Tax policy colloquium, week 2: Clinton Wallace's Democratic Justice in Tax Policy Making

 Yesterday at the colloquium, old friend (and former NYU Visiting Assistant Professor) Clinton Wallace presented his paper, Democratic Justice in Tax Policymaking.  

The article explores how to make tax policymaking more “democratically legitimate.” It notes critically that “various scholars and policy makers have sought to channel tax policy making away from democratic input and towards prescribed outcomes…. [T]hese moves are grounded in strands of public choice theory that are expressly critical of democratic decision making.” It favors instead empowering the normal majoritarian legislative process, while increasing its transparency and the information that is available to voters. Further details are available in the 3-paragraph abstract that you can find right at the front of the above link.

I give the article kudos for interrogating “our” elitism, i.e., that of tax policy experts who often believe (and I plead guilty) that their sense of what the tax system ought to look like is normatively preferable to what Congress is likely to do. However well-meaning we might be, we need to be healthily self-interrogating regarding our biases and inclinations.

I also wish to acknowledge upfront a possible criticism of my response to the paper. I wish I had a nickel for each comment I’ve ever gotten, on one of my papers, that took the form of “Why did you write the paper you were interested in writing, rather than the wholly different one that I (the speaker) was interested in reading?” This is usually a stupid form of comment, because both of those two papers might be worth writing, and one is entitled to follow one’s own fancy. So I hope I am not doing too much of that here.

1) Democratic legitimacy, democratic deficit

While the paper at this stage does not entirely define “democratic legitimacy,” I would think that this does or should have a whole lot to do, in present circumstances especially, with what is often called the democratic deficit. That, in turn, can be defined as an insufficient level of democracy in political institutions and procedures, in comparison with the theoretical ideal of democratic government.

That ideal, in turn, is of course is not self-defining. Indeed, one could read (or write) an entirely library about it, and many have. But it brings to mind such concerns as the following:

(a) the relative political power held by different types of people and groups, which it suggests should not be too unequal. This is part of why vote suppression is so vicious and evil – no milder words will do – even leaving aside its effects on electoral outcomes. But one person, one vote is not enough to make not-too-unequal political power a part of democratic government’s theoretical ideal.

(b) whether majorities’ subjective preferences are being sufficiently honored (insofar as consistent with minority rights),

(c) whether the members of such majorities are getting what they would want with accurate empirical information. Fooling people into supporting self-harm, which they are then able to get because their candidate wins the election and then sets about robbing and immiserating them, does not meet democratic government’s theoretical ideal.

In my view, the democratic deficit is currently a seventy-alarm fire with multiple components. But one of them, predating Trump, is the empirical evidence adduced by the likes of Larry Bartels and Martin Gilens to the effect that the policy views of the bottom 99% have no discernible impact on most areas of public policy.

This is a key sense in which the focus on democratic legitimacy led me to expect a different paper. Removing delegations to experts and other means of limiting legislative majoritarianism, even when accompanied by offering voters more extensive information regarding, e.g., how their current year tax bills would change under proposed legislation (and who sponsored each provision in such legislation) doesn’t strongly address what I consider the main sources of today’s gaping democratic deficit, even if one favors those changes. But perhaps this is just a labeling issue.

2) The “undemocratic impulse” among tax policy experts

In what I think is one of its signal contributions (whether or not one fully agrees), the paper criticizes what it calls the “undemocratic impulse” among experts to dictate outcomes that are (in their view) the best. This is a very useful phrase, given the need among even the most benevolently minded experts in a given area to be properly self-aware and self-interrogating. However, the paper attributes the “undemocratic impulse” to public choice theory, which I would question on 2 grounds: actual causation, and what public choice theory is / does. I would say instead that those who are subject to the “undemocratic impulse” may invoke public choice theory as an ideological tool. However, it can also be used to criticize actual democratic and majoritarian institutions from the standpoint of democratic government’s theoretical ideals.

(a) “Undemocratic impulse” (if that’s what it is) without public choice theory – Stanley Surrey, the famous Harvard law professor who invented the tax expenditure concept and served in JFK’s and LBJ’s Treasury Department, on his way to becoming the most influential tax academic in US history, notoriously favored delegating tax law details to experts, such as the Treasury Department staff. He was a firm critic of legislative majoritarianism in tax policymaking, as in his classic 1957(!) article, “The Congress and the Tax Lobbyist: How Special Tax Provisions Get Enacted.”

Surrey notes here how interest group capture of the legislative process gives rise to sacrifice of the public interest, by reason of logrolling between different business interests and the disproportionate power of higher-income taxpayers. It’s almost pure Mancur Olson interest group theory, but without the theoretical apparatus and based on years of personal observation rather than any sort of a theoretical model (public choice theory or otherwise). Surrey’s view epitomized how idealistic experts very often view the legislative process, based in part on empirical knowledge that gets slighted in that process, albeit not from a purely “neutral” perspective as no such thing exists. Less clear, however, is whether this viewpoint is actually “anti-democratic,” or is based instead on observing how democratic institutions fail in practice to satisfy the dictates of democratic theory. Maybe some of each.

(b) Public choice theory – While it’s true that public choice theory can be used as an ideological tool by one who is hostile to public control over policymaking, it also (i) has aspects of science or logic, not just ideology, and (ii) can be used from a pro-democratic standpoint to identify flaws in how majoritarian institutions work in a mass society.

Consider Arrow’s theorem, which the paper groups among public choice theory’s “indictments of and attacks on democratic decision-making.” The theorem is simply logically true within its terms, like it or not, although what to make of it is of course another matter. But it does not “predict” that in practice there will be a lot of cycling between outcomes (indeed, its literature explores what might produce stability and/or particular outcomes). It also does not support viewing voters’ and legislators’ preferences (especially if we are thinking cardinally, not just ordinally) as normatively irrelevant.

Likewise, a democrat should be no less interested than an anti-democrat in the observations about interest group politics that Olson theorized and Surrey observed. The reign of narrow, concentrated interests over broad and diffuse ones is potentially invidious to satisfaction both of the majority’s interests and of its preferences.

3) Concrete proposals

In addition to favoring more legislative majoritarianism and less delegation to experts / insulation of policymaking from control by elected politicians – on which my preferences are more case-by-case than a priori, although I admit to having frequent sympathy for delegation where I feel it might work decently – the paper also favors a number of measures to strengthen Congress’s accountability by better informing the public. This is an aim I generally favor, although there is much to debate in the paper’s particular proposals. Indeed, one need not believe that measures of this kind can greatly increase democratic legitimacy and shrink the democratic deficit – given where we are these days – in order to view them as good things. One also need not favor more legislative majoritarianism, rather than less, in order to agree that, when elected politicians are directly controlling policy, transparency is vital even if less effectual than one might have wished. But given the length of this post, along with the clarity with which the paper presents these proposals, I will leave them to readers to examine on their own.