Sunday, April 09, 2017

What Does "Pay Their Fair Share" Mean?

Alaska's budget is about $4 billion short.  The legislature is battling to balance the budget.

Republicans, pretty much, want to do it by cutting the budget.
Democrats say it's been cut to the bone over the last couple of years and that revenue needs to be raised.

In a recent blog post I quoted a letter to the editor which called on teachers to take a pay cut to preserve their colleagues' jobs.   I pointed out that it seemed unfair for only teachers to take a pay cut.  Everyone benefits from kids getting a good education.  Everyone should take a pay cut.  And that there was a way already set to do this, and it was done in most other states.  It's called an income tax.

I, of course, knew that this term is like blasphemy to conservatives, particularly to wealthy ones.

Oliver, who comments here once in a while, suggested, in a comment to that post, that we have a sales tax instead.  After a discussion about all the people who would not pay an income tax, including those who make less than $14,000, Oliver concluded that:
"Not what I would call fair or everyone paying their fair share."
I took some time to think about and respond to his comment.  When I tried to post my comment, there was a problem and it wouldn't post there.  I had thought about making it all a new post, but figured the discussion should stay with the original post and comment.  Then I tried again and it said my comment was too many words.  So I'm making this a new post.  You can see the old one and Oliver's comment in full here.

My response:

1.  For the sake of this discussion, I'll just accept the numbers that Oliver offered.  I agree in general principle that as many people should pay the tax as possible.  I would point out that as of 2016, there were 198,617 residents 18 or under, many of whom would live in families that paid an income tax.

2.  It's long been understood that a sales tax is a regressive tax, meaning the poor pay a larger percent of their income in sales tax, and that it 'hurts' them far more than it 'hurts' wealthier people.  Even if wealthier people pay more in sales taxes.  I won't go through that argument here.  That link also discusses the reasons for a progressive tax, like most income taxes, in which higher income people pay a higher percentage of their income. (Assuming there aren't enough loopholes to make the higher rates moot.)

So I would just like to focus here on the idea of "everyone paying their fair share."  More particularly, on the underlying assumption of that.

The Problem Of The Work Ethic In The 21st Century World

The work ethics that most Americans can quote goes something like this:  hard work and diligence are morally good.  There are some corollary assumptions:

  • that if you work hard, you will do well
  • wealth is the result of hard work
  • poverty is the result of laziness
  reminds us that work wasn't always seen as having intrinsic value, particularly manual labor.  The Hebrews, the Greeks, the Romans saw work as something to escape, to have slaves do.   It wasn't until the Reformation that work became holy.  Luther equated one's vocation with one's calling from God.  But, with Calvin, according to History of Work Ethic, work didn't make you good, it was a sign that you were predestined to be good.  
"Central to Calvinist belief was the Elect, those persons chosen by God to inherit eternal life. All other people were damned and nothing could change that since God was unchanging. While it was impossible to know for certain whether a person was one of the Elect, one could have a sense of it based on his own personal encounters with God. Outwardly the only evidence was in the person’s daily life and deeds, and success in one’s worldly endeavors was a sign of possible inclusion as one of the Elect. A person who was indifferent and displayed idleness was most certainly one of the damned, but a person who was active, austere, and hard-working gave evidence to himself and to others that he was one of God’s chosen ones (Tilgher, 1930, p. 53-61).
Calvin taught that all men must work, even the rich, because to work was the wil of God."

In any case, today, most of us, at least subconsciously if not explicitly, tend to look down on the poor and give respect to the wealthy.  But despite this general rule, there have always been exceptions:

  1. Those who inherit wealth only work if they want to or their families require them to. If they do work it’s often in jobs provided through family connections
  2. Slaves worked, but didn’t get paid for their work - their masters took the benefit, and those lost wages are still reflected in our society’s wealth inequality.
  3. Women didn’t work outside the house unless economics forced them to.  Married women whose  husbands had enough income to support the family worked at home.  Depending on how much the husband earned, the woman might work hard in the house or might have help to do most of the work.
  4. People who were physically or mentally ill or disabled may or may not have worked depending if they could find something that matched their abilities  
  5.  Children may or may not have worked - it depended on the family income and where they lived.  Farm kids often worked from a young age.  Child labor outside the house/farm expanded greatly in the industrial age for poor families.  And conditions were often horrendous.

