Ethical Evaluation of President Bushs Tax Cuts
This paper serves as a response to the speculation that the Bushs tax cuts introduce an unfair policy to certain social classes, that is, the rich. After integrating the economic projections, facts and figures, as well as looking at the issue from different ethical perspectives, the conclusions are given in this paper, which supports the viewpoint that contradicts the argument that tax cuts are unethical to the rich.
Introduction
In 2001, President George Bush has initiated a policy called the Economic Growth and Tax Relief Reconciliation Act or EGTRRA that reduced tax rates in all income brackets (Auerbach, 2002). This change in tax policy has immediately aroused different reactions from varying social groups. Basically, there are two opposing ethical views on this policy. These views are deep-rooted in the perennial core issues on the social inequality, wealth distribution, justice and fairness etc.
The first of the arguments states that the tax policy is unfair for the higher-income bracket, because the stratum receives the bigger share of the financial responsibility (Landsburg, 2004). A counter-argument to this, which comes surprisingly as its total opposite is that it widens the social inequality existing between the richer and the poorer of classes- thereby, benefiting the richer class more than it does the lower-income class (Friedman and Shapiro, 2004). While the resulting tax rate after the cut is lower for low-income families, the amount of income of a well-off person, exempt from the government, is much higher. This goes alongside with a valid speculation that in the end, welfare programs and other governmental programs that could have brought benefits to the lower-income classes do not meet this purpose as far as budgeting is concerned.
The tax cut policy is made as a response to the US financial situation, to spur economic activity by generating available jobs (Auerbach, 2002). The annual financial reports from the government indeed show an increase in employment rates and economic activities. These are factors considered to be positive for the growth of the countrys economy. However, the side-impacts inspired by the policy have important consequences as well. These should be considered to fully determine whether a policy change brings total benefits, or only partial, to the over-all welfare of the state.
This paper seeks to fully understand the ethical grounds of the tax cut policy. It supports the viewpoint that in order to come up with a sound solution, it is necessary to consider the data from the relevant national economic statistics and scrutinize the policys impacts from different ethical perspectives, namely, utilitarian, Kantian and pragmatic. The aim of this paper to provide counter-arguments to the view that the tax cut policy is unfair to the rich.
The Broader Picture
To ground for the unjustified provisions of the tax cut policy toward the rich, it is not enough to simply consider the statistical data concerning how much of the overall tax collections has been paid by the higher class. Looking at these statistical figures, the question arises whether it is ethical to pass most of the financial burden to the higher-income class. But we have to consider that there is a necessary interplay of social, political and economic factors that determine the outcome of the tax cut policy.
The Core Arguments
Arguing from the Kantian perspective
Kant, in his universalizability principle, states that for an action X to be considered ethical, it should be a course of actions that all individuals are justified to take under the same circumstances (1797). As for the tax cut policy, it seems that the measure can only be justified if no other means come as a better alternative solution. In the case of tax cut policy, apparently, there is- the reduction on government spending. Bush implemented the tax cut policy on the peak of the US war against Iraq, apparently, a very expensive endeavor that Americans are left to handle. This raises the question on the necessity, whether it is really necessary for the state to spend considerable sums of money on cases, like for instance, the war in Iraq Whether the Iraqi war is ethical or not is to be discussed separately, but the point is whether measures have already been taken to possibly cut down on the governmental expenses by evaluating whether a certain initiative is worth spending much money on it.
Arguing from the utilitarian perspective
J.S. Mill states that for a particular action X to be justified, it should abide by the greatest happiness principle, that is, it should result the most benefits to the greatest number of people (1863). Having considered the tax cut policy statistics, one can see how much shares in tax collection is being shouldered by the upper-class, and proceed to draw the conclusions that indeed the tax measure is unfair to the high-income stratum given the fact how much they pay and how less numerous they are. Yet, to view things from the utilitarian perspective is to say that regardless of taxes the higher-class pays so long as the consequences improve the society as a whole, the view that this is an unjustified policy becomes easily undermined. If the over-all impact of the tax cut policy, in the end, serves the best interests of all income brackets (or maybe even more advantageous to the high-income stratum), the tax cut policy is readily justified as ethical no matter how wide the inequality exists in the shares of tax payments. It is difficult to think how the high-income class will not get any benefit from the enhanced socio-economic mechanisms and efficient structural improvements that will occur upon the implementation of a certain policy. Anyone can hardly think how the betterment of the society will leave behind this very important social class which plays significant role in the socio-economic and political behaviors.
There is one thing that needs to be taken into consideration, though. The research shows that the economic projections and analyses forecast a steady decrease in national savings and thus, the reduction in national budget. Whether the reduction is a good thing or not, it may be helpful to look at the other aspects or impacts of such reduction, both in short term and long term. This will also lead us in touching the side impacts associated with the Buss tax cut policy.
