Screwed the Undeclared War Against the Middle Class (17 page)

To possess ourselves of a clear idea of what government is, or ought to be, we must trace it to its origin. In doing this we shall easily discover that governments must have arisen either out of the people or over the people.

Mr. Burke has made no distinction. He investigates nothing to its source, and therefore he confounds everything. . . . As he thus renders it a subject of controversy by throwing the gauntlet, I take him upon his own ground. It is in high challenges that high truths have the right of appearing; and I accept it with the more readiness because it affords me, at the same time, an opportunity of pursuing the subject with respect to governments arising out of society.

Burke strongly defended rule by the rich, enforced by corporate and chartered state power. He wrote:

Let those large proprietors be what they will, and they have their chance of being amongst the best, they are at the very worst, the ballast in the vessel of the commonwealth. For though hereditary wealth, and the rank which goes with it, are too much idolized by creeping sycophants, and the blind abject admirers of power, they are too rashly slighted in shallow speculations of the petulant, assuming, short-sighted coxcombs of philosophy.

Some decent regulated pre-eminence, some preference (not exclusive appropriation) given to birth, is neither unnatural, nor unjust, nor impolitic.

In short, Burke advocated for hereditary wealth and the rights of the aristocracy. Paine, of course, as a small-
d
democrat, was violently against aristocracy. But more than that, Paine saw into the future and realized that the modern aristocracy might in fact be a corporatocracy.

Paine moved to head off the possibility of an American corporatocracy by insisting that neither government nor corporations should have rights. Rights, he argued, belong only to the people. In this regard the last chapter of
The Rights of Man
is perhaps the most important. Paine wrote:

I begin with charters and corporations.

It is a perversion of terms to say that a charter gives rights. It operates by a contrary effect—that of taking rights away.

Rights are inherently in all the inhabitants; but charters, by annulling those rights, in the majority, leave the right, by exclusion, in the hands of a few. . . . [They] consequently are instruments of injustice.

But charters and corporations have a more extensive evil effect than what relates merely to elections. They are sources of endless contentions in the places where they exist, and they lessen the common rights of national society. . . . This species of feudality is kept up to aggrandise the corporations at the ruin of towns; and the effect is visible.

It is on this most fundamental question, the question of whether corporations have any role in government, that the difference between us and the cons becomes clear. Thomas Paine, and all of us who see ourselves in his proud tradition, believe that government belongs to We the People.

But the cornerstone of the cons' philosophy is the belief that control of government by a corporate elite and those with inherited wealth will ensure a stable society. It's the core of Reagan's "greed is good" philosophy that led Republicans in the 1980s to stop enforcing antitrust laws and to lower taxes on the superrich. In this Burke was equally consistent:

The power of perpetuating our property in our families is one of the most valuable and interesting circumstances belonging
to it, and that which tends the most to the perpetuation of society itself. It makes our weakness subservient to our virtue; it grafts benevolence even upon avarice. The possessors of family wealth, and of the distinction which attends hereditary possession (as most concerned in it) are the natural securities for this transmission.

In short Burke argued that a stable society depends on inherited wealth. The theory is that because the same rich and powerful people will always control government, laws and customs will hardly ever change. Burke was against change. Because he lived in a monarchy, you can say that Burke himself was not a con but a true conservative—he wanted to "conserve" the aristocratic past of the society in which he lived.

Anyone who calls himself a small-
d
democrat should have a problem with Burke's brand of conservatism. It's a con game to suggest that Americans should want to "conserve" the rule of the rich.

Paine's rebuttal to Burke was to propose what he called "progressive taxation." The last chapter of
The Rights of Man
has several tables, showing specifically how the more wealthy an estate is, the more heavily it should be taxed. Paine pointed out that most of the taxes then paid in England were consumption taxes, such as sales taxes, which fell most heavily on the working class and the poor while the vast land holdings of the wealthy were relatively free of taxes. In essence the wealthy were freeloaders, getting and staying rich off the labor and the taxes of the poor. Paine wrote:

Before the coming of the Hanoverians, the taxes were divided in nearly equal proportions between the land and articles of consumption, the land bearing rather the largest share: but since that era nearly thirteen millions annually of new taxes have been thrown upon consumption. The consequence of which has been a constant increase in the number and wretchedness of the
poor, and in the amount of the poor-rates. Yet here again the burthen does not fall in equal proportions on the aristocracy with the rest of the community. Their residences, whether in town or country, are not mixed with the habitations of the poor. They live apart from distress, and the expense of relieving it.

Much like today, corporations and the superrich paid relatively little in taxes as a percentage of their assets. Back then most taxes were sales taxes, that is, taxes on consumption; the poor cannot afford sales taxes as well as the rich, so the poor are hurt more by them.

Progressive taxation, Paine said, would cure both the problem of inherited wealth's corrupting government and the continuous drag of taxes on the working class and the poor. He writes that his intended tax would be "lighter" on "small and middling estates . . . It is not till after seven or eight thousand [pounds] a year that it begins to be heavy. The object is not so much the product of the tax as the justice of the measure. The aristocracy has screened itself [from taxes] too much, and this serves to restore a part of the lost equilibrium." That is, the progressive income tax is designed to serve as a way of making sure the aristocrats pay their fair share.

