The Hidden Costs of the Progressivity Debate

I. INTRODUCTION Progressive taxation-taxing high income individuals at a proportionally higher level than low income individuals-has sparked more than a century of controversy.l Those who support progressive taxation have heralded it as a policy that promotes the greatest good for the greatest number in society,2 protects traditional democratic values,3 reflects the communitarian world-view of women who see themselves as responsible for the well-being of all individuals,4 and reveals the "aesthetic judgment" that income inequality is "distinctly evil or unlovely."5 At the same time, critics have condemned progressive income taxation as social policy that amounts to theft and involuntary servitude,6 reflects the democratic process gone awry,7 penalizes hard-working individuals,8 and produces economic waste throughout society.9 Theorists in almost every discipline have entered the progressivity debate, proposing a variety of different tax rates in order to disburse the costs of public goods and services. Despite their contending viewpoints, theorists on both sides of the debate have reached surprising consensus on the proper treatment of the truly poor. Both sides agree that legislators and policymakers must avoid imposing tax costs on individuals living at or below subsistence levels of income.10 This agreement is notable in light of the widespread perception that advocates of progressivity worry about the poor while its detractors worry about the wealthy.11 In fact, all tax theorists have divided society into two groups-relatively wealthy individuals who pay taxes and poor individuals who are excluded from the face of the laws entirely. Of course, if the goal of tax policy is to distribute the costs of public goods, then offering an exemption to the poor might seem desirable and perhaps even an obvious policy choice, given that the poor have little or no income. While the practical difficulty of collecting the tax explains why theorists have advocated an exemption, it does not explain why they have failed to explore any positive rights beyond an exemption or, indeed, any responsibility the poor might have to society despite their lack of income. In this Article, I argue that.by reaching the agreement that the poor should have no tax liability, the contest over progressivity has centered improperly on the rights and responsibilities of relatively wealthy citizens. The wealthy are widely perceived to have valuable property that, if shared with society, will enable the smooth operation of the democratic state.l2 At the same time, the wealthy are perceived to have liberty interests, which if violated, could lead to the ruin of the domestic economy.l3 Although the debate over progressivity has lasted for more than a century, traditional tax theorists have limited their discussion to the negative rights of the poor and have never explored fully any positive rights the poor might have. Moreover, theorists have ignored completely any responsibilities the poor might have with regard to the state. Traditional tax theorists, for example, have never investigated in any detail the question of whether poor individuals have a right to basic needs and economic security simply because of their status as citizens.14 Theorists also have failed to explore the idea that the poor might have a social duty to contribute their talents and energies to the greater social good despite their lack of income. Indeed, the poor are viewed as having nothing of value to contribute to society. Many political, moral, and economic theorists have argued, however, that access to rights as well as fulfillment of duties are necessary components of one's full membership in a community. Accordingly, I argue that by drawing lines and divisions between taxpayers and nontaxpayers, traditional tax theorists have enabled relatively wealthy individuals to participate in society as full citizens. At the same time, the lines have virtually bound the poor to a subordinate position in society. …