Tax Hypocrites

With Tax Day just around the corner, the Centerman is stirred from another long hibernation to note the hypocrisy of so many politicians who want to raise taxes.

James Thorndike of Tax Analysts has a wonderful little bit of history on the differences between Franklin D. Roosevelt's sanctimonious excoriations of others, and his own efforts to avoid taxes.

Roosevelt's returns, not made public until long after his death, reveal his private behavior quite at odds with his attacks on others. Thorndike writes:

Roosevelt reserved special scorn for the "clever little schemes" devised by tax lawyers, insisting that they posed a threat to the tax system, and even to society as a whole. "In this immediate problem the decency of American morals is involved," he declared. "The example of successful tax dodging by a minority of very rich individuals breeds efforts by other people to dodge other laws as well as tax laws."

Roosevelt's 1937 message on tax avoidance decried a variety of popular techniques, including the use of overseas and domestic personal holding companies, the creation of multiple trusts for the support of family members, and the incorporation of money-losing country estates and personal yachts.

Such bombast carried the day in 1937, when FDR pushed a tax bill through Congress that tried to eliminate some of the more glaring loopholes. Other high points in Rooseveltian tax policy -- including the Wealth Tax Act of 1935, the undistributed profits tax of 1936, and the tax bill veto of 1944 -- were also rooted in a conviction that rich Americans were gaming the tax laws.

But Roosevelt's tax returns reveal him to be something of a hypocrite. At various points, both before and after his election to the White House, he indulged in the sort of tax avoidance that he claimed to find so objectionable.

For instance, Roosevelt repeatedly urged Congress to end the tax-free treatment of interest on state and municipal bonds. The special treatment accorded to those financial instruments, he told Congress in April 1938, "has created a vast reservoir of tax-exempt securities in the hands of the very persons who equitably should not be relieved of taxes on their income." Congress should act to end the injustice, he declared.

Yet just a month before, FDR had filed a tax return indicating that he owned some $17,000 in tax-free bonds. Defenders of the president might insist that he was doing nothing wrong; after all, the tax-free status of those bonds was a deliberate and long-standing element of the tax law. But Roosevelt himself dismissed those legalistic arguments:

Methods of escape or intended escape from tax liability are many. Some are instances of avoidance which appear to have the color of legality; others are on the borderline of legality; others are plainly contrary even to the letter of the law.
All are alike in that they are definitely contrary to the spirit of the law. All are alike in that they represent a determined effort on the part of those who use them to dodge the payment of taxes which Congress based on ability to pay. All are alike in that failure to pay results in shifting the tax load to the shoulders of others less able to pay, and in mulcting the Treasury of the Government's just due.

Roosevelt's income from tax-exempt bonds was not grand; it shrinks to insignificance when compared to the exempt income reported by the nation's richest taxpayers. Still, his fondness for investing in those bonds stands in stark contrast with his public pronouncements on the subject.

But it gets better - catch this little gem of creativity:

FDR repeatedly claimed that he was exempt from the high tax rates on personal income that Congress had enacted -- and Roosevelt had approved -- in the revenue acts of 1934 and 1935.

In a series of letters to internal revenue officials, Roosevelt insisted that he could not be taxed at the heavy rates imposed on rich taxpayers during the mid-1930s. Article II, section 1 of the Constitution forbids any reduction in the president's compensation during his term in office, Roosevelt pointed out. Since the new rates enacted in 1934 and 1935 effectively reduced that compensation, they could not be applied to the president's salary.

Thorndike's post even includes a copy of a note from Roosevelt making that claim to the IRS. Now that's chutzpah: pass a tax increase, excoriate others for looking for legal ways to avoid paying it, and then claim a constitutional exemption, available only to an elite few in government (presumably federal judges would have also benefited), from the increase.

In this election cycle, two very wealthy presidential candidates - Hillary Clinton and Barack Obama - are telling us that we simply have to raise taxes. I don't know if they makes claims rising to the hypocrisy of FDR, but it really doesn't matter. Of course, when you are earning over a million bucks a year, it's pretty easy to pay more in taxes. When wealthy politicians say that "we" have to make sacrifices, they usually mean "you."

