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Biweekly Discussion - Tax Debates for Skeptics

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Brian B.
Biweekly Discussion - Tax Debates for Skeptics

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We're currently hosting our discussions at Café Walnut, near the corner of 7th & Walnut in Olde City, just across the street from Washington Square Park. The cafe's entrance is below street level down some stairs, which can be confusing if it's your first time. Our group meets in the large room upstairs.

Since we're using the cafe's space, they ask that each person attending the meetup at least purchase a drink or snack. Please don't bring any food or drinks from outside. If you're hungry enough to eat a meal, they have more substantial fare such as salads, soups & sandwiches which are pretty good and their prices are reasonable.

The cafe is fairly easy to get to if you're using public transit. With SEPTA, take the Market-Frankford Line & get off at the 5th Street Station (corner of 5th & Market), and walk 2 blocks south on 5th and then turn right on Walnut Street and walk 2 blocks west. With PATCO, just get off at the 9th-10th & Locust stop and walk 3 blocks east & 1 block north. For those who are driving, parking in the neighborhood can be tough to find. If you can't find a spot on the street, I'd suggest parking in the Washington Square parking deck at 249 S 6th Street which is just a half block away.

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TAX DEBATES FOR SKEPTICS:

IS IT IRRATIONAL TO BELIEVE YOU DON'T HAVE TO PAY TAXES, THAT THE IRS IS USED AS A POLITICAL WEAPON, THAT TAX CUTS WILL PAY FOR THEMSELVES, OR THAT THE GOVERNMENT CAN SIMPLY PRINT MONEY INSTEAD OF TAXING US?

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INTRODUCTION - THE SCOPE OF SKEPTICISM: SHOULD SKEPTICS DEBUNK PSEUDO-LAW, PSEUDO-SCANDALS & PSEUDO-ECONOMICS?

In honor of Tax Day, which is tomorrow, this discussion will focus on taxes - hold on, it's actually more interesting than you'd think!

I know taxes may seem like an odd choice for a skeptic meetup, since it's not a scientific subject and it tends to be a highly partisan topic where a person's views are mostly determined not by empirical evidence but by their political allegiances and their moral intuitions about what seems fair.

Following prominent skeptics like Steven Novella & Daniel Loxton, I think the skeptic movement should try to remain relatively apolitical, in the sense that - as the late Senator Daniel Patrick Moynihan put it: "Everyone is entitled to his own opinion, but not his own facts." I've tried to steer our meetups away from discussing issues that are purely partisan. In the hopes of reassuring prospective members of this meetup, I've mentioned this nonpartisan principle in the "What We're About" section of our Meetup's webpage, saying:

"Although we occasionally address political issues, we do so from a non-partisan, empirical approach. Any politician, pundit or political party that makes claims that are unsupported by logic & evidence are open for criticism. We typically avoid issues that are purely ethical questions, since science can only tell us how the world is not how it ought to be (i.e. we employ the "fact-value distinction" from philosophy)."

However, while taxes aren't a purely objective & factual topic that can be divorced from moral value judgements, some tax-related issues do overlap with the mainstays of skeptical inquiry, such as conspiracy theories, moral panics & pseudo-science...

The first section of this discussion will investigate the overlap between conspiracy theorists and "tax protestors" - i.e. people who refuse to pay certain taxes, often the income tax, because they believe that the tax laws are unconstitutional or otherwise invalid. "Tax protestors" are different from "tax resisters", who refuse to pay taxes as a form of political protest against the government's policies (often war), or a moral opposition to taxation in general, not out of a belief that the tax law itself is invalid. Tax protestors often use a wide variety of unusual legal arguments to support their position, and these arguments are commonly referred to as "pseudolaw" because they run contrary to well-established legal precedents and are highly unlikely to stand up in a court of law. We'll discuss the relationship between "pseudolaw" and pseudoscience, and we'll ask whether the belief that one isn't legally obligated to pay certain taxes is inherently irrational or simply an uncommon but logically coherent interpretation of the law that just happens to be unpopular with the IRS & tax court judges.