Is this really pragmatic
Arguing based on the seemingly positive effects of the policy change is to take the pragmatic view that something is sound as long as it the telos (or end) is good. According to Dewey, morality is a communal concept (1922). The major consequence of the tax cut policy is apparent in the increased availability of local employments. Apparently, this is a short term effect. On the whole, national savings are reduced because the tax cut policy and its opening of employment opportunities enable households to have higher disposable income (Auerbach, 2002), and this is the long term effect of the policy. When the disposable income increases, we can expect an increase in the amount of household consumption. Increase of the consumption is more likely to result in the reduction of national savings. From here, we need to evaluate carefully whether the compounding benefits make it really worthwhile pursuing the policy. Apparently, the reduction in national income may possibly lead to the reduction in other expenditures considered important in the pursuit of national welfare (i.e., the budget on education, elderly etc.). If we consider the reduction to be made on these very important aspects, the strength of the Bushs tax cut policy is undermined.
The Budget Starvation for the Governmental Programs
One of the strongest valid speculations concerning the tax cut policy is the high possibility that it will starve other governmental programs. One example is the welfare program being adopted in the US. Arguably, when the tax rates are cut and other variables like government spending remains the same we can expect a deficit or reduction in national revenues. This is because the original tax collections have been reduced substantially. The government has to do some adjustments somewhere. Apparently, such adjustments will occur in the government spending. One strongly anticipated possible effects of this is the reduction in the budget for government welfare programs. Is it ethical It depends on how you view welfare programs.
Welfare programs are another issue in the US. In 1992, Robert Wood claimed that the social welfare programs have been a huge failure (the World I, 1992). The cited reasons include the following (1) the funding for the welfare program gets to be channeled through different people and agencies and this increases the over head costs. For every 1 invested on a welfare program, only 30 cents goes to the poor people (The World I, 1992) (2) the qualifications and conditions for the receipt of the welfare programs come as a discouragement the citizens from exerting efforts to take initiatives in alleviating themselves. Individuals who are on a welfare program can be sent to jail if they accumulate assets more than 1,000 (The World I). Some people say that welfare programs perpetuate poverty and in no way a help to the citizens.
The given descriptions for the welfare programs do not altogether support the viewpoint that welfare programs are wrong and should be eradicated. It simply suggests that that there may be something wrong with the existing welfare system being adopted in the US. The existing welfare system seems to have its own glitches, making it hard to decide whether they really alleviate poverty or maintain it. Thus, it makes it difficult to ground our judgment that the tax cut policy is unethical because it cuts on the expenditures on a very important welfare system.
Arguments concerning equality
Another argument against the tax cut policy is that it widens the socio-economic gap (Friedman and Shapiro, 2004). The argument that supports this widening inequality gap is apparently unclear in how they define social equality. To judge, whether a policy promotes equality or not, we should have clear distinctions on what equality is. To hope that the socio-economic gap should be eradicated as a measure for social equality is a hope in vain. For one, people have not been born the same- some are more privileged than the others (Dworkin, 1985). It is also impossible to implement equal opportunities for the simple reason that not all of the opportunities are created by the government itself. Some people, because of their privileges (be it skills or endowment, etc.), may be better in finding and creating opportunities for themselves over the others. Further to that, peoples abilities, resources or privileges determine what kind of access they have to certain opportunities.
Thus, it seems that the better way to define the social equality is to say that every individual should be given the necessary access to the opportunities required to help him realize his full potentials, but done so in a way that the access to the opportunity is guarded against exploitation of the others who have greater abilities in accessing the opportunities. This is equality on its very basic sense- equality of access, which then leads to equality of opportunities available. On that note, it is difficult to say whether the tax cut policy is really a culprit in the widening social inequality. Apparently, it is not.
What happens when we do not cut down on taxes
Removing the tax cut policy would result in higher tax rates and the narrowing of the income bracket levels. This results to some individuals being spared from tax responsibilities. The direct effect of this move to the household is the reduction in their disposable incomes. The effect of this, on the national level, is the increase in the government savings. If the government has more funds to dispose, it sounds a very good thing. But one question that may be raised against the possible benefits of this is whether, increasing the budget ensures the establishment of better structures and national welfare- in other words, an issue on funds disposal. Apparently, with the presence of restraints and political factors, proper funds disposal is never guaranteed.
Conclusion
To answer whether the policy change is really biased, it will be necessary to render the ethical judgment based on facts and figures. Discussion on whether the tax cut policy is unethical to the high-income class entails touching certain issues on inequality, justice and distribution, fairness, liberalism, accountability and responsibility, and social responsibility. Only when the position can adequately address these aspects will it be able to be a foolproof understanding.
The tax cut policy is not unfair to the rich, and neither it is to the poorer class. Arguing from the utilitarian viewpoint, we were able to illustrate that the percentage of shares in tax payments collected by the rich alone does not determine whether the policy is ethical or not. We have seen how the short-term impact of the policy seems to benefit the society as a whole, and thus including in the beneficiaries are the high-income class (considering the undeniable amount of protection this class receives from the states because of the special function they have). The tax cut policy is neither unfair to the lower class. We have illustrated that the policy may not necessarily cause a widening socio-economic gap because this scenario is more properly determined by other considerations (endowments, differences, access, etc.)
Despite the ethical grounding that has been provided here, it seems that we may need to look at the side-impacts of the policy, more especially on the important other policy changes it may require in the future. Considering all the economic projections on national savings and its effects on government spending, it seems that an alternative solution is called for. For instance, perhaps, we may need to evaluate again the existing government structures and identify which of them function inefficiently because it may be that the government is channeling funds to such inefficient mechanisms and thus, wasting valuable resources.
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