Taxes: The Debate We're Not Having

If you feel like you are paying too much this year to Uncle Sam, remember. The issue isn't what you are paying, but what those taxes buy you. And until we are willing to tame the $700 billion budgetary gorilla, you won't ever get much value for your hard-earned money.
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It's tax time and to mark this hated season let's take a quiz. Question: Do you

A) Pay too much in taxes

B) Pay too little

C) Pay just the right amount

The answer is: D) none of the above.

We talk -- or complain -- a lot about taxes in this country, and many of us, I suspect, are upset with our annual bill. And while promising tax cuts has always been politically popular, our national mood about them changed when Ronald Reagan portrayed paying our taxes as some sort of government-perpetrated felony. Indeed, that anger at taxation of any kind has been the consistent center of the Republican Party ever since.

Whenever we talk about taxes, whether about our own or about our national tax policies, we make a basic mistake. We talk about what we pay -- how much, at what rate, which deductions and so forth. Rarely, however, do we talk about the other half of the equation. What do we get in return for what we pay?

We don't talk about that, because the answer is pretty dispiriting. Mostly what we get is the Department of Defense.

Slightly more than 50 cents out of every discretionary dollar spent by the federal government goes over the river to the Pentagon. That means a little less than 50 cents out of every discretionary dollar gets spent for everything else -- from roads to medical research to education support to environmental protection. Some estimates have that number at closer to 60 cents.

That figure has been remarkably consistent since the end of the Second World War. Over more than half a century, big, bloated Defense Department budgets have enjoyed wide bipartisan support. As scholars like Andrew Bacevich and Paul Koistinen have demonstrated, administrations have come and gone, wars have been started and ended, our enemies have changed from communists to Islamists, and the Defense Department budget has remained enormous and largely unchanged as a portion of our total spending. Or has even increased. According to Koistinen, for example, today's Pentagon budgets are larger than at any point between 1946 and 1992 (the period of the Cold War), and that doesn't even include the price-tags for Iraq and Afghanistan (for a review of his latest book see here).

The bipartisan support for this spending has meant that we don't even debate the efficacy of all this military spending. Much of the economy is now addicted to Pentagon money, making defense spending popular in almost every Congressional district.

This weird silence on the single largest piece of the federal government distorts all of the policy debates we have over spending and taxes. Republicans who want to reduce spending only want to reduce the way we spend that 49 cents -- and since it is already spread too thin, the cuts they propose are cynical, cruel and irresponsible. At the same time, those who want to increase spending on education or infrastructure are forced to propose tax increases, since any suggestion that we move that money from the Pentagon's ledger in order to fund everything else is verboten.

Look at it this way. Paul Ryan has trotted out yet another version of the GOP's budgetary same-old same-old, proposing $2.4 trillion dollars in cuts over ten years to poor people, old people, sick people, students, farmers and almost every American who isn't a hedge fund manager or related to the Koch brothers. That averages $240 billion/year. Which is about 30% of the Pentagon's budget for a single year. (The Pentagon tab for FY2013 ran to $716 billion). Naturally, Ryan's budget framework envisions an increase in defense spending.

For most of us, of course, spending our taxes on the military doesn't yield much to make our lives or our communities better. Big weapons systems and overseas military installations, to say nothing of feckless military adventures in Vietnam or Iraq, have done very little to fix our roads, improve our kids' education, or push the boundaries of medical research.

In fact, despite the enormous extent to which the private sector is dependent on our tax dollars funneled through the military budget (hello Boeing and Lockheed Martin!), this kind of public spending doesn't even have much knock-on effect in the larger economy. Invest in roads, trains, and airports, and goods and services move around the country faster and more efficiently. Build another aircraft carrier like the USS Gerald Ford and it costs you $13 billion. Then you spend a lot of money operating it. It doesn't do the rest of the economy much good.

This is perhaps why Western Europeans seem more willing to pay higher taxes. In return for their money, they get better paid teachers, more fully subsidized higher education, a more expansive social safety net, and better investments in infrastructure.

In short, most Americans want to use taxes to build a better society. But given the way the Pentagon sucks up our tax dollars, we are trying to do so with one budgetary hand tied behind our backs. It's a little like paying for a Lexus and driving away with a Kia.

So if you feel like you are paying too much this year to Uncle Sam, remember. The issue isn't what you are paying, but what those taxes buy you. And until we are willing to tame the $700 billion budgetary gorilla, you won't ever get much value for your hard-earned money.

Steven Conn teaches history at Ohio State University. His latest book is "Americans Against the City: Anti-Urbanism in the 20th Century" (Oxford University Press).

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