Joe Thorndike ’88 wrote a Washington Post op-ed.

Americans don’t mind taxes — they hate tax loopholes

Americans hate taxes, right?

We vote for candidates who promise to cut them and punish candidates who pledge to raise them. We tell pollsters we don’t want to pay them. And we teach our children that the nation was founded to resist them. From the Boston Tea Party to Shays’s Rebellion to California’s Proposition 13, we are a nation of tax revolters. Hand us a pitchfork, and we’ll march on Washington — just witness the “9/12 Taxpayer March” on Sunday on the Mall.

This is the history underlying today’s battle over the Bush tax cuts, the economy and President Obama’s complicated call for new business tax breaks even as the nation faces crippling budget deficits. Yet it’s a history that doesn’t quite meet the test of, well, history. Oliver Wendell Holmes once observed that “taxes are what we pay for civilized society,” and for more than 200 years, Americans have been remarkably willing to pony up. It’s not that we hate the financial inconvenience of paying taxes — we hate the injustice of an unfair tax code. We’ve long agreed to pay the price for civilization. We just can’t tolerate anyone looking for civilization on the cheap.

Consider the Boston Tea Party, the creation myth for today’s anti-tax activists. It was a protest not against taxes but against tax loopholes. The colonists who dumped tea into Boston Harbor were objecting to a special tax exemption that Parliament had granted to the East India Company, a well-connected enterprise that in the early 1770s happened to be in dire need of a government bailout.

Hmmm. I agree with the general thrust here (no one likes loopholes) but question the history lesson. Speaking of which, here is a picture I took at the “Boston Tea Party” of April 15, 2009.

I believe that I was the first Eph to attend a Tea Party event (counter examples welcome).

Back to Joe:

Twenty-four years ago, a recognition of this reality helped produce the Tax Reform Act of 1986, the greatest peacetime tax reform in U.S. history. Lawmakers eliminated many tax preferences, expanding the size of the tax base dramatically. The broader base allowed them to cut marginal rates, reducing the incentive for aggressive tax avoidance.

It was a good bargain — but not a durable one. In the two decades since Reagan shepherded tax reform into reality, pernicious dynamics have returned in full force. As economist C. Eugene Steuerle, an architect of the 1986 reform, has observed, “Helped by pollsters skilled at making private greed appear like public need, even the White House, Treasury, and tax-writing committees have increasingly used the tax code to serve special interests instead of the common good.”

Today, once again, the resentment is evident around us. The “tea party” movement, in particular, draws sustenance from a deep-rooted suspicion that politicians serve the interest of a well-connected minority, not a long-suffering majority. For many tea partiers, the loophole-ridden tax code is Exhibit No. 1 in their indictment of American government.

“Deep-rooted suspicion?” I prefer “well-established fact.” If the last three years of Bush/Obama bailouts have established anything, it is that the government protects the interests of the powerful.

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