Richard Epstein: Progressivism Remains Off Key

Progressivism Remains Off Key
Richard A. Epstein
April 19, 2010

There is a delicious irony in the Center for American Progress choosing Tax Day, April 15, 2010, to publish its new defense of the progressive intellectual tradition in the U.S. The deep intellectual confusions of that movement are caught in its opening salvo, which quotes a famous aphorism of Justice Oliver Wendell Holmes: “Taxes are the price that we pay for a civilized society.”

Ironically, the CAP study links that quotation to the U.S. Department of Treasury Web site, which has the good sense to observe that the Holmes quotation “tells us nothing about the form or levels of taxation.” Neither does CAP, it turns out. But the issue matters. Treasury reported that when Holmes penned those words in 1902 the tax burden stood at 1.3% of GDP. By 2000 the tax burden exceeded over 20%, a number that looks almost blissfully low in light of the massive new Obama taxes. Some taxes are necessary for civilization, but surely every tax, no matter how dumb, is not.

As I read through the first of the three CAP reports, that by John Halpin and Conor P. Williams on the "Progressive Intellectual Tradition in America," I found no systematic defense of our current high rates of taxation. Instead our authors dished out a cook’s tour of the major tenets of the progressive movement, which attacked any traditional theory of natural rights (which date back to Roman times), without saying where and why it broke down, or what should have been done to fix it. Nor do our authors explain what was wanting in the classical liberal efforts to use the antitrust law to counteract horizontal restraints on trade, or rate regulation to deal with the problem of large network monopoly industries, such as railroads and communication, in which competitive markets are not possible.

Richard A. Epstein


The Right ignores the obvious.

Epstein writes:

"As I read through the first of the three CAP reports, that by John Halpin and Conor P. Williams on the 'Progressive Intellectual Tradition in America,' I found no systematic defense of our current high rates of taxation."

Frankly, the assertion that "our current . . . rates of taxation" are "high" is misleading, and cannot be characterized as anything but intentional.  While I am not certain what bases Epstein used in concluding that today's tax rates are "high," other than a completely silly comparison of the ratio of tax burden vs. GDP for 1902 and 2000, e.g., I think it's safe to assume Epstein's numbers include social security and medicare taxes, which didn't exist in 1902, but which Americans more than recover during their golden years, a review of tax rates over the last 60 years destroys the myth that Americans are overtaxed.  Indeed, Epstein's argument and apparent fondness for teaparty politics underscore a willful ignorance of the fact that tax rates have declined significantly in recent decades, and that federal tax rates are middle-income Americans are lower than at any point since the mid-Fifties.

Manufacturing and twisting facts in order to support an argument only highlights its deficiences.


Misleading or Lazy?

It is either intellectually lazy or misleading for Professor Epstein to point to the growth in tax rate while ignoring the growth in GDP. The 2000 GDP was 10 times larger than it was in 1902. Here's a concrete example.

If J.D. Rockefeller had an income of $1 million in 1902, and had to pay a tax at the 1902 tax burden rate, he would have paid $13,000, and retained $987,000.

But his proportionate income in 2000 would have been $10 million. His 2000 tax, at the tax burden rate, would have been $2 million and he would have retained $8 million.

It is unfortunate that such a powerful and well-intentioned mind as Professor Epstein's is locked into an ideology that has proved erroneous in real-world application.