Wednesday, October 12, 2022

Tax Policy Colloquium for October 11: Bridget Crawford's Pink Tax and Other Tropes

Yesterday at the colloquium, Bridget Crawford presented Pink Tax and Other Tropes. It discusses the rhetorical practice of calling things "taxes," not just when / because they literally are, but in cases where the use is metaphorical or (even for a literal tax) the assigned name involves metonymy or synecdoche. The five examples the paper looks at in some depth are the so-called nanny tax, death tax, soda tax, Black tax, and pink tax (with especial interest in the last of these, as per the title).

I always enjoy conceptual papers of this kind. My main thoughts about the paper and the broader topic can be grouped into the following headings:

1) Use of the "tax" trope

Why do we call something the "this" tax or the "that" tax? Sometimes it is merely a descriptive shorthand for something that is literally / formally a tax provision. At other times, however (but also in some of the labels deployed to describe literal taxes), the label is a rhetorical tool, aimed at invoking a negative response to the provision or, for a figurative tax, the underlying phenomenon.

The paper notes the role of U.S. anti-tax ideology in motivating some of these labeling exercises. While one can almost never go wrong in ascribing great significance to this ideology, I think that the amount of work it is doing in the paper's case studies is variable. Sometimes the point seems to be, not that taxes are bad, but that the juxtaposition between "tax" and the descriptor is unjust or anomalous.

By point of comparison, consider the phrase "driving while Black." It's not anti-driving - rather, it asserts that Black people unfairly face special adverse consequences when driving (or doing other routine daily activities). Similarly, the phrase "Black tax" arguably is not so much drawing on anti-tax sentiment as asserting that in the US one's race can cause one, unfairly, to face various systematic burdens in one's life.

2) The paper's five main examples

Each of the paper's five main examples is interesting and merits attention.

    a) Nanny tax - This phrase debuted, at least in terms of national prominence, when Bill Clinton's two first choices for Attorney General, Zoe Baird and Kimba Wood, were forced to withdraw as a result of so-called "nannygate." Like millions of other Americans, they reportedly had not complied with the taxpaying and reporting obligations that one may incur when one hires people to provide services. Often these are provided in an informal household setting, and the service provider may be a chauffeur, housekeeper, babysitter, etcetera - not just a nanny.

The choice of the term "nanny tax" in the partisan political setting of a new president's Cabinet appointments reflected, I think, a bit of sexist hostility to professional women whose careers require them to use full-time childcare help, rather than just the odd babysitting hour here or there. Apparently male appointees who have violated this same rule in more recent years have avoided being forced out, because they didn't face the same sexist hostility. But it is also true that part of the "gotcha" that was successfully directed against Baird and Wood reflected the view that an Attorney General designate ought to have complied with all pertinent legal obligations.

In terms of the phrase's broader applicability, I don't think it reflects objection to the idea that hiring a nanny (or other domestic worker) should trigger tax liabilities. Rather, it is founded on the obligation's imposing compliance burdens on transactions in the informal household sector where people sometimes are not used to bearing them. The reporting thresholds have been raised since the time of the controversy, but arguably not enough, and noncompliance remains at high levels even among the otherwise generally compliant.

    b) Death tax - This term was deployed by the extremely well-organized and well-funded movement that sought to achieve repeal of the federal estate and gift tax. The movement succeeded in getting this tax repealed in full for one whole year, and otherwise in having the exemption thresholds raised significantly. The term "death tax" was helpful in this movement, at a minimum in enabling them to develop polling results which suggested massive public opposition to estate and gift taxes. (Differently worded polls, however, tended to show at least a modest level of public support for the very same taxes.)

The term "death tax" for the estate and gift tax is inaccurate and dishonest. Death is neither necessary nor sufficient for it to apply. It is a tax on transmitting wealth to others, incurred by only a tiny fraction of decedents' estates, and incurred inter vivos if one makes sufficiently large gifts.