Today, we still have this moral value attached to wealth and working.  Not working, or at least being poor, is seen in the US as a moral failing.  We may provide services for the homeless, but we tend to blame their homelessness on lack of a work ethic.

A Change In the Nature Of Work

The myth is that the work ethic was useful once in a time when everyone had to work for the family and the society to survive.  That may have been true of families, but most societies in history had workers and those who lived off the work of the rest.
The work ethic was probably a convenient tool when human economies became industrialized and workers were needed in the factories.   But our economy has changed.

Trump has blamed immigrants for taking away American jobs though we know for the most part immigrants take jobs that Americans either don’t want to do, or skilled positions for which employers can’t find enough qualified Americans.

The Real Job Thief Has Been Automation.  

From the time that science was applied to management in the US (around the early 1900s) workers were seen as a problem. Early Management Science tried to make factories more efficient by making people more machine like.  People no longer created a whole product from the beginning to the end.

Instead the process was broken down in to separate pieces, and factory workers did the same 10 - 90 second action over and over again all day.  The joy of work, of having a craft and doing it well, was replaced by tedious, boring work.  First this was with factory work, but then it spread into other fields.  Some of the last fields are education and medicine.  The technology of distance education, for example, reduces teaching into components.  Teachers prepare, with the help of teaching technicians, videos, reading assignments, etc. before the class begins.  Everything is put on line and the teacher may have no role except to comment in discussion groups. And a new teacher could step in and appropriate the work of the teacher who designed the class.   Doctors are no longer working in private practice.  They are now mostly employees of hospitals.

What Will We Do With Our Leisure?

This change was already anticipated in the 1950s and 1960’s when weekly magazines had cover stories with titles like “Automation:  What will people do with all their leisure time?”  They were predicting 30 hour work weeks.

What they forgot was that we have a capitalistic society where profits go to the owners of the companies.  So, as work got automated, some employees did get more leisure - they lost their jobs.  The remaining employees often ended up working more than far more than 40 hours a week.

Companies then used automation to out-source a lot of the remaining work to customers - think about self-service gas and grocery checkout, ATM machines,  skipping travel agents and booking your own tickets on line.  Now we even have to check ourselves in and get our own baggage claims.

Instead of 30 hour work weeks, we have far more unemployed, and a much greater income gap between the heads of corporations and their employees.

Are You Ever Going To Wrap This Up, Steve?

The point of this long explanation is that people are unemployed because our society doesn't need everyone to work to produce the goods and services that we want.  In fact, we do it more efficiently with more machines and fewer workers.

But our value system is still based on a society that needed every able bodied person to work.  I’m guessing that you, like most people, are still thinking in terms of those old values.  But owners of companies have an incentive to automate and get rid of jobs - it’s cheaper and machines don’t have personal lives that interfere with their work.

So that’s why I’m not persuaded by your argument that with an income tax, some people don’t contribute their fair share.  That language implies a moral shortcoming on the part of those who will get something for nothing that echoes the Protestant work ethic.

Most, if not all of those people who don’t earn enough to pay an income tax, also didn’t get a fair share when it came to things like good parents, skills that are rewarded in our school system and job market, good mental and physical health, and other factors that impact who will succeed and who won’t in our society.  Brawn which was marketable in the past, is much less in demand.

The systems we have for allocating pay are also very skewed.   How hard you work is not necessarily related to how well you do or whether what you do makes society better or worse.   Should the people who get rich selling alcohol have some extra responsibility for the people who die at the hands of an alcoholic?   Should a teacher get tax credits for inspiring a student to succeed despite a difficult upbringing? [UPDATE a little later:  When I wrote this, I didn't know that a bill has been introduced in California to exempt teachers from state income tax.0

An important measure of human beings for me is how they play the hand they were dealt at birth.  Those who are given a lot, owe a lot more than those who were dealt a lousy hand.  In my ideal world, people's moral worth would be measured by the ratio between the benefits one receives and what one gives to society.  Ideally, everyone would be at least 1:1.

