COLUMN-Behind contentious US democracy, boring tax policy: Ross Kerber

By Ross Kerber

Dec 17 - Ahead of the last U.S. presidential election in 2024, I imagined a public debate where candidates Donald Trump and Joe Biden would be questioned on fiscal policy by accountants and actuaries. If ever a future election features such a panel, it should include Vanessa Williamson.

She is senior fellow at the Brookings Institution think tank and author of "The Price of Democracy: The Revolutionary Power of Taxation in American History," which traces how tax policy questions tracked and shaped broader competitions for power ever since the American Revolution, which turns 250 years old next year. (say it with me: "Semiquincentennial")

I spoke with Williamson this week about the lessons she sees for current revenue debates. Where Williamson is coming from: she worries about growing inequality and says Republicans have become "a very extreme anti-tax party" but faults lefties for not stressing the virtues of taxpaying.

A transcript of our conversation follows, edited for length and clarity.

Q: You open your book with a take on the Boston Tea Party as a protest against a corporate tax cut, how might that reframe the popular understanding of the American revolution?

A: Most people have a picture in their minds of what happened on that December night in 1773, a bunch of artisans and mechanics from Boston disguised themselves and went down to Griffin's Wharf, Boston Harbor, and threw 90,000 pounds of tea into Boston Harbor. People usually imagine that it was because taxes were too high. In fact, it was quite the opposite.

Parliament decided that they were going to provide this company (the East India Company) with a big bailout...and gave this one company the opportunity to undercut their competitors in selling tea in the colonies.

Sam Adams, the leader of the Sons of Liberty, called this measure introductive of monopolies and a danger to public liberty.

Q: Sam Adams should be on the Federal Trade Commission.

A: I would be pleased to see it. They were objecting to corporate power. I think it's a story worth retelling so that we know our real history. George Washington and Ben Franklin both thought it was far too radical.

Q: I think it's fair to summarize that the big point of your book is that democracies flourish with high taxes because it kind of gives everybody a stake and makes them responsible to the needs of citizens. Authoritarians or despots prefer low taxes so the government becomes less important to people.

A: Yes. It (taxation) gives officials an incentive to be concerned with what people want because they're going to have to ask them to pay their taxes at the end of it. And it's tax dollars that makes government possible. So it gives them the incentive and the capacity to do what people want.

Q: But there must be some tipping point where taxes become too high and become inefficient?

A: The U.S. has been a very low-tax country. There's a conservative trope that taxation is tyranny, but if you actually look at the start of the world, it's our strongest democracies that raise the most in tax money.

FDR (Franklin Delano Roosevelt, U.S. President from 1933 to 1945) actually wanted a top rate of 100%. At one point he thought there should be a limit. Other Americans have said similar things. Thomas Paine argued for a limit to property to protect against corruption in elections.

But there's also a reason to make sure we're taxing everyone. That's what the strongest democracies do.

Q: Am I right to see you as a centrist? You have a problem with the progressive critique, that they're all about taxing the rich. Am I hearing you right that you're not exactly arguing for soaking the rich?

A: Bernie Sanders is one of the only people on the left who's ever talked about raising taxes on regular people. No one else has. A lot of other major leaders, even ones who are seen as very liberal or left wing, won't answer one critical question, which is, do we think our democracy is worth paying for? I have a very serious critique of the Democrats in this way. Only a few generations ago, they were not afraid to talk about raising taxes on regular people.

Those are the most popular taxes, (for Medicare or Social Security) the ones that fall on everybody. I think it's a real failure on the Democratic side to not be willing to talk about the fact that government is worthwhile.

Q; Well what are the most unpopular taxes among Americans?

A: Two taxes are generally quite controversial. The income tax, it (faces) partisan tension. And then property tax, because your property taxes historically did not match your income.

If you make taxpaying very frustrating, you're going to face a whole series of problems. In early America, the government wanted taxpayers to pay in what was called specie, gold or silver coin. Well, on the frontier there wasn't any. There was huge deflation.

I think a thing that would be enormously valuable was something underway at the federal level until recently is simplifying filing and having the IRS do it for you. There was a program called Direct File. I think it would make a big difference. It was shut down this year. It got caught up in the DOGE (Billionaire Elon Musk's Department of Government Efficiency) time.

Q: You also wrote about the political alliances that taxation systems create. Is there a possibility for new alignments now that might bring back the popularity of taxation?

A: We've structured our income tax in something like the worst way possible. It doesn't actually achieve the ends you want for progressivity. Wealthy people are very, very good at evading the income tax and the top rates are simply too low.

At the same time you've created a system that the large middle of America gets irritated with every year.