Tax Notes contributing editors Robert Goulder and Joseph J. Thorndike discuss envy and what it might mean for tax policy, all in five minutes.
This transcript has been edited for length and clarity.
Joseph J. Thorndike: Hi, I'm Joe Thorndike, here today with my Tax Notes colleague, Bob Goulder. We want to talk about envy and what it might mean for tax policy.
We live in the golden age of envy. Thanks mostly to social media — Instagram, Facebook, TikTok, Twitter — they’ve all conspired to leave us chronically unhappy, sometimes even indignant, about all the good things that happen to other people.
Some think this epidemic of envy is shaping tax policy. In a recent op-ed, the economist Lawrence Lindsey accused the Biden administration of supporting some taxes purely as a form of punishment.
That sure sounds like a tax rooted in envy, at least to me.
Robert Goulder: To me too, Joe. But to be clear, I think Lindsey was talking about the type of taxes that punish the rich solely for the sin of being rich. I think, specifically, he was talking about capital gains rates up around 40 percent.
He argued that such a rate wouldn't raise any new revenue, and that any tax that isn't designed to maximize revenue must therefore be intended to maximize pain. So, according to him, that's what he means by an envy tax.
Joseph J. Thorndike: That's how Aristotle would have defined one, too, I think. Aristotle thought that envy is the pain that I feel at the sight of someone else's good fortune.
By extension, then, a tax designed to destroy that person's good fortune is a tax driven by envy. It soothes my pain at witnessing another's good fortune by destroying that fortune.
Robert Goulder: I guess that makes sense. At least logically. Perhaps intuitively.
Joseph J. Thorndike: It makes sense to me too, which is probably why critics of progressive taxation have been talking about envy for a long time. Here's Calvin Coolidge in the 1920s telling Congress to lower income tax rates on the rich.
“This country believes in prosperity,” he says. “It's absurd to suppose that it's envious of those who are already prosperous. The wise and correct course to follow in taxation is not to destroy those who've already secured success, but to create conditions under which everyone will have a better chance to be successful.”
Robert Goulder: Calvin Coolidge? Really Joe, how quaint. Can you find an example of envy talk that’s a bit less ancient?
Joseph J. Thorndike: Well, how about Ronald Reagan? That's not exactly yesterday, but it's still within living memory for some of us.
“Since when do we in America believe that our society is made up of two diametrically opposed classes — one rich, one poor — both in a permanent state of conflict and neither able to get ahead, except at the expense of the other?
Since when do we in America accept this alien and discredited theory of social and class warfare? Since when do we in America endorse the politics of envy and division?"
Robert Goulder: Well, OK. I'll give you Calvin Coolidge and Ronald Reagan. I guess U.S. presidents have had thoughts about envy and taxes.
Joseph J. Thorndike: So do editorial writers. Here’s the Wall Street Journal on Biden's tax plan.
“This is what happens when you turn your economic policy over to Bernie Sanders and Elizabeth Warren. Envy is in the political saddle and Joe Biden is along for the ride.”
Robert Goulder: Well, I’ve got to ask you, Joe. Are you really good with all this envy talk? Are you actually saying that- that any progressive tax is secretly driven by envy?
Joseph J. Thorndike: Look, I think it sounds sort of reasonable to say that, but I also think it's wrong.
It's reasonable to suppose that some people might feel envy at other people's wealth and might support taxes to confiscate that wealth.
But here's the thing: For an action to be truly motivated by envy, it has to be devoid of other morally defensible justifications. If those justifications exist, then what you have isn’t envy, but what the philosophers actually call resentment.
Most progressive tax reform is defensible on non-envy grounds. Taxing large fortunes into oblivion can look a lot like envy, but it's also possible that it's motivated by a defense of democratic values and a fear of plutocracy.
Robert Goulder: That sounds a little bit like a pedantic point, Joe. It's almost like you're trying to define envy out of existence.
Joseph J. Thorndike: It's a little pedantic. But hey, it's philosophy! What do you want?
It's also an important and relevant point, because as a matter of civic discourse, we'd all be better off if we dispensed with cheap takedowns like the envy charge against progressive taxation.
When conservatives say that progressive tax is about envy, it's no better than when liberals say that tax cuts are always about greed. In both cases, the epithets oversimplify and avoid the real arguments. We aren't having a real debate.
As a matter of political strategy, cheap shots also leave the real arguments unscathed and still able to win the day. Because you can get a good sound bite from envy or from greed, but you won't actually win a generational battle over tax reform.