Defending his federal budget proposal slashing support for the poor, Congressman Paul Ryan protests that he simply wants to avoid transforming "our social safety net into a hammock, which lulls able-bodied people into lives of complacency and dependency."
It's a noble thought. But if Ryan and his Republican Congressional cohort really want to help Americans avoid this fate, why does their tax policy create the cushiest hammock of all for those who inherit large amounts of money?
As an inheritor myself, I am actually very sympathetic to the idea that a job is the best "welfare" program around; I'm all too aware of wealthy kids who never find a way to contribute to society and end up just as badly off as any long-term welfare recipient. So I'm puzzled that Republicans support taxing the money I earn by the sweat of my brow more than the money that my wealth earns sitting in a brokerage account.
Today, if I earn an extra $1,000 by teaching another class at Columbia, I only get to keep around $570 after federal taxes, but if I earn an extra $1,000 from my portfolio, I get to keep around $850 -- almost 50 percent more. Worse, despite Republican claims about wanting to close tax loopholes, Ryan's plan would totally eliminate taxes on investment income.
Republicans justify their position in two ways. First, they argue that low taxes on investments are good for everybody because they encourage savings, which helps the economy grow. Yet taxes on investments over the last 15 years have been lower than at any time since the Great Depression and the only thing growing robustly has been the gap between the richest Americans and everyone else.
So Republicans also offer a moral argument, one well illustrated by the eagerness with which they leapt upon President Obama's poorly phrased comment that entrepreneurs don't build their businesses all by themselves. Disliking taxes in general, and believing in the moral virtue of thrift, Republicans have become especially indignant when the government imposes taxes on the income from savings, or, even worse, on wealth itself, which they claim penalizes people for hard-earned success.
But even if the entrepreneurs who proclaim "I built this business" are solely responsible for their own good fortune, their kids didn't build the business. Why, then, are Republicans so passionately opposed to estate taxes, too? If they really dislike complacency and dependency so much, why do they aspire to provide hammocks for their own offspring?
Attitudes toward taxes invariably represent a moral view of the world as much as an economic one. While Republican rhetoric emphasizes that the rich are "job creators," their opposition to estate taxes suggests that the highest honor in their moral universe goes not to the people who create jobs but to the capital those people have accumulated. Like the neutron bomb, the nuclear weapon designed to kill people but leave infrastructure intact, Republican tax policies show a greater concern for capital than for the labor of hard-working, middle-class Americans.
Personally, I value my earned income more than my unearned income, no matter what the IRS tax tables say. And I have to say, I'm a little hurt that my Republican friends seem to think that my money is more useful to society than I am.