The people who camp in the woods along the bike trails would mostly like a decent home and income and only camp in the woods when they chose to.  But their skills and life experiences have gotten them to a point where they really can’t get out of their ruts without some serious interventions.  Our health care non-system caused many people to self-medicate, with alcohol being the legal drug, but lots of illegal drugs have also been available.   American individualism still attributes poverty to the laziness of the individual.  Other countries recognize that the social, political, economic systems play a big role in who succeeds, financially, in life and who doesn't.

I  don’t have a problem paying higher taxes to offset what they can’t pay.  I wouldn’t want to trade places with them.  And I also know that as the percentage of poor gets bigger, the more brutal society gets, even for the wealthy.

I would love a society where people are nurtured as kids and helped to discover and develop their skills and talents so we have far fewer people who can’t make it on their own.  But we also have to figure out how to distribute wealth when there just aren’t real jobs for a large segment of society.

And so "paying their fair share" doesn't mean that everyone pays in money.  Lots of people are paying with abusive parents,  with learning disabilities that weren't overcome because their school saw them as problems kids not teachable kids, with skills that are no longer valued, with trauma from war or crime, and in many other ways.

This Debate Isn't New

And I'd note, these conflicting  ways of looking at the world aren't new.  Hilary Mantel, in Bring Up The Bodies, describes how Henry VIII's chief minister,  Thomas Cromwell's attempt to hire the poor to build much needed infrastructure was treated by Parliament:
"In March, Parliament knocks back his new poor law.  It was too much for the Commons to digest, that rich men might have some duty to the poor;  that if you get fat, as gentlemen of England do, on the wool trade, you have some responsibility to the men turned off the land, the labourers without labour, the sowers without a field.  England needs roads, forts, harbours, bridges.  Men need work.  It's a shame to see them begging their bread, when honest labour could keep the realm secure.  Can we not put them together, the hands and the task?
But Parliament cannot seee how it is the state's job to create work.  Are not these matters in god's hands, and is not poverty and dereliction part of his eternal order?  To everything there is a season:  a time to starve and a time to thieve.  If rain falls for six months solid and rots the grain in the fields, there must be providence in it;  for God knows his trade.  It is an outrage to the rich and enterprising, to suggest that they should pay an income tax, only to put bread in the mouths of the workshy.  And if Secretary Cromwell argues that famine provokes criminality;  well, are there not hangmen enough?" (emphasis mine.)
I'd note that Thomas Cromwell lived from 1485 - 1540 and Martin Luther lived from 1483 -1546.
John Calvin lived from 1509 - 1584.


  1. We are never going to agree on the tax thing. But go back and read your original post ‘Come on all my mighty fellow Alaskans who get all these state benefits for free. Let's stop whining and grow up and pay our fair share’. Wanting more people to have some skin in the game does not I think, ‘implies a moral shortcoming’. (also I am not a ‘wealthy conservative’. I think this year after 34 years at my job I will make $50,000 for the first time this year).
    That being said your comments about the nature work, I read that at some point it the future that we will have more people than jobs for them. Then what are we going to do? And, what do people do when they have nothing to do?


    1. Oliver, we may not agree on the tax, but at least I’d like to get to the point where we know exactly which points we disagree on. I’ve laid out specifics, but you’ve just said you disagree. If you don’t spell out what you object to on the tax issue, then we surely won’t ever agree. But if you do, then we’ll probably find areas of agreement and narrow down the areas of disagreement. Then we can more closely examine those points latter.

      But for now, I’d like to clarify two specific things you did say in your comment.

      1. You write, “Wanting more people to have some skin in the game does not I think, ‘implies a moral shortcoming’.”

      I didn’t write that wanting people to have more skin in the game implies a moral shortcoming.

