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May 3, 2012
News Analysis: It's the Fairness, Stupid
Joseph J. Thorndike

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There's been an awful lot of talk about tax fairness in recent months. President Obama kick-started the issue when he unveiled his "Buffett rule" in September 2011. A few months later, Mitt Romney moved the argument into high gear when he released his personal tax returns.

By and large, the fairness debate is wholly predictable. Liberals call for higher taxes on the rich, framing their case in terms of social justice. Conservatives respond with accusations of class warfare and warn darkly of economic calamity.

If the debate seems familiar, it's because it is. Americans have been arguing about tax fairness for two centuries, and there's every reason to think they'll still be arguing about it after another couple hundred years.

False Fairness

Standards of fairness are not immutable, natural, or self-evident. Rather, they're socially constructed -- the end result, not the starting point, of political argument.

Conservatives take this point to heart, especially when rates are at issue. Any system of graduated rates is inherently arbitrary, they insist. And the steeper the progression, the more punitive that system becomes. At root, taxing the rich at higher rates is about envy, not equity, they say.

Some conservatives have tried to challenge the very notion of tax fairness. In a recent article for, Sheldon Richman, editor of The Freeman, begins with the very reasonable point that calling something fair does not make it so.1 Indeed, many liberal invocations of fairness are long on moralizing and short on reasoning.

But Richman isn't actually interested in liberal arguments for tax fairness, or even in their absence. To his mind, tax fairness is an oxymoron. He quotes libertarian luminary Murray Rothbard to make the point:

    The prime objection to these "canons" [of tax justice] is that the writers have first to establish the justice of taxation itself. If this cannot be proven, and so far it has not been, then it is clearly idle to look for the "just tax." If taxation itself is unjust, then it is clear that no allocation of its burdens, however ingenious, can be declared just.

This is libertarian tax theory in its most provocative -- and intellectually consistent -- form. For Richman, the recognition of taxation as theft marks the end of the argument. "So let's hear no more about tax fairness," he concludes, "unless it's to point out that fairness is approached as tax rates move toward zero."

Political Potency

For something that doesn't exist, tax fairness sure gets a lot of attention, not least from voters. A recent NBC/Wall Street Journal poll asked respondents to evaluate a series of "statements you could hear about government and the economy from candidates running for president."2 Of six statements offered, the two most popular put fairness front and center:

    1. Will fight for balance and fairness and encourage the investments needed to grow our economy and strengthen the middle class;

    2. Says America is better off when everyone gets a fair shot, does their fair share, and plays by the same rules.

Like all messaging statements, these are pretty vague. (Though no vaguer than two other statements in the poll stressing the value of free enterprise and limited government.) And it's important to point out that the least popular statement in the poll was one highlighting the dangers of inequality, so liberals can't claim any sort of clear-cut mandate from the results.3

But still, the poll results suggest that fairness claims resonate clearly with voters. Call this false consciousness, mistaken intuition, or whatever other intellectually dismissive term you prefer, but the fact remains: If you think democracy matters, then you better pay attention to fairness, because the demos certainly does.

History bears out the importance of tax fairness. Every major tax watershed in American history has been characterized by arguments over fairness. Revenue needs, of course, have been the driving force behind structural changes to the federal tax system. Wars, in particular, have been a crucial catalyst.

But wars only establish the need for new revenue, not the means of raising it. Time and again, the wartime choice of tax instruments has been shaped by concerns for fairness. In the Civil War, for instance, complaints about the regressive incidence of federal tariff duties and excise taxes prompted lawmakers to adopt the nation's first income tax. As Republican Rep. Schuyler Colfax explained the need for this novel levy (and his opposition to a federal property tax): "I cannot go home and tell my constituents that I voted for a bill that would allow a man, a millionaire, who has put his entire property into stock, to be exempt from taxation, while a farmer who lives by his side must pay a tax."

During World War I, similar complaints convinced lawmakers to supplement tariff duties with a vastly expanded income tax (a modest version of the levy, of course, had returned to the revenue system in 1913). Supporters of the revived income tax understood that it would be controversial, especially when the time came to set rates. "Individual judgments will naturally differ with regard to the burden it is fair to lay upon incomes which run above the usual levels," warned President Wilson in a letter to congressional taxwriters.4 But the fundamental justice of the income tax seemed clear -- at least to Wilson and his fellow progressives. And when war came in 1917, lawmakers quickly made the income tax a centerpiece of federal finance.

The story of World War II is similar. Lawmakers considered a range of new revenue tools, including a national sales tax. Indeed, some of President Franklin Roosevelt's own advisers considered the sales tax a foregone conclusion, despite FDR's adamant opposition to the idea. But ultimately, lawmakers chose to further expand the income tax, invoking ability-to-pay arguments to justify its adoption.

Reagan and Fairness

Even peacetime tax reforms have hinged on fairness arguments. Supporters of the Tax Reform Act of 1986 offered many cogent arguments for its adoption, including some that stressed its economic benefits. But ultimately, the political case for enacting the reform rested at least as much on fairness concerns about loopholes and tax avoidance. As President Reagan famously declared:

    We're going to close the unproductive tax loopholes that have allowed some of the truly wealthy to avoid paying their fair share. In theory, some of those loopholes were understandable, but in practice they sometimes made it possible for millionaires to pay nothing, while a bus driver was paying 10 percent of his salary, and that's crazy. It's time we stopped it.5

Reagan knew a thing or two about politics, and he understood that fairness claims -- especially when framed in terms pitting millionaires against bus drivers -- were crucial to successful tax reform.

Some of today's conservatives have forgotten Reagan's insight -- or abandoned it deliberately. Instead, they're dismissive of almost any fairness claims about taxation, and especially any that try to mobilize class resentment. The very concept, they suggest, is unworthy of serious consideration. "'Fairness,' an elusive idea normally exploited by spoiled children, is now the foundation of the Democratic Party's economy policy," scoffed columnist David Harsanyi on

Maybe worries about fairness are childish. Maybe claims to fiscal justice are just window dressing for self-interest and demagoguery. But then again, maybe we can learn a thing or two from our childish instincts. Maybe everything we ever needed to know about tax reform (or at least the politics of tax reform) we actually learned in kindergarten.


1 Sheldon Richman, "Obama's Bogus Case for Tax Fairness,", Jan. 27, 2012, available at

2 For the full poll results, see

3 The inequality statement read: "Says what drags down our entire economy is an ever widening gap between the ultra-rich and everybody else."

4 W. Elliott Brownlee, "Social Philosophy and Tax Regimes in the United States, 1763 to the Present," 23 Social Philosophy and Policy, 15 (2006).

5 Ronald Reagan: "Remarks at Northside High School in Atlanta, Georgia," June 6, 1985, the American Presidency Project, Gerhard Peters and John T. Woolley, eds., available at

6 David Harsanyi , "Obama's 'Fairness' Fiction,", Apr. 11, 2012, available at