A progressive tax, Paine goes on to argue, would be fairer than sales taxes (which were called "excise laws" or "duties" back then). To demonstrate why sales taxes are unfair, he describes a specific tax that was levied in his time on beer brewed for sale; we have the same sort of tax today, as most states levy a liquor tax. But there was a significant difference between our liquor tax and the beer tax of the eighteenth century. Paine explains:

The aristocracy do not purchase beer brewed for sale, but brew their own beer free of the duty, and if any commutation at that time were necessary, it ought to have been at the expense of those for whom the exemptions from those services were intended; instead of which, it was thrown on an entirely different class of men.

A landed aristocrat would have had his own winery, his own brewery, his own livestock operation, and so forth. Because the rich could afford to brew their own beer, the beer levy taxed only the poor. The rich were essentially exempt.

One function of the progressive tax is simply to level the playing field, making sure that if the poor are paying more than their fair share through sales tax, at least the rich pay their fair share through income tax. But that's not the main reason for a progressive tax.

"The chief object of this progressive tax (besides the justice of rendering taxes more equal than they are)," Paine wrote, "is, as already stated, to extirpate the overgrown influence arising from the unnatural law of primogeniture [inheritance], and which is one of the principal sources of corruption at elections." Paine knew that if the rich were allowed to pass all their wealth to their heirs, the dynasties that formed would easily take over and corrupt the government.

For that reason Paine argued not just for a progressive tax but for the adoption of an inheritance tax. He pointed out that "hereditary succession is in its nature an absurdity because it is impossible to make wisdom hereditary." He believed that the accumulation of wealth in specific families was anti-democratic. "The earth is an inheritance to all God's children," he wrote.

Burke, of course, saw things differently. He was not fond of the poor. He was a strong believer in the conservative dictum, badly misappropriating and twisting the meaning of Jesus' words, that "The poor you always have with you." How dare the working-class "many" think of taxing the rich "few"? It would threaten Burke's beloved aristocracy and therefore threaten the very core of society. He wrote:

It is said that twenty-four millions ought to prevail over two hundred thousand. True; if the constitution of a kingdom be a problem of arithmetic. This sort of discourse does well enough with the lamp-post for its second: to men who may reason calmly, it is ridiculous. The will of the many, and their interest, must very often differ; and great will be the difference when they make an evil choice.

Today we hear what is essentially a version of that argument. Cons now call the estate tax a "death tax" and claim that it unfairly deprives the wealthy of their property rights.

But we don't have a landed gentry in the United States. There is a certain point—and we approached it in the Gilded Age with the Morgans and the Du Ponts—when family fortunes become so large that they could wield power greater than local government and even the federal government. They became, as Jefferson warned, "a threat to democracy itself." Paine agreed. He believed that it was necessary to limit inherited wealth so as not to create a new feudalism.

Paine thought that the best way to build a strong democracy was to use his tax on the wealthy to give the poor bootstraps by which they could pull themselves up. He proposed helping out young families with the expense of raising children (a forerunner to our income tax exemptions for dependents), a fund to provide housing and food for the poor (a forerunner to housing vouchers and food stamps), and a reliable and predictable pension for all workers in their old age (a forerunner to Social Security). He also suggested that all nations reduce their armaments by 90 percent to ensure world peace.

Summarizing, Paine noted:

When it shall be said in any country in the world, my poor are happy; neither ignorance nor distress is to be found among
them; my jails are empty of prisoners, my streets of beggars; the aged are not in want, the taxes are not oppressive; the rational world is my friend, because I am the friend of its happiness: when these things can be said, then may that country boast its constitution and its government.

This, Paine hoped, was the fate of America. And, he believed, when our nation had achieved such an egalitarian and liberal way of life, other nations of the world would naturally emulate us. He predicted that Burke's beloved "benevolent rule by the rich" was doomed to the ash heaps of history.

Unfortunately, that didn't happen. It took America more than 150 years before Franklin Roosevelt—who said he was inspired by Thomas Paine—would implement the majority of Paine's ideas. They worked. The middle class grew. And then the so-called Reagan revolution undid so much of the good that had been done.

The freeloaders are back.

This is not the first time Americans have been screwed.

The American colonists were screwed, too. By the 1700s the colonists living in America should have been well off. Once they had chased away or killed the Native Americans (also screwed), they had plenty of land. Trade was booming. Small businesses were springing up in cities all over the East Coast. A young kid like Benjamin Franklin, coming from modest means, could be apprenticed to a tradesman and hope to easily stay in the middle class.

But by the 1750s, folks realized that something was terribly wrong. The harder they worked, the less money they had. Instead of living in a democracy, they found that their country was run by King George II, and he saw it as a great cash cow—for himself and his wealthy cronies.

King George set the rules of business in America. He levied sales taxes (called "excise laws") on almost every product Americans consumed. To make matters worse, he added import taxes ("duties") on the items Americans brought in from overseas.