One view of why the label proved so politically potent might be that it makes people (falsely) believe that everyone incurs the tax because everyone dies. But I don't think that was actually the main source of its potency (nor, do I think, was it anti-tax sentiment tout court). Rather, it was a bit like "driving while Black." Targets of the phraseology were being induced to react to the sentiment that death is simply a bad / burdensome / unfair time to impose tax liability. E.g., the death of a loved one is already a sad time, now this too?

    c) Soda tax - These are literal taxes, although synecdoche is involved if the provisions also apply to sugary drinks (or other products) beyond just soda. The term has also been used to describe regulatory provisions, such as those sought in NYC some years back by Mayor Bloomberg, that seek to reduce soda consumption by means other than imposing a fiscal levy.

I think of this as pretty much a straight-up term, rather than a rhetorical weapon, used by the provisions' supporters and foes alike as a handy shorthand descriptor. Soda taxes are rightly controversial, in that they have both virtues and vices (and to my mind it's largely an empirical question which prevails in a given setting). I personally am fine with their addressing both the externalities and the internalities associated with drinking sugary products. But even so there are such questions as that of the impact on people in lower-income households, who may benefit insofar as they switch to healthier diets but who face added burdens insofar as their diets don't improve but they are paying more tax (and/or adopt burdensome means of avoiding the tax).

    d) Black tax and e) pink tax - I discuss these more fully below. Here we are mainly in the realm of discussing figurative rather than literal taxes. The paper argues that such figurative uses of the tax trope are generally less effective than literal ones in generating a direct legislative response. I agree, but would emphasize that this is not the only use that figurative rhetoric may have.

3) What is rhetoric "for"?

The above tax tropes vary in the degree to which they are being used as rhetorical tools to support a particular viewpoint, as distinct from merely offering handy descriptors. How should one judge a particular use of the trope? One relevant question is whether it promotes accurate or inaccurate public understanding of the underlying "thing," be it a literal tax or merely a figurative one. Here "death tax," for example, badly fails the test, as (by design) it promotes misunderstanding.

A second relevant question, in the case of deliberate rhetorical use, is how effectively it promotes the underlying aim. Here "death tax" seems to have done well for those who shared the proponents' aim. Crawford's paper skeptically interrogates the efficacy of "Black tax" and "pink tax" in this regard. It emphasizes the lack of legislative successes that can be associated with these figurative uses of the tax trope. By way of contrast, the paper notes that the one literal tax within the pink tax rubric - what has become known as the tampon tax - has proven terminologically effective in getting these taxes legislatively scaled back. I'll say more about tampon taxes shortly. But for now let's focus on how one might assess figurative taxes' rhetorical effectiveness beyond just looking for legislative victories.

One who uses the term Black tax or pink tax is arguing that Blacks and women, respectively, face pervasive unfair burdens in US society (or elsewhere) that reflect the influence of racism and sexism. The argument is not just about current legislation, although it might inspire various proposals, but about how to view the state of social justice in our society. Hence the "payoff" from using these terms, if realized, may be indirect and more lagged.

And note again that tax tropes offer only one way of doing this. Consider again "driving while Black." Or the slogan "Black Lives Matter." The latter is a shorthand way of saying "While Black lives matter [which should be obvious], they have been treated as if they don't matter." Its being a shorthand for the longer version has permitted trolls to misunderstand it deliberately (e.g., the anti-Semitic clown Ye with his "White lives matter").

In thinking about the long-term political and cultural efficacy of such terms, I think it's useful to think of there being 3 groups in society, relative to one's underlying aims: supporters, persuadables, and opponents. A successful phrase is one that (a) stimulates, focuses, and motivates supporters, while also (b) reaching persuadables, and (c) not handing a useful rhetorical weapon to opponents. [Consider, for example, how racist politicians around the country have benefited from misapplying and weaponizing the term "critical race theory.")

In the context of the phrases Black tax and pink tax, the persuadables are people who can be outraged by racism or sexism - e.g., when they learn about police killings or Harvey Weinstein's actions - but who have a lower estimate of these problems' general pervasiveness and seriousness than those who are already "supporters." Gaining the persuadables' support is the key to achieving majority status for one's views, although in the US what the majority thinks (other than a Supreme Court majority) has had increasingly little impact on policy outcomes.

