November 28, 2006
What Is a Populist? IV Posted by John Steele Gordon at 01:15 PM EST First let me congratulate Fred Smoler on using the word demagogy instead of the awful demagoguery, which is far more common and, to my ear, an illiteracy, even though the dictionary accepts it. About the only linguistic minutia that irritates me more is when someone pronounces “coup de grâce” as “coo de grah.” That pronunciation, in French, means “blow of fat.” I think he is right that the difference between a populist and a demagogue is largely a matter of sincerity. Alas, that quality is in perennially short supply in the profession of politics. I’m reminded of the wonderful line in Stephen Sondheim’s masterful Into the Woods where Prince Charming, caught talking pure flummery, shrugs his shoulders and says, “I was raised to be charming, not sincere.”
Nowhere is this insincerity—across the political spectrum—more pronounced than on the subject of taxes. Every politician wants it both ways, raising lots of tax money while not losing any votes. As the late Senator Russell Long explained, “Don’t tax you, and don’t tax me. Tax the man behind the tree.” One way to accomplish this political sleight-of-hand over the years was to play the populist by socking it to the rich with a highly progressive marginal rate structure, while making sure the rich don’t have to actually pay those rates by providing endless deductions, allowances, credits, and a hundred other devices. The result is a tax code that is so complex no one understands it all and that produces grotesquely inequitable results. People with identical incomes can, and do, pay wildly varying “effective” tax rates—the percentage of income that is actually taxed away. The guy down the street with 10 times your income probably has a higher marginal rate (the tax on the last dollar earned), but it’s a very good bet that he has a lower effective rate, thanks to good lawyers and accountants and, perhaps, a cozy relationship with his local Congressman, who slipped an innocuous looking amendment into the tax code late one night that saved him big bucks. That’s why I favor a flat tax, with one marginal rate and absolutely no deductions or distinctions between forms of income, other than the direct cost of earning that income. Such a scheme (which is spreading rapidly in Eastern Europe and has even been adopted in Russia, of all places, greatly increasing government revenues there) makes insincerity very hard to hide. And a flat tax is, paradoxically, progressive in fact, taxing higher incomes at higher effective rates, which the present tax code most certainly is not. Populists should love it.
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