The House Republican’s have recently released their version of tax reform – “The Tax Cuts and Jobs Act.” It is mostly what you would expect – massive tax cuts for the rich and nothing much for everyone else. Coincidentally, the New York Times this week released multiple stories on the “Paradise Papers.” The paradise papers detail how supremely profitable multinational corporations are able to avoid taxes (in the U.S. and elsewhere) through offshore financial dealings. Billions of dollars in taxes have been lost to the U.S. through offshore tax avoidance. The Republican tax plan attempts to deal with this in a few ways – a 20% excise tax on payments U.S. corporations make to overseas affiliates for example. However, as you can imagine, the proposals they offer are mostly weak tea.
The problem of tax avoidance is not just simply the result of the wealthy manipulating our very complex tax code to shirk their responsibilities but it is a part of a broader normative problem. There is a cultural assumption in the U.S. that, of course the rich avoid paying their taxes and if you were smart enough, or wealthy enough to afford a good accountant, you would as well. Hell, during the Presidential debates Trump even bragged that avoiding taxes made him smart. This norm is encapsulated in the infamous Leona Helmsley quote that “only the little people pay their taxes.” This cynicism is corrosive to our politics and our potential to solve social problems and provide adequate funding for essential public services.
We need to de-legitimize the tax avoidance norm and replace it with a norm that fully paying ones taxes is an obligation of citizenship. When thinking about this I am reminded of some remarks the political economist Mark Blyth had at the end of a talk he gave on “Global Trumpism” (pertinent remarks begin at the 1 hr 23min mark). In response to a question on how he would campaign if he was running for office, Blyth said one of the planks of his campaign would be “everyone pays their taxes.” I think this is exactly the right approach. Its a succinct statement that resonates inherent fairness and responsibility. Any left-leaning pol would be wise to incorporate that position into their campaign.