Editorial of the Year

Sure, it's a young year. But this is worth reading.

A Christian Democratic America?

Henry Olsen has this very interesting column out, which discusses what a Huckabee presidency might mean for the United States and neatly defines the battle going on for the Republican Party's soul.

Thinking About Memorials

I love this short article on the problem with modern war memorials - enough to stir me from my lethargy to post for the first time in two months.

Duncan Anderson shares my frustration with modern memorials:

What these modern war memorials have in common with each other is nothing: They portray nothingness. They have no people in them, never mind men carrying guns or swords, statues of Winged Victory or even doves of peace. Just death and names - grief without glory.

Ain't that the truth. The Vietnam Memorial started this trend, and while the starkness of that memorial can be moving, who is inspired by it? Now, current memorials being designed to memorialize 9/11 are following the same path. They don't educate today's viewers, let alone future generations, as to what it was all about, and why it mattered. Nothing more than, "people died here."

Good memorials should honor the deeds of those memorialized, and inspire others to do great or at least things. But today's memorials just sit there, stark and empty.

Anderson, I think, correctly gets why this has come about:

it results from a misunderstanding between the memorial-creating classes and the war-fighting classes.

Anderson sums it up well:

We all die - so to offer voids to the memory of our heroes, and to list their deaths without comment about what they did in life, is to assert meaninglessness, pointlessness. It says, "You sacrificed for others - but that's not worthy of mention, because now you're just as dead as anyone else."

A nation that can't build good memorials, memorials that say, "these fallen acheived something" of "these fallen demonstrated these qualities that make our nation great" is one that has lost its confidence. Unless reversed, these are nations on a downward spiral.

What's the Independent Voter to Do?

I really should write a tome on this, but simply lack the time. Let's sum it up this way - the Bush Administration has made a hash of the war on terror, but how do you dare trust power to a party of which 35% believe the President had advance knowledge of the attacks of September 11 (and only 39% think otherwise)?

Mark Steyn, a very good writer, has some comments here.

A good day for Mitt to be quiet?

Today marks the 40th anniversary of Michigan Governor George Romney's famous statement that he had been "brainwashed" about Vietnam. The remark caused a national furor, and effectively ended his frontrunners campaign for the presidency (a campaign which, unlike today, had barely begun in September of 1967).

It is hard today to understand the fuss, really, especially since Romney's new position was essentially right and he had that revelation far sooner than most of America's leaders. But in those days, the idea of "brainwashing" was a truly scary one to most Americans (see the original "Manchurian Candidate" if you care to know why - but do not see the atrocious, cheesy Denzel Washington remake of a few years ago.)

Anyway, might be a good day for son Mitt, the Republican frontrunner in the early primary states, to stay low key, if you're superstitious and all.

More Self Parody at the New York Times: Electoral College Reform in California

Reading the editorial pages of the Onion... er, I mean New York Times,is always a hoot. Today the Daft, ... er, Gray Lady unloosed a salvo against a proposal circulating in California to allocate the state's electoral votes by congressional district, rather than winner take all. There are many good arguments against this proposal, not the least of which is the perception that one party - in the case the Republican - is trying to change the rules to affect a predictable outcome that will favor that party, as is often done with the campaign finance laws of which the Times is so enamored. On the other hand, there are also legitimate, neutral arguments for this proposal, which is used now in two small states, Nebraska and Maine. But the Times, as always, has no nuance - just a partisan screech.

The Times calls the proposal, "a sneaky initiative that, in the name of Electoral College reform, would rig elections in a way that would make it difficult for a Democrat to be elected president, no matter how the popular vote comes out. If the initiative passes, it would do serious damage to American democracy."