I wonder if the terms Black tax and pink tax are currently still a bridge too far for many of the persuadables whom the terms' proponents want to reach. But sentiments can't change over time, as evidenced, e.g., by the rise over the last twenty years of support for marriage equality (another well-chosen descriptor).

4) The Black tax

This term is used to describe the pervasive disadvantages that Black Americans by reason of both current and historic racism. Per one of the paper's sources, it refers to the cost of implicit bias on African-Americans that manifests in housing, business, finance, the automotive industry, online commerce and employment by way of segregation, employment discrimination, and race-based differentials in marketplace fees and pricing. It can also include the risks and disadvantages that are captured by such phrases as "driving [etcetera] while Black."

As this is already a fairly long post, I will note here that many of its manifestations are potentially relevant to tax policy design. When people discuss reparations for slavery and continued racism, the analysis is at least partly backwards-looking. Basing proposed fiscal policies on racism's continued impact is both forward-looking and potentially consistent with broader principles that are widely accepted in public economics and welfare economics more generally.

5) The pink tax

This term is used to describe such phenomena as the gender wage gap, gender-based pricing differentials, gender-based personal safety costs, and the "second shift." Its use as a term is controversial even among supporters of the underlying anti-sexist cause, e.g., due to differing views regarding whether it promotes / relies upon undesirable gender stereotypes.

Again for reasons of brevity here, rather than discussing each of these manifestations in particular, I will merely note that they are potentially highly relevant to tax (and broader fiscal) policy design, whether this were to involve expressly gender-based provisions or, say, deductions/exclusions for particular items.

The paper also discusses the one literal (rather than just figurative) tax within the pink tax rubric, which is the so-called tampon tax on female menstrual products. As background, US retail sales taxes (RSTs) often exempt "necessities" while taxing other consumer products ("luxuries"). Often products for men, such as Viagra, are exempted whereas tampons are taxed. However, there has been a widely successful movement, in a number of states, to move tampons to the exempt category. The allies in this movement have included (a) people who are more broadly engaged in combating sexism, (b) high school students and the like whose limited budgets are strained by the need to pay the tax on top of the pretax price itself (and by the products' not being otherwise made available to them), and (c) more generally anti-tax Republicans.

As it happens, under the Internal Revenue Code the cost of buying tampons qualifies for reimbursement in a health saving account (HSA). But it might not be deductible (I am not sure) as a section 213 medical expense. The latter would only matter for people whose medical expenses (as defined by the Code provision) exceed the statutory floor and who are itemizing.

On tampon taxes more generally, I would make the following two arguments:

a) Agreed that they are misclassified by RSTs that treat them as luxuries but exempt "necessities."

b) Well-designed consumption taxes would not exempt necessities, however, so long as other adequate provision was made for the taxes' fiscal impact on lower-income households.

c) In a properly comprehensive consumption tax, the cost of buying a tampon (in common with consumer purchases generally) would be included, not exempted.

d) Despite (c) above, the fact that some people but not others need to purchase tampons is relevant to what one might call ability to pay. Suppose that A and B are relevantly identical (e.g., they earn the same amounts with the same level of labor supply), but that A but not B needs to purchase tampons due to a biological difference between them. All else equal, B has greater ability to pay, and A should have greater marginal utility of a dollar. Moreover, needing tampons is an unchosen condition, hence one not triggering moral hazard (leaving aside the choice between costlier and cheaper tampons), and subject to adverse selection if private insurers offer it in circumstances where take-up depends on one's knowledge of how the ex ante uncertainty regarding one's need for them has been resolved.

This might support one or more of the following: (i) gender-based provisions in one's fiscal system, (ii) the use of at least partial deductions or exemptions for tampon purchases, and/or (iii) free or subsidized tampon provision by a national healthcare or health insurance system.

1 comment:

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