Fairness

We keep saying this fall’s presidential election will pivot on economic issues but what I hear getting at least equal time in the media and from the progressives is the theme of fairness.  Commentator Charles Krauthammer said it best: “Obama is a leveler. He has come to narrow the divide between rich and poor. For him the ultimate social value is fairness. Imposing it upon the American social order is his mission.”  And with the OWS encampments broken up (at least for the winter months), their dispersal left a lingering air of: “We are OWS and we want equality.”  Meaning universal equality = universal fairness.

I think many folks are ready to argue the U.S. strives to live the principle of equality of opportunity. I know the OWSers, the President, and many progressives are arguing for the equality of outcomes.   That position is at odds with opportunity – which presumes that variables, external factors, personal risk levels, are all in play in a capitalistic society.  If the OWSer took a group field trip to Las Vegas for a weekend, do they supposed all of them would be counting an equal wad of cash on the redeye flight back home?  No, I think they realize that a few of them would have cash to count but many others would be returning with just a comb or half-eaten roll of Lifesavers in their pockets. Would they make the winning fellow OWSers feel bad?  Maybe insist they split their cash among the less fortunate gamblers on the plane?  Forcibly take away their colleagues’ ill-gotten gains?

Even a free and democratic-themed society like ours does strive to tip the playing field to favor one group or class – perhaps with noble intent. The federal tax code is overly complicated now, in large part because of such (you could argue) well-meaning balancing attempts.  You can deride the tax code as loop-hole filled, or you view it as it is: a complicated matrix of attempted fairness measures.  “Home ownership is good for both individuals and for the health of our society – let’s encourage home ownership with a mortgage deduction (cue IRS Publication #936; 16 pages).  Or, want family farmers to benefit from accelerated equipment depreciation? Cue Publication #225, 89 pages.  Or want to bring a measure of fairness to Disaster Relief Payment systems?  Cue IRS Publication #525, 43 pages.  It goes on, and on, and on. The tax code is one big attempt at a “fairness” system when you boil it down.

A straight flat tax (or Herman Cain’s 9-9-9 plan) can appeal as seemingly universally fair at first blush.  But anytime you change the status quo of a policy, statute, regulation, or even enforcement practice you are going to rebalance the apple cart with either intentional or unintended consequences.  And those that have something taken away from them will cry “unfair.” Apple cart rebalancing is a messy business.

No, I’m not naïve about loopholes and special deals.  Although I’m not a CPA, for five years I worked for one of the Big 4 global accounting/consulting firms and well understand the money to be made in finding quasi-legitimate loopholes in federal tax laws. Many, many folks are employed full-time to do just that at very handsome salaries.

I’m not especially defending our present tax code – it does need fixing.  It’s more that I don’t look forward to the coming months of “fairness” discussions in the heat and posturing of the national and state political races.  Call me a pessimist.