Acting Chief Justice Oliver Wendell Holmes Jr. of the U.S. Supreme Court was seated (1902–32) by the reformer Republican President Theodore Roosevelt. Holmes said, “Taxes are what we pay for a civilized society.” In other words, taxes are the cost of civilization. To build and maintain a democratic civilized society, we need taxes. You cannot reduce taxes without cutting such vital public services as national defense, police and fire, fair courts, public education, health care and social infrastructures like bridges, roads and public transportation.
In 2016, then-presidential candidate Donald Trump was boasting that only fools pay taxes. He lied when he said he couldn’t release his income tax returns because he had to wait for the completion of IRS auditing of his tax returns. He continues his charade even after The New York Times exposed this month that Trump paid only $750 income tax each year in 2016 and 2017, far less than our heroes like elementary school teachers, nurses, firefighters, policemen, sanitation workers, postal workers, public transportation workers and small business owners and workers. Furthermore, he paid no income taxes for 11 years prior to 2015. He continues to hide his income tax records and falsely claims he is paying millions of dollars in income taxes. In other democracies, few politicians would survive without paying their fair share of taxes.
Trump and his Republican enablers are against rescuing local and national economies and the unemployed, battered by the coronavirus pandemic. They falsely argue that the U.S. needs another tax cut even when the 2017 Trump tax cut helped only billionaires and Wall Street speculators and produced massive budget deficits. The Trumpian tax cut weakened American democracy. It did not produce a promised surge in private business investment. Corporations and billionaires merely diverted increased cash holdings to buy their own and others’ shares. Meanwhile, the real economy of middle income and working families is hit hard by the COVID-19 pandemic abetted by Trump’s willful ignorance and miserable crisis management.
To evaluate the economic plans of presidential candidates Joe Biden and Donald Trump, we should remember that former President Bill Clinton’s tax increase and Gov. Jerry Brown’s Californian tax increases have produced economic booms. Obamacare added about 15 million jobs. Today, Moody and Goldman Sachs estimate that under Biden’s tax spending plans, real GDP would be 4.5% greater than under a continuation of Trump’s plans. Biden follows Justice Holmes’ prescriptions while Trump follows his own financial gains.
In 1972, after four years of teaching in Canada, I returned to the Harvard Business School. I was one of five instructors of first-year MBA students’ compulsory economics and international business classes. I persuaded my colleagues to teach national income analysis (macroeconomics) in the historical context of the Great Depression and Roosevelt’s New Deal policies, Truman’s (Democrat) and Eisenhower’s (Republican) taxes and their uses and active federal government management of the U.S. economy and society. They created the post-New Deal “Golden Age” of the 1950s. They were supported by GI bills, massive investment in public education, spreading modern national highway systems and agriculture — robust job creation, low inflation and rapid GDP growth. To help our students develop empathic sensibilities and a keen sense of history, we showed John Steinbeck’s film, “The Grapes of Wrath.” These pedagogical innovations were generally well received. However, some conservative students openly rebelled.
Former President George W. Bush was in my class. He advocated for the “robber baron business culture.” He called FDR-Truman-Eisenhower “socialists.” To him, New Deal investments, Social Security, unemployment insurance, and legalization of labor unions, progressive income taxes, the Securities and Exchange Commission, and other New Deal innovations were socialism, not democracy. To justify the robber baron culture, those students always cited superficially Adam Smith, the father of modern economics, and his book, “The Wealth of Nations.” Little did they know that Adam Smith scathingly castigated government-business collusions and the unfair taxes that Trump and Republicans support. Nowhere in his 900-page book does Adam Smith even imply that those who knowingly harm others and society in pursuit of personal greed also benefit their society. He rejects the notion that corporations exist to make money without ethical and civic constraints. Even in his famous discussion of the “invisible hand” of freer market competition and the “division of labor,” Adam Smith specifies that their excess pursuit would make people as “stupid as humanly possible.”
At that time, George W. Bush was distinctly in the minority. Today, Bush would be appalled by Trump and his Republican enablers corrupting American society and destroying American democracy.
— Yoshi Tsurumi is professor emeritus of international business, Baruch College, City University of New York. He lives on Rock Creek Lane.