      I wrote that people who think that the poor aren’t paying their fair share are probably are basing that on Protestant work ethic assumptions. We’ve all been drenched in the idea of the work ethic to the extent we don’t even realize it frames how we see things, like the economic fairness of income versus sales taser. It’s a value system that tells us that work is inherently good and that the poor are poor because they don’t have the necessary moral fiber to work hard. That's a relatively new concept and it's not even now universally held.

      My point was that American culture puts the blame for poverty squarely on the poor individual. And the wealthy often credit their success solely on their own hard work. Other cultures recognize that the system as a whole puts obstacles up for some people, and gives others special passes to the good life. (The tall and beautiful have it easier than the short and homely, for example.) The wealthy push the myth hard: that anyone who wants to work hard can do well and there are enough examples of such people to make that persuasive. But those examples are the exception. Studies show that kids born into low-income families can expect very different futures from those born into higher-income families. It’s the system, not the individual. Though the lack of hope, because of the system, may make some low-income folks behave in ways that seem to validate stereotypes about them. And just as the media highlight the rags-to-riches stories, they also highlight these stereotypes of the poor. And we all absorb them and use them to interpret situations unconsciously.

      These are narratives that all Americans carry. Middle class and even lower-class people have internalized these stories, and they are used by wealthy people to get not so wealthy people to oppose things like income taxes. Even though, for example, someone making $50,000 would probably be better off with an Alaska income tax than with sales taxes. (I haven't checked the numbers, but if we also count the benefits people get from better public services, I'm sure I could show this.)

      2. You write at the end, “I read that at some point it the future that we will have more people than jobs for them. Then what are we going to do? And, what do people do when they have nothing to do?”

      You’re picking up on my point about the system putting people out of work. Maybe we agree on something. But I’d like you to clarify what you mean by that question: “what do people do when they have nothing to do?”

      Are you asking because you don’t have any idea? Or is that a rhetorical question? I could guess what you mean, but I don’t want to put words in your mouth. So, I'm asking you to explain what that question meant to convey.

  2. Let’s start at the beginning ‘Come on all my mighty fellow Alaskans who get all these state benefits for free. Let's stop whining and grow up and pay our fair share’, so translated it comes out as ‘Let's stop whining and grow up and those of us who make more than X number of dollars pay our fair share and those who don’t pay nothing.’ You are framing this as a matter of class and that for some reason you think that I feel an income tax is unfair because I pay and others don’t. I am a numbers person Steve, when I think of a fair tax for Alaska, Henry the VIII does not come to mind. In your whole first response I think only three sentences were devoted to the Alaskan tax issue. You seem to be channeling you inner Bernie Sanders here. I want all people to be engaged with their government not just a small elite who pays taxes. I am not going to argue class with you. Shoot me some numbers.

    Let’s look the governor’s limiting the PFD to $1,000. It was across the board and effected everyone. I will argue that if he decides to run again more than a few people will vote against him for doing that. That’s what happens when you have some ownership in the government.

    To summarize I think a sales tax that exempt’s food, medical care, day care, and clothing is better. I think a sales tax that has a cap of x amount of dollars for an individual purchase is better. I think a sales tax that taxes tourists and out of state people visiting Alaska is better. I think a sales tax is better because in the long run it is less complicated. (Last time I looked the federal tax code was at 4,037 pages). I think as sales tax would be better because it would increase the tax base and collect taxes from everyone (even drug dealers would have to pay when they buy something). And, you know what, people might look for ways to barter to avoid the tax and that might be a good thing.
    One more time you want to tax people who produce I want to tax people who consume. That is where we disagree.

    As for the work issue. I was being serious. What will happen when we have more people than jobs? About 30% of my job has gone away because of automation (lucky for me my employer found 40% more stuff for me to do). A guaranteed income? Will people have to do some public service to get it? My concern and question is, what will people do with their time? Will it be like you are retired at 25?

