Romneyhood and the Ruse of "Double Taxation"

Mitt Romney was asked on Sunday if it's fair for people like him to be paying the low 'capital gains' tax rate while people who make money from work pay up to a top marginal rate of 35%. Unphased, Romney answered in the affirmative explaining that capital has already been taxed once, at the corporate level, which is what justifies the low rates on investment income (capital gains).

Let's take that argument a little further. After all, corporations only make profit because consumers buy things, and they buy those products with the money they have after they paid taxes. So, the money corporations get from their customers has already been taxed once, right? Why should they pay tax on it again? Under this logic, no contractor you ever hire to work on your home should ever have to pay a dime in taxes, since you are paying them from your after-tax income. Any work that is paid for with after-tax dollars should then be tax free. And under this logic, the only time money should be taxed is when it goes from a corporation to you, via the means of compensating for work. Every other tax is "double taxation," and thus unfair.

These arguments can be confusing, and even convincing, if we don't understand the basic concepts of where the instance of taxation always occurs: at the point of transfer. This is the one characteristic all taxes have in common, and given that taxes are the way we pay for ongoing government, it is the only reasonable way to tax. You owe income/payroll taxes when you get paid. Sales tax is paid at the point money goes from your wallet to a retailer. If that weren't the case, lots of taxes could be characterized as "double taxation."

This, by the way, is the notion used to exempt the privileged from all sorts of taxes. Republicans want to get rid of the inheritance tax because, they argue, the inheritance has already been taxed once, and taxing it again at the time of inheritance amounts to "double taxation." The fact that the people who are inheriting it never paid their share of taxes is irrelevant. And I suppose the fact that it means the children of the super wealthy get to inherit fortunes without paying any taxes on it themselves is just a happy side effect.

This argument is a ruse. It's a ruse to confuse people, to make them think that you're making a fair argument while you conduct the greatest transfer of wealth in history - from the poor and the middle class to the rich. Taxes are what we pay to live in a civilized society. Because taxes are needed on an ongoing basis to keep the government (and its services, like roads, bridges, the military, public schools, etc.) running, taxes also need to be collected on a regular basis. The ongoing instances of taxation are, therefore, at the point of transfer. When taxes are looked at in this light, you can see why the arguments of 'double taxation' are idiotic. When one inherits money, it's a transfer - and thus an instance for taxation. When one gets money from their investments, it also is a transfer - from the corporate coffers to the personal coffer - and in that way no different from transfers from an employer to an employee in instances of regular income.

The 'double taxation' argument conveniently shifts the burden from the rich - who get most of their money from transfers from corporations in the form of investments to the poor and the middle class, who get most of their income from work. Somehow, when you transfer wealth to the rich, it has "already been taxed," but when you transfer it to the needy, it's "government dependence." It is an argument to distract us from focusing on the fundamental unfairness of our tax-code: a code that by law gives preferential treatment to money made from money than to money made from work. It aims to move us away from the stunning cognitive dissonance of the people who say they value work but clearly in their policies value wealth made from sources other than work more.

No one should be surprised that Mitt Romney so cavalierly makes and accepts this argument. No one should make the mistake of thinking this is simply a selfish state of mind for him, either. His and his party's preference for a vastly preferential rate for capital gains over the tax rate for work is much more than about catering to the wealthy. It is about fundamentally shifting the tax burden from the well off to the worse off. It is about fundamentally re-organizing the playing field so that opportunity is the sole privilege of the privileged rather than a birthright of all. It is about dismantling the American contract and the very concept of social responsibility.

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