Are child tax deductions a step down the slippery slope to serfdom?
This post, in which First Things contributor Greg Forster makes what he calls “The Moral Case Against Child Tax Deductions”, is a strange piece of reasoning. Here is Forster’s argument in a nutshell:
The rule of law is a much higher moral imperative for government than encouraging fertility. The rule of law is our only defense against arbitrary (and therefore, ultimately, tyrannical) use of political power. Fertility is encouraged through many social systems; no one argues either that government is the social system with primary responsibility for fertility, or that promoting fertility is a core competence of government. However, preserving the rule of law is government’s core function and only the government can preserve it.
What the rule of law requires above all else is stable rules that are fair and the same for everyone. Our current tax code is one of the primary threats to that core value, which is why the editors of the Journal have invested so much of their time, effort and social capital over the years in fighting to restore the rule of law to our tax policy.
Let me take a stab at diagnosing the fallacies here.
First, it is just not true that whenever the law treats different people differently, it thereby embodies rules that are not “the same for everyone”. For example, consider the law that sets the minimum voting age at 18: in one sense this law extends a right to some people and not to others, but clearly this does not amount to unequal treatment, as under this law everyone has the right to vote when they turn 18 (unless they forfeit this right in some way, perhaps by committing a felony). Similarly, a tax code that offers tax deductions for childbearing (or home ownership, or health care benefits, or …) is a code under which the rules are “the same for everyone” insofar as under such a policy, everyone has the opportunity to receive the same tax deductions in the same life situations: that some people do receive them while others do not is evidence of inconsistency, not in the rules, but in the factors that determine the upshot of their application.
Suppose, though, that when Forster says the tax code should be “the same for everyone” he means something more specific than this, namely that everyone (over some age, perhaps) should be taxed in exactly the same way, without any credits or deductions based on particular circumstances. Even if we were to accept this claim, it is pretty clear that it describes any number of possible but incompatible tax policies — for instance, here are three of them:
- A traditional “flat tax” on income, where every citizen’s income is taxed at a rate of n%.
- An even flatter tax, where every citizen pays $n in tax dollars.
- A national sales tax, where all expenditures are taxed at a rate of n%.
Each of (1), (2), and (3) admits of multiple descriptions, some of which make them look like policies where taxes are “the same for everyone”, and others of which do not: for example, we could describe (1) as a policy where everyone pays the same rate but also as one where some people pay a larger number of dollars in taxes than others, (2) as a policy where everyone pays the same number of dollars in taxes but also as one where some people pay a greater portion of their income in taxes than others, and (3) as a policy where everyone is taxed on the same portion of what they spend and also as one where people who spend more pay more in taxes and people who spend a larger portion of their income pay a larger portion of their income in taxes. (And this is not all: for we need to determine who counts as a citizen, what counts as income and expenditure, whether to tax even those who do not earn any money, etc., and none of these are trivial tasks.) So how do we decide between these possible policies (preferring, hopefully, (1) and (3) over (2)), given that each has the same claim to make the rate of taxation “the same for everyone”? Clearly the answer is: by answering the question which of these tax policies is MOST JUST, where this requires appealing to factors — such as the precarious financial situation of the working poor — other than mere consistency. And once these factors are on the table, what could be wrong with using them to make the tax code even more just, in virtue of being flexible in yet further ways?
Here is what I take to be Forster’s response to that question:
Changing a tax rate doesn’t implicate the rule of law very much because the rate is the same for everybody. If we are going to tax capital gains at all, we have to set a rate, and that makes it legitimate to argue about what the rate should be. You can make a case that it should be higher or lower, but whatever case you make, you’re asking for the same rate for everybody. You’re not asking the government to tax capital gains at one rate for one set of people and another rate for another set of people. You’re not encouraging the government to use its power to create two sets of rules for two classes of people.
Creating a tax deduction does implicate the rule of law. You’re taxing income, but you’re taxing it at one rate for one class of people and at another rate for another class of people. You’re reinforcing government’s perennial and pernicious habit of dividing the public into classes and showing favoritism to one over the other. This is the road down which the destruction of our freedoms awaits.
But we have already seen how this argument goes wrong. Just as a tax policy according to which rich and poor alike pay $n in taxes, and thus where the poor pay a greater portion of their income in taxes than the rich, is wrong not because it creates “two sets of rules for two classes of people”, but because the set of rules it creates is obviously unjust, so a tax policy that employs progressive rates and offers various credits and deductions, all of which are equally available to any member of the population depending on income and circumstance, needs to be evaluated not in terms of its supposed “favoritism”, but by asking whether its outcomes are just ones. Of course the possibility that a certain tax policy will lead to “the destruction of our freedoms” is among the considerations relevant to this inquiry, but we have been given no reason at all to believe that child tax deductions — as opposed, say, to low birthrates or a widespread inability of parents to afford health care and quality education for their children — are likely to have this consequence.