Several years ago, starting in 2013, there were allegations of IRS targeting of conservative non-profits that some people, particularly pundits on the political left, denounced as a "conspiracy theory". I thought this would be another interesting tax-related issue for us to discuss, since conspiracy theories are a common topic for skeptics. However, I think the IRS targeting allegations might better be referred to as a "scandal" or "pseudo-scandal" (depending on whether you feel there was genuine wrongdoing) as opposed to a "conspiracy theory". "Scandals" and "conspiracy theories" typically allege similar things - i.e. that a group of political or business elites colluded to do something morally wrong and/or illegal - but "scandals" typically denote an allegation that's received a lot of mainstream media attention while "conspiracy theories" typically denote allegations confined to obscure rumor mills & the followers of eccentric political agitators like Lyndon LaRouche & Alex Jones. Scandals are also similar to "moral panics" in that both attract heavy & sometimes excessive news coverage (a.k.a. a "media circus") and involve lots of moral grandstanding & scapegoating by political pundits, but moral panics tend to involve elites condemning "folk devils" on the fringes of society whereas scandals are intra-elite conflicts. For politicians, the point of a scandal is not merely to push for legal action against those accused of wrongdoing. Even if no one is criminally charged, politicians often seek to convict their opponents in the "court of public opinion" and damage their political prospects in the next election, and they also seek to rally their own supporters by showcasing their leadership & advocacy skills. The political scientist Brendan Nyhan has pointed out that scandals can be analyzed not only in terms of the level of the actual wrongdoing they uncover but also as "social constructs" that emerge predictably at certain points in the news cycle. We'll use Nyhan's approach and trace how the IRS targeting scandal dominated news coverage in the spring of 2013 but then dissipated over the summer as new facts emerged. We'll also ask whether in hindsight this was a "real scandal" that uncovered major illegal activity by key political players or a "pseudo-scandal" that exaggerated the importance of some minor mistakes by a few bureaucrats.

Another way that taxes related to a common skeptic concern is that both the political right & left often refer to each other's tax policies as "pseudo-economics". "Pseudo-economics" could be considered a close cousin of pseudoscience since economics is classified as a social science. However, the distinctions between mainstream economics, the highly speculative but still respectable theories of "heterodox economics" and the empirically false claims of "pseudo-economics" are a bit of unclear. Once reason for this lack of clarity is that there's a lot of disagreement among both pundits & scholars about whether or not economics is really "objective" or just a cover for ideology. It's also not hard to find some public intellectuals denouncing the entire field of economics as a "cargo cult science" that use lots of math & models to mimic the harder sciences without offering a high enough degree of predictive accuracy or easily testable claims. In fact, some economists have even criticized their own field when they feel their colleagues have overstepped the bounds of what their field can reliably recommend given the complexity of the global economy. We've covered this debate in a previous Skeptics meetup entitled, "Should Skeptics Defer to the Economic Consensus" - you can check out the discussion outline here:
https://www.meetup.com/Philly-Skeptics/events/235264056/

In that previous discussion, I argued that economic issues are so important that it's almost impossible remain completely agnostic about them - and that would be our only recourse if we dismissed the entire field of economics as bunk. I also argued that economics is "scientific" enough, in the sense of having an empirical basis, that (as with other social sciences like psychology, criminology, political science, sociology & history) we should generally defer to the experts when there's a high degree of bipartisan consensus. Starting from this premise, we can ask whether certain economic theories that don't enjoy a bipartisan consensus should be classified as "pseudo-economics", especially when these theories are heavily criticized even by many economists that share its normative values & goals. In the second half of this discussion, we'll look at two controversial economic theories that have both been in the news recently - "Supply-Side Economics" and "Modern Monetary Theory" - and ask whether or not they deserve to be dismissed as "pseudo-economics" and have their policy prescriptions ignored. We'll also tie these theories into current policy debates about the effects of the Trump tax cuts and the feasibility of Alexandria Ocasio-Cortez's Medicare-for-all plan.

