Ajay K. Mehrotra
Thanks to Jack Balkin for hosting this blog post and to Joey
Fishkin and Willy Forbath for organizing the Texas Law Review Symposium on “The
Constitution and Economic Inequality.”
I’m looking forward to the conference and I’m honored to be a part of
such a distinguished group of constitutional law scholars and historians.
As one of the members of the panel on Constitutional
Political Economy, my task is to explore the constitutional dimensions of
fiscal policy and economic inequality.
In my presentation, I’ll be drawing on a collaborative project that I’ve
been working on with my good friend, political historian Joe Thorndike (Tax Analysts/Northwestern Law). Joe and I have been exploring the origins and
development of what we refer to as “The Long Twentieth-Century American
Commitment to Progressive Taxation.”
We began collaborating on this project for a conference on “Beyond the New Deal Order,”
hosted last fall by labor historian Nelson Lichtenstein and others at UC-Santa
Barbara. Incidentally, more than a few
participants at the Santa Barbara conference will also be in attendance at the University
of Texas symposium.
The central aim of the New Deal conference was to revisit
Steve Fraser and Gary Gerstle’s seminal 1988 edited volume, The Rise and Fall of the New Deal Order. Joe and I took on the task of questioning and
trying to explain why Fraser and Gerstle’s pivotal historiographical
intervention overlooked the importance of fiscal policy and particularly FDR’s
commitment to progressive taxation. In
the process, we were contesting the prevailing view that New Deal tax policy
was mainly about symbolic politics rather than substantive fiscal reform.
A central part of our argument was that the New Deal’s
commitment to progressive taxation was deeply rooted in American history,
stretching back to the turn of the twentieth century if not earlier. It was during the Gilded Age and Progressive
Era and into World War One that our modern system of direct and graduated taxes
first took permanent shape. More
directly, we contended that today’s federal tax system is a lineal descendant
of the fiscal regime established during the first half of the twentieth
century. Defined by a
commitment to progressivity in general and the income tax in particular, this
long regime survived the conservative ascendancies of the 1920s, 1950s, and
1980s. Indeed, we believe these were periods of consolidation rather than fragmentation
for the long 20th century regime of progressive taxation.
In making this claim, we are challenging a dominant view of
American constitutional and legal historiography. Just as an earlier generation of New Left
historians disparaged FDR’s tax policies as “a triumph of form over content,” so too have constitutional
historians asserted that the progressive era origins of our graduated income
tax reflect a form of sophisticated conservatism – a conservatism designed to
blunt more radical calls for wealth redistribution. Thus, we are told, by Morton Horwitz that the
tax jurisprudence of “Classical Legal Thought” was animated by a desire to
solidify an “anti-redistribution principle” into the “very essence of the
constitutional law of a neutral state.”
Similarly,
legal historian Robert Stanley has argued that the progressive income tax
movement was infused with a “centrist” logic that permitted relatively
autonomous lawmakers to become the “trustees” of the capitalist system. We are led to believe that the reform
movement that culminated with the ratification of the Sixteenth Amendment,
which permitted the direct taxation of incomes without apportionment, was “not
an expression of real economic democracy … but a rejection of the far more
fundamental institutional change advocated by intellectuals and street
dissidents of both left and right.” In
sum, standard accounts of the origins of American progressive taxation hold
that if this was a period of fiscal revolution, it was mainly a palace
revolution – an era of pretense with little fundamental transformation.
The dominant narrative of hypocrisy and disappointment is
misleading. It hinges on a narrower version of the famous Werner Sombart query
about socialism: Why no highly redistributive taxation in America? When
stripped of the normative bias inherent in that implicit query, however, the
long-twentieth century of progressive taxation seems less about “centrism,” “anti-redistribution,”
and “symbolic politics,” and more about substantive change, especially when we
treat the twentieth century – from the Progressive Era through the New Deal and
into the post-war period – as a single period.
In conclusion, my coauthor and I are trying to argue that
the Progressive Era and the New Deal order made graduated taxation a pillar of
the modern American fiscal state. Indeed,
taxation is one of the most durable legacies of the American political
tradition; while the rest of the Progressive and New Deal order may have ended
with Ronald Reagan’s election in 1980, the progressive tax regime is with us
even today. In 2015, the United States
relies more on progressive taxes – and less on regressive ones – than any of
its peer nations. It imposes no broad-based consumption tax, standing firmly
against the global popularity of value-added levies. But it makes ample use of
corporate and graduated individual income taxes—touchstones of progressive
politics for more than a century.
This fiscal exceptionalism is a legacy of the long twentieth
century of progressive reform. Tax arguments from the dawn of the century
through the 1970s were not simply the instrumental invention of master
manipulators in Congress or the White House, or merely a convenient distraction
from more important disputes over labor, social welfare, and business
regulation. Rather, fiscal arguments were part of a broader, longer debate that
put progressive taxation at the center of larger questions about social
justice, state-building, and citizenship.
Ajay K. Mehrotra is Director and Research Professor at the American Bar Foundation. You can reach him by e-mail at akm at abfn.org