Thursday, March 6, 2014

Progressive Taxation and Fiscal Citizenship

Thanks to Dan, Karen, and the rest of the folks at the Legal History Blog for inviting me to be a guest blogger this month.  I’ve been a long-time reader of LHB and other blogs, but I’m a first time blogger. I’m looking forward to the experience.

Bernard Hibbitts is a tough act to follow, and I doubt I’ll be nearly as prolific or as inspiring as he was in his posts, but I hope to use my time here to share some background on my research and teaching, and to revisit (perhaps later this month) some of the pressing issues facing legal historians and historians more generally during this tumultuous time in higher education.

Let me start, though, with a brief post about my recently published book, Making the Modern American Fiscal State: Law, Politics and the Rise of Progressive Taxation, 1877-1929.
Dan has already kindly posted a summary of the book and links to the introduction and conclusion. And Chris Schmidt has generously reviewed the book on JOTWELL.  I thought I’d begin by following up on a couple of the book’s central themes. 

One of my primary aims in this project is to place the origins of our progressive income tax into a broader historical context.  Today, scholars and social commentators are highly critical of our current tax regime.  Many political conservatives depict it as an inefficient set of complex rules that ought to be abandoned in favor of some kind of consumption tax.  By contrast, many liberals believe our present system is mainly a muddle of incoherent, special interest giveaways and loopholes for the wealthy that does little to address economic inequality.  Many of the historical narratives we have seem to track one of these two views.

Although there’s a certain amount of truth to both of these depictions, they seemed to me rather simplistic and ahistorical accounts.  Thus, I try to show how the reformers and lawmakers that helped create the early twentieth century foundations of our current system were motivated by a complex mix of intentions.  In supporting a progressive income tax, most activists were not trying to radically redistribute wealth, as some commentators on the political right might claim today.  Rather, their goal was to reallocate the burden of financing a burgeoning modern, industrial state.  They wanted to replace the existing nineteenth-century regime of indirect, regressive, and hidden taxes – associated mainly with the tariff and excise taxes on alcohol and tobacco – with a direct, graduated, and transparent tax system.

Similarly, while the adoption of moderately graduated income taxes may not have gone as far as some radical dissidents had hoped in addressing the massive inequalities of the first Gilded Age, the effective displacement of a regressive and hidden tax system was in and of itself a tremendous achievement.  In short, I try to demonstrate how reformers and lawmakers navigated between the political extremes in an effort to create a new fiscal order.

The book’s other goal is to show how taxation a century ago was about much more than just raising revenue in a fair and effective manner.  It was also about reinvigorating a new sense of American civic identity.  Influential thinkers, populist activists, and political leaders believed that citizens owed a debt to society in relation to their “ability to pay.”  They used these key words as a cognitive map, as a type of mental frame, to illustrate the widening circle of modern associational duties and social obligations.  They also used this curt yet crucial phrase – “ability to pay” – as a political tool. They wielded these words to demonstrate that citizens that had greater economic power also had a greater social responsibility to contribute to the public good – to contribute not only proportionally more but progressively more.  In this sense, demands for progressive taxation were used to reconfigure the relationship between citizens and the state, to renegotiate a new social contract, to forge a new sense of fiscal citizenship.

In the book’s conclusion, I try to show how these Progressive-Era claims continue to resonate today.  The calls to tax Warren Buffet as much as his secretary, the demands by the “99 percent” to “tax the rich,” and even the Obama administration’s partial victory last year in raising the top tax rates on the wealthiest Americans are all examples of the enduring legacy of a progressive tax system based on the notion of “ability to pay.”

In my next post, I hope to discuss briefly how I became interested in trying to write a socio-legal history of the modern American fiscal state, and the origins of my broader research interests in the historical relationship between taxation and state-building.