NOTE: This meetup will be preceded by a related discussion on taxes hosted by the Philly Political Agnostics and running from 3-5pm. They'll be covering the moral philosophy of taxation, optimal tax theory from economics, the psychology of taxpayers, and the political science of tax policy. To check out the discussion outline & RSVP, go here:
https://www.meetup.com/Philadelphia-Political-Agnostics/events/259946508/

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DIRECTIONS ON HOW TO PREPARE FOR OUR DISCUSSION:

The videos & articles you see linked below are intended to give you a basic overview of some of the weird beliefs people have about taxes. As usual, I certainly don't expect you to read all the articles & watch all the videos prior to attending our discussion. The easiest way to prepare for our discussion is to just watch the numbered videos linked under each section - the videos come to about about 53 minutes total. The articles marked with asterisks are just there to supply additional details. You can browse and look at whichever ones you want, but don't worry - we'll cover the stuff you missed in our discussion.

In terms of the discussion format, my general idea is that we'll address the topics in the order presented here. I figure we'll spend about 30 minutes on each section.

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I. RIGHT-WING TAX PROTESTORS & LEFT-WING TAX RESISTORS: PRINCIPLED ACTIVISM OR PSEUDO-LEGAL NONSENSE?

  • SINCE MANY RIGHT-WING CONSPIRACY THEORISTS WHO DISTRUST THE GOV'T ALSO BELIEVE THE INCOME TAX (AND SOMETIMES ALL TAXES) ARE LEGALLY INVALID, DOES THIS ALL TAX PROTESTOR ARGUMENTS ARE IRRATIONAL CONSPIRACY THEORIES?

  • IS THERE A SHARP DISTINCTION BETWEEN "TAX PROTESTORS" THAT OBJECT TO TAXES ON LEGAL GROUNDS & "TAX RESISTORS" THAT OBJECT TO TAXES ON MORAL GROUNDS?

  • ARE ILLEGAL FORMS OF "TAX EVASION" & LEGAL FORMS OF "TAX AVOIDANCE" COMPARABLE TO TAX PROTESTS & TAX RESISTANCE, OR ARE THEY METHODS OF NON-PAYMENT RATHER THAN MOTIVATIONS?

  • ARE ANY TAX PROTESTOR ARGUMENTS LOGICALLY COHERENT & REASONABLE EXTRAPOLATIONS FROM OLDER CASE LAW THAT JUST HAPPEN TO BE UNPOPULAR WITH TODAY'S TAX COURT JUDGES?

  • WHY ARE TAX PROTESTORS & TAX RESISTORS OFTEN ABLE TO AVOID PROSECUTION FOR MULTI-YEAR SPANS?

  • DOES THE VALIDITY OF TAX PROTESTOR ARGUMENTS DEPEND ON ONE'S UNDERLYING LEGAL PHILOSOPHY: NATURAL LAW (LAWS MUST BE ACCORD WITH NATURAL RIGHTS), LEGAL POSITIVISM (LAWS ARE SOCIAL CONSTRUCTS WITH THEIR OWN INTERNAL LOGIC), OR LEGAL REALISM (LAWS ARE AMBIGUOUS, HISTORICALLY CONTINGENT & REINTERPRETED AS POLITICAL FORCES CHANGE)?

1a) Stuff They Don't Want You To Know, "Income Taxes" (video - 4:40 min.)
https://www.youtube.com/watch?v=0fMdS7bzd8c

1b) NowThis World, "Who Are Sovereign Citizens And Are They Above The Law?" (video - 3:25 min.)
https://www.youtube.com/watch?v=zN-JSFeYQ_o

1c) Democracy Now w/ Ed Hedemann, "Refusing to Pay Taxes, Fund War" (video - 9:54 min.)
https://www.youtube.com/watch?v=xfqFX7Vi-cI

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II. IRS TARGETING OF TEA PARTY GROUPS: SCANDAL OR PSEUDO-SCANDAL?

  • DOES THE USE OF KEYWORDS LIKE "PATRIOT" & "TEA PARTY" TO HELP DETERMINE WHICH 501c4 APPLICATIONS TO SCRUTINIZE PROVE THE IRS WAS ENGAGED IN POLITICAL SUPPRESSION, OR DOES THE FACT THAT THEY USED ALSO KEYWORDS ASSOCIATED WITH LEFT-WING GROUPS LIKE "OCCUPY" AND "PROGRESS" SHOW THERE WAS NO BIAS?

