Why Taxing the Rich isn't Enough

[Note from Bluebird: The following article was originally published in Pine & Roses several months ago. We have been deeply concerned by our perception that the political development of the left wing of US politics has not kept pace with the right wing. At the time of writing, and if contemporaneous election results are any indication, socialism of any variety is really not a movement within the masses of working people. Going by what we’ve found in our research for other writings, and our personal experience, the socialist movement is currently a fringe movement consisting of several sizable organizations which can barely cooperate with each other, and which do not agree on important matters of socialist theory. The goal of this article was to do several things at once: firstly, we wanted to write the closest thing to a popular outline of capitalism, which could be understood at an elementary level, in order to aid in broader attempts at popular socialist education. Secondly, we wanted to intervene forcefully in conversations about socialism, specifically how many popular forms of reformist socialism do not actually solve the problems they claim to address. Thirdly, as always, we wanted to have a little fun. Socialism, as we understand it, is not exactly “meant for” people of a certain class background. We therefore wanted to write an article which would repulse such people in some capacity. A socialism which is palatable to the bourgeoisie, in our opinion, is not a progressive socialism, and we resent attempts at creating such a socialism.

We were consciously trying to be provocative when drafting this article. The original draft included a couple lines which even we had no intention of publishing, but which we submitted to Pine & Roses to see how far we could push the envelope. We may have pushed too hard though. The version of the article that was eventually published lacked much of the snark that the original draft had, so we have decided to self publish the following version, which includes more lines from the draft. 

On this particular article, Pine & Roses editor Todd Chretien went so far as to add several paragraphs himself, rather than just suggesting small changes. Even though his style of writing is quite distinct from our own, we found his additions to be quite valuable, hence why they are retained in this version of the article. The end result is an article which is quite tonally dissonant, but which concisely and assertively argues for more radical socialist policy.]

“Our demands are humble. We want only the earth.” — James Connolly

It is quite [a fashionable position] in mainstream progressive politics to call for increased taxation on the wealthy. Those who espouse this position support it in a multitude of ways. Some point to the social democratic countries of Europe, where more equitable tax policy has allowed for the funding of strong social programs, allowing more people than would otherwise be possible to enjoy more comfortable living conditions. Some point to the legacy of the New Deal era in the United States, when similar progressive taxation policy and state subsidization of the economy resulted in what many consider the strongest most prosperous period in American history. They may point to how decades of tax cuts for the wealthy have left the state unable to afford projects that the private sector simply refuses to undertake. And lastly, they point to how the wealthiest people in the country have far more money than they could ever hope to spend in one or even many lifetimes. There is simply no compelling argument against increasing taxes on the wealthy.

Socialists wholeheartedly support raising taxes on the rich. Here in Maine, Gov. Mills proposed eliminating cost of living raises for workers who provide Medicaid services in order to save a few millions dollars. In response, those workers went on strike and gave the whole state a lesson in how to fight budget cuts, leading the Legislature’s Health and Human Services Committee to vote against the governor’s proposed cuts. This leads to a larger question: why is there a budget crisis? Of course, Trump is doing his best to make our state pay for opposing his transphobic attacks on high school athletes by threatening to withhold hundreds of millions in federal aid. That’s a big chunk of the state’s two-year $11 billion budget, and we’ll have to fight every step of the way to stop him. But we can also look closer to home to find funding. 

As incredible as it may seem, just a handful of billionaire Mainers could fund the state for years out of their own pockets and still live out their lives as multimillionaires. So when socialists say tax the rich, we mean more than raising what billionaires pay by 1% or 2%, we mean raising their taxes by 25% or 50% or more to start with. We mean we should take back the wealth they have collected by exploiting all the people who have worked for them, all the land they have stolen, and all the resources they have grabbed all around the world. In the meantime, socialists often support smaller measures whenever we feel like they are a way to raise funds to help our class, raise consciousness, and build organization. 

[There is, however, one fatal flaw with increasing taxes on the wealthy, which prevents it from being a permanent solution to the persisting problems of capitalist society. To understand why this is the case, we must understand how capitalism essentially works.]

In capitalist society, production is oriented around the accumulation of profits through the sale of goods and services in the form of commodities. The class that controls this process and accumulates the profits is the capitalist class. Production under capitalism is generally organized so that investments, in the form of money, are used to purchase either ready-made goods or the means to produce them, which are then sold as commodities for a price above what it cost to produce them and bring them to market. Marx concisely outlines this process as a cycle of money-commodities-profit (M-C-M’) in chapter 4 of volume 1 of Capital.