  3. Part 1/2: Your original comment didn’t talk about needing a tax that “engaged all the people of Alaska.”

    As I read that original comment, you were saying that nearly half of Alaskans WON’T pay an income tax. You wrote, “so fewer people end up paying. Not what I would call fair or everyone paying their fair share.” Your emphasis, as I read it, was on this point - fair share- NOT that more people needed to be engaged.

    So I responded that people with low incomes simply couldn’t afford to pay and raised the points about the Protestant work ethic causing people to morally look down on poor people. The Cromwell reference was to show that the tension between the income tax and non-income tax folks isn’t new. These same battles have been going on for centuries. It’s useful to step back and see that our debates aren’t unique and to understand the underlying assumptions each side is making. Mantel portrayed the rich feeling no obligation to help the poor even though their wealth came from dislodging people from their livelihood. She portrayed Cromwell’s belief that the practical benefits of a tax making it possible to hire the poor and unemployed to build much needed infrastructure solved the problems of unemployment, poverty, and infrastructure and that the rich could easily afford it. That same split exists now.

    Again, originally, your basic argument was that lots of people wouldn’t pay the income tax and that wasn’t fair. If you meant more than that, you didn’t write it. I can only respond to what you actually write. Only in this last comment do you hint that you think the numbers are bad. (I think you mean that the dollar amounts are bad, not the number of people paying, but you don’t clarify that.) And then you raise a different issue - that without paying the tax, people won’t be engaged. That seems to be your point this time around. (I’m not trying be picky. I realize it is often difficult to a) figure out exactly what one means and b) to convey that in writing. I reread my posts multiple times before I post and I know that is not easy to do in the comment boxes. But I also know that going sentence by sentence is often the best way to get both sides to clarify what they mean.)

    The point of your most recent comment seems to be, “I want all people to be engaged with their government not just a small elite who pays taxes.” What exactly do you mean by “be engaged”? Do you mean that by paying income tax they are engaged? Or do you mean that paying taxes makes them (more?) engaged? Engaged how, specifically? I realize some people say that by paying taxes people have more of a stake in government. But I can’t find anything that gives evidence of that. Some people argue that liberals agreed to the permanent fund dividend because they thought the public would pay more attention to how the state taxed the oil companies. While people are intensely interested in the PFD, most of that focus seems to be on how much they will get each year, but they don’t seem to have paid that much attention over the long haul to how the oil companies are taxed. When I’ve gone to public hearings on oil taxes, the vast majority of people who support the industry positions say they work in the field or have a relative who does. (Part 1 of 2)

  4. Part 2/2: You say you are a numbers person, but the numbers you give are pretty vague and there are no references or links to where they come from. If you are saying this particular income tax proposal has bad numbers, then I don’t see why it is my responsibility to provide the numbers first. I don’t know what numbers you want and what they are supposed to show. You brought it up, so you should give the numbers.

    Again, my original post was not about the specifics of the current Alaska income tax, but about the underlying assumptions that make some people favor an income tax and others oppose it. I do this because I believe those values, not the numbers of any particular proposal, are the real issue. If we don’t address those underlying assumptions, there will be deadlock unless one side has all the power.

    My point about whining boils down to this: Most Alaskan household get more money from the collective PFD’s than they pay in property taxes. I don’t know to what extent that’s true for people where there is a sales tax, but since Anchorage is more than half the state and doesn’t have a sales tax, I’d say at least half the households get back more than they pay. Most other states have income taxes, most have sales taxes. And if it weren’t for progressive politicians in the 1970’s who set up the Permanent Fund, no one would get a dividend even. No other US state, even oil states, have a dividend. Even people who want to privatize all the government land say, “It’s our money.” I’m sorry, that’s whining to me. It’s childlike behavior, expecting things without having to do anything for them. If you mean by 'engaged' that if their Permanent Fund gets diminished because the state has a deficit, they will vote out the people who tried to balance the budget, I'd say that's a shallow, short term engagement. That's not engagement in the process, only the outcome. It's like a kid complaining about not getting a new iPhone without having any sense of the parents' income and expenses. Just his wants.


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