  • DID THE IRS SUSPICIOUSLY TARGET THE TAX-EXEMPT STATUS OF LIBERAL 501c3 GROUPS LIKE THE NAACP UNDER BUSH IN 2004?

  • IF THERE WAS ANY POLITICALLY BIASED IRS TARGETING OF CONSERVATIVE GROUPS, WAS IT LIMITED TO LOWER-LEVEL IRS EMPLOYEES AT ONE CINCINNATI OFFICE, OR WOULD THEIR ACTIONS AUTOMATICALLY RAISE RED FLAGS WITH THEIR SUPERIORS?

  • IS IT PLAUSIBLE THAT LOIS LERNER'S EMAILS WERE LOST BECAUSE OF AN ACCIDENT, OR IS IT MORE LIKELY THEY WERE DELETED TO AVOID DIVULGING INCRIMINATING EVIDENCE?

  • IS BRENDAN NYHAN RIGHT THAT THE PUBLIC GOT THE WRONG IMPRESSION FROM THE INITIAL NEWS COVERAGE OF THE IRS TARGETING SCANDAL & THEN THE NEWS SHIFTED TO OTHER TOPICS WITHOUT CORRECTING THE INITIAL STORY?

  • DID THE 2017 TIGTA REPORT VINDICATE OR DEBUNK THE GOP'S ALLEGATIONS OF IRS TARGETING?

  • DOES THE FACT THE SEVERAL TEA PARTY GROUPS WERE AWARDED $3.5M IN COMPENSATION IN 2018 VINDICATE THEIR ALLEGATIONS THAT THE IRS UNFAIRLY TARGETED THEM?

2a) Ben Swann, "Reality Check: IRS Targeting Scandal" (video - 3:55 min.)
https://www.youtube.com/watch?v=-zkpPDLQLV4

2b) Newsy Politics, "Missing IRS Emails: Bureaucratic Failure Or Cover-Up?" (video - 3:32 min.)
https://youtu.be/GX2ZA5S1lRw

2c) Jesdan Weyan, "Ezra Klein on IRS Scandal" (video - 3:20 min.)
https://www.youtube.com/watch?v=wNl9faHhkIM

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III. SUPPLY-SIDE ECONOMICS THEORY & THE TRUMP TAX CUTS: CAN TAX CUTS PAY FOR THEMSELVES BY STIMULATING ECONOMIC GROWTH... OR IS THIS RIGHT-WING PSEUDO-ECONOMICS?

  • IS THERE A LEFT-RIGHT DISAGREEMENT ABOUT THE VALIDITY OF THE LAFFER CURVE AS A CONCEPT (I.E. TAXATION RUNS INTO DIMINISHING & THEN NEGATIVE RETURNS), OR MERELY ABOUT WHERE THE LAFFER CURVE BENDS - 33% VS 70%?

  • IS DAVID PAKMAN RIGHT THAT THE LAFFER CURVE IS LIMITED IN ITS UTILITY FOR DESIGNING TAX POLICY BECAUSE OF OUR GRADUATED INCOME TAX SYSTEM?

  • SHOULD WE BE SUSPICIOUS OF THOSE WHO ADVOCATE FOR SUPPLY-SIDE ECONOMICS SINCE THEIR TAX POLICY ADVICE OFTEN DOESN'T CHANGE DURING DIFFERENT PHASES OF THE BUSINESS CYCLE - I.E. THEY ALWAYS WANT TO CUT TAXES, AND BOOMS & RECESSIONS MERELY AFFECT WHETHER THEY WANT TO INCREASE OR CUT GOV'T SPENDING?

  • IS IT ACCURATE TO DESCRIBE SUPPLY-SIDE ECONOMICS AS "TRICKLE DOWN ECONOMICS" OR DOES THAT CONFUSE ECONOMIC GROWTH DUE TO INCREASED INVESTMENT & HIRING (WHICH IS PLAUSIBLE) WITH DEMAND-SIDE STIMULUS FROM ELITE CONSUMPTION (WHICH IS UNLIKELY)?