Damage to American democracy? The Times doesn't say how this would be, other than its apparent identification of the interests of the Democratic Party with American Democracy. (It's probably that "demos" root that causes the confusion). The Times insist that this initiative is supported by a "shadowy group," with a "misleading" identity, although - confusingly to we simple-minded readers - the Times article begins by informing us that this is a Republican initiative, launched by "a prominent Republican lawyer" (presumably the Times knows his name, but if they don't, the Sacramento Bee informs us that it is Thoms Hiltachk - maybe this is not so "shadowy" after all.) (The Republican Party - "a shadowy group." LOL) The proposal is "bad faith" and "mischief." "No principled voter" should support it. Instead, the Times suggest an alternate reform that would make it harder for Republicans to win the presidency. Go figure.

Of course, the Times didn't always feel such a plan was quite so disreputable. On October 2, 2000, the Times published an op-ed by Michael Lind, who wrote:

Fortunately, it is possible to transform our presidential elections, while keeping the Electoral College and without amending the Constitution. All we have to do is change the way that the states allocate their electoral votes.

Today all but two states -- Nebraska, which has five electoral votes, and Maine, which has four -- give all of their electoral votes to the winner of the state's popular vote. If every state were to divide its electoral votes among the candidates on the breakdown of the popular vote, presidential politics would be reinvigorated.

For example, even if a majority of Californians and New Yorkers preferred the Democratic candidate, the division of their electoral votes would give a Republican candidate an incentive to make lots of visits to these states and to listen to voters' concerns there.

On August 15, 2004, it published a letter to the editor by one Joe Cobb of Dana Point, California. If you've ever tried to get a letter into the Times, you know it ain't easy, and while they publish a few letters with an opposing point of view, you've got to be a pretty big wheel, and/or have what they think is a pretty strong arguent, to reach print. But Mr. Cobb did, arguing:

There is another possible reform, which is to follow the lead of Maine and Nebraska. Those states already allocate electoral votes on the basis of the popular vote in each Congressional district, instead of using the ''winner take all'' method. They also give two electors to the winner of the statewide popular vote.

If all states used this method, it would bring the electoral vote into much closer alignment with the popular vote. It would also preserve the benefits of the Electoral College: restricting the impact of voter fraud or irregularities to localized areas, preventing overwhelming majorities in a few states from obviating the voters' choice in less populated areas, and assuring that candidates need to campaign nationwide.

Now, in fairness to the Times, they have long opposed the California plan. But compare the careful, intelligent, measured tones of this 1992 editorial to the one quoted above. Here is what the Times wrote then - so far as we can tell, the last foray by the editorial board into this particular proposal:

Changing the way America picks its President calls for national consensus. It deserves serious thought, not just partisan, state-by-state wrestling in the heat of a campaign year. That's reason enough for a sigh of relief that Florida's flirtation with a proposal to split its electoral vote seems to have ended, at least for the moment.

Under the Constitution, each state has as many electors as it has representatives and senators; a majority of the national total is needed to win. Florida currently gives all its electoral votes to the Presidential candidate who wins the most popular votes statewide. The new plan gives candidates one vote for each Congressional district they carry; the statewide winner would get the other two.

Maine uses this system, and Nebraska will, starting this year.... Florida, the fourth-largest state, has 25 electoral votes -- and usually votes Republican for President. That's why Democrats wanted new rules and Republicans didn't.

Applied nationwide, a district-by-district system would yield electoral votes roughly proportional to the popular vote -- rather than lopsided electoral majorities as in 1988, when President Bush took 48 states but only 53.4 percent of the popular vote. In close elections, it might change the outcome.

A split-vote system would also open opportunities for third-party and independent candidates like Ross Perot. It is hard for such a candidate to wrest a whole state away from established parties.

The proposal's backers also argue that it would impel candidates to give the Florida voters more attention instead of writing off the state, as the Democrats did in 1988. But critics say the state would get less attention because the split prize would be worth less.

This year's unusual race, which includes a plausible third candidate, makes piecemeal reform even less attractive than usual. In the heat of the moment, there's no way legislators can remain focused on reform rather than partisan interests.

In fact, on the merits, I actually agree with the Times. California shouldn't switch. But the difference in tone and quality between its 1992 and 2007 editorials, thinks the old Centerman, is demonstrative of the decline of a once proud, influential editorial page into screaming paranoia.