There is a problem with organizing production and exchange in this way though. In order for the capitalist to realize a profit from their investment, they cannot be the consumer of their own commodities, as this would simply be more money out of their pocket. [This would also be the case in an economy where the workers own the means of production, but production and exchange remain organized in a manner identical to our current economy—what many people mistakenly believe to be socialism.] The capitalist cannot realize a profit by selling their commodities back to the workers that produced them either, as this would require the workers to purchase the commodities for more money than the workers were paid to produce them.

In order for the capitalist to realize a profit, they must sell their commodities to a party from outside their specific sphere of production. In order to accomplish this, the capitalist takes their commodities to the market, but everyone who appears on the market as the seller of the commodity is there because they have the same problem. In other words, at the end of each productive cycle there is always a greater amount of commodities than can be sold. The inevitable result of this overproduction of commodities is an economic crisis whereby unprofitable enterprises go out of business, profitable businesses reduce their expenses in reaction to economic uncertainty, and a great many workers are thrown out of work through no fault of their own.

After an indeterminate amount of time, economic conditions reset, and the cycle of capitalist production begins again.

What does any of this have to do with taxing the wealthy? [Absolutely nothing, and that is precisely the problem.] Increasing taxes on the wealthy does nothing to address the economic crises which result from how production is organized under capitalism, nor does it seek to alter this organization. All taxation accomplishes is an alteration in the distribution of the profits. Trade unionism suffers from a similar defect, in which it endeavors to improve the living standards of the working class by achieving higher wages for the workers, but does not seek to abolish exploitation or change the underlying organization of production. [At best, taxation is a band-aid for the social problems of capitalist society, and an extremely faulty one at that.]

Politically, socialists want to fight on this terrain by increasing to the greatest possible degree the portion of production that goes to the working class. Alongside our [comrades] in trade unions, we want to improve the living standards of the working class by achieving higher wages for the workers, but we are not content to cease fighting until we abolish exploitation entirely and change the underlying organization of production. 

So are we arguing against raising taxes on the wealthy? Absolutely not. By all means tax them at a rate of 95%, 99%, 100%, 200%! Take back everything they have stolen [then take some more]! Truly solving the causes of social inequality cannot happen until the property of the capitalist class has been expropriated, but, for the reasons explained above, simply taxing them at any rate will prove ineffective given enough time.

Moreover, tax increases tend to antagonize capitalists. Sooner or later, as we are seeing very clearly now in Washington, they will transform their economic might into raw political power to claw back even the small social costs that generations of social movements and trade unions have imposed on them. During such times, as grim as our prospects may seem, it becomes clearer than ever that so long as the capitalists have all the power, even the most progressive public policy can only be temporary. 

[Indeed, everyone is a socialist until it hinders capitalist accumulation. Then the big tent collapses. Heaven forbid someone raises the subject of class conflict, at which point many liberals renounce all prestenses of progressivism and cry out “expropriate the capitalists? At what cost?!”]

[Oh yes, at what cost indeed!] How much longer will capitalist industry be allowed to pollute the planet? How many more times does the economy have to crash? How many more wars will we be forced to fight on the behalf of these robber-barons? How many more lives will be ruined by debts, mass layoffs, denied insurance claims, and more? Why should we tolerate a system that exploits those whose labor keeps society functioning? [The capitalists seem not to have noticed that many of us have nothing to lose but our chains!]

[If the working class treated the capitalist class as the capitalist class treats the working class, we would make Stalin look like a pacifist, but that still would not resolve the contradictions of capitalist production] What we demand is all power to the workers. The problems plaguing modern society can only begin to be solved once the means of production are freed from their capitalist relations of production. Accomplishing this is no easy task. But as the great socialist leader Rosa Luxemburg put it when addressing the question of Reform or Revolution: “At first view the title of this work may be found surprising. Can the Social-Democracy [as the socialists of her day called themselves] be against reforms? Can we contrapose the social revolution, the transformation of the existing order, our final goal, to social reforms? Certainly not. The daily struggle for reforms, for the amelioration of the condition of the workers within the framework of the existing social order, and for democratic institutions, offers to the Social-Democracy the only means of engaging in the proletarian class war and working in the direction of the final goal–the conquest of political power and the suppression of wage labor. Between social reforms and revolution there exists for the Social Democracy an indissoluble tie. The struggle for reforms is its means; the social revolution, its aim.”