is not likely to be so great as in an aristocracy or autocracy.  The university professor, for instance [of which Seligman was one], occupies a far higher position, socially and financially, in Russia than he does in the United States.  Not only is democracy less favorable to the dominance of the expert, but it is also less favorable to administrative efficiency in other respects.  Permanence of tenure, with all the knowledge that results therefrom, is difficult to secure…And finally, the general attitude of the average citizen to the government official is more likely to be that of superior to inferior, rather than the reverse.”

Seligman later speaks of the “inestimable advantages of a democratic government” which we put over and above the inherent “dangers” of difficult administration, and later in his career he spoke strongly against implications that he was a socialist.  The point here is not whether he was.  It is simply to point out that this well-connected professor openly envied systems of government where the leaders and “experts” could just say, “Do it!” and the people did it, “whether [they] like it or not.”  That doesn’t smell like democracy to me.

So, picture this: a form of taxation introduced in democracies where it is greeted with sometimes violent opposition by the people (you know, those who make up a democracy).  The few keep it in place long enough, knowing the people will eventually grow tired and acquiesce (where have all the Occupy protesters gone?).  The tax is administered and enforced by the proper “machinery,” which turns out to be despotic rather than democratic or even humane (ripping families apart so Uncle can get a buck?).

For Seligman to say that “democracy has declared” that the income tax is the democratic way to raise government revenue is truly an oversimplification.  I believe if we look beneath the surface we will see that there’s more to it than that, and I believe that my take on Seligman and all the other “experts” who were using the income tax to point the way forward actually hits closer to home: Our system, though not perfect, has been doing a fine job financing government (in fact, sometimes too good).  The Gilded Age has caused the gap between rich and poor to increase, and we must do something in the name of equality to fix it, because the rich aren’t paying their “fair share.”  Here’s the democratic answer – the income tax.  And look, everybody’s doing it, and so should we.  And, by the way, you’ll fall in line whether you like it or not.

Do we need another hundred years to watch the income tax administered and enforced before we can make a judgment and put it to rest?  True, it looks good in theory, but in practice, with its necessary machinery in place, it can only be the tax of the despot, the tyrant, the dictator – even in a so-called democracy.