  • WHY DON'T MOST ECONOMISTS THINK THE TRUMP TAX CUTS HAD A BENEFICIAL EFFECT ON THE ECONOMIC GROWTH? IS IT BECAUSE UNEMPLOYMENT WAS ALREADY LOW & ECONOMIC ACTIVITY FAIRLY HIGH, OR BECAUSE THE LACK OF SPENDING CUTS MEANS IT RAISES THE NATIONAL DEBT?

3a) Tim Groseclose, "Lower Taxes, Higher Revenue" (video - 5:37 min.)
https://www.youtube.com/watch?v=FqLjyA0hL1s

3b) David Pakman, "Does the Laffer Curve Make Any Sense?" (video - 5:35 min.)
https://www.youtube.com/watch?v=1gyobu3pd50

3c) Washington Post, "Fact Checker: No, the Trump tax cut didn't spark major U.S. investments" (video - 1:18 min.)
https://www.youtube.com/watch?v=7lJsepwiTQY

3d) Washington Post, "Fact Checker: No, Trump's budget doesn't reduce the deficit" (video - 0:57 min.)
https://www.youtube.com/watch?v=hja73BHPwoo

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IV. MODERN MONETARY THEORY (MMT) & MEDICARE-FOR-ALL: CAN THE GOV'T PAY OFF STUDENT DEBT AND/OR FUND EXPENSIVE SOCIAL WELFARE PROGRAMS WITHOUT RAISING TAXES ON THE MIDDLE CLASS BY PRINTING MONEY... OR IS THIS LEFT-WING PSEUDO-ECONOMICS?

  • DOES MMT ACCURATELY DESCRIBE HOW TAXATION WORKS IN A FIAT CURRENCY SYSTEM - I.E. THE GOV'T DOESN'T HAVE TO COLLECT TAXES TO FUND ITS PROGRAMS BECAUSE IT CAN PRINT MONEY, SO THE PURPOSE OF TAXES IS TO CONTAIN INFLATION BY REMOVING MONEY FROM CIRCULATION?

  • IS STEPHANIE KELTON RIGHT THAT AMERICA'S HISTORY OF DEFICIT SPENDING - INCLUDING UNDER TRUMP - PROVES THAT MMT CAN WORK, I.E. TAXES DON'T HAVE TO BE RAISED TO FUND A HIGH LEVEL OF GOVERNMENT SPENDING & IT WON'T NECESSARILY CAUSE MUCH INFLATION?

  • AT WHAT POINT DO ECONOMISTS THINK MMT WOULD TRIGGER HYPERINFLATION? COULD THIS BE PREVENTED BY RAISING TAXES OR ISSUING BONDS ONCE INFLATION STARTS TO GO TOO HIGH?

  • WHAT THE DIFFERENCE BETWEEN THE FED'S BANK BAILOUTS IN THE WAKE OF THE 2008 FINANCIAL CRISIS AND THE LATER ROUNDS OF "QUANTITATIVE EASING" (QE)? HOW DOES QE DIFFER FROM THE JEREMY CORBYN'S "PEOPLE'S QE" IDEA TO FINANCE GOV'T INVESTMENT & BEN BERNANKE'S "HELICOPTER MONEY" IDEA FOR FISCAL STIMULUS?

  • COULD THE FED WIPE OUT STUDENT DEBT WITH QUANTITATIVE EASING AS JILL STEIN SUGGESTED?

  • IS STEPHANIE KELTON RIGHT THAT AMERICA'S HISTORY OF DEFICIT SPENDING - INCLUDING UNDER TRUMP - PROVES THAT MMT CAN WORK, I.E. TAXES DON'T HAVE TO BE RAISED TO FUND A HIGH LEVEL OF GOVERNMENT SPENDING & IT WON'T NECESSARILY CAUSE MUCH INFLATION?

4a) CNBC w/ Stephanie Kelton & Dan Mitchell, "Debating Modern Monetary Theory" (video - 6:59 min.)
https://www.youtube.com/watch?v=4CIwS0PDs1g

4b) Wochit News, "Jill Stein Slams John Oliver On Student Debt" (video - 0:55 min.)
https://youtu.be/RcgvWVQrIuA

4c) CNN, "Fact check: The true cost of 'Medicare for all'" (video - 3:14 min.)
https://www.youtube.com/watch?v=G28wPV_bAjs

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Cafe Walnut
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