Book of the Day: Perfectly Legal (David Cay Johnston)

Appropriately for tax season, I recently finished reading David Cay Johnston’s Perfectly Legal. The book describes the current state of the U.S. tax system; the description is of a no-longer progressive, mostly flat system which systematically offers loopholes to the richest while hunting for cheaters among the poorest.

Johnston covers taxes for The New York Times. I’ve read Johnston’s articles for years and I had expected the book to have the Times‘s grand, objective style. It doesn’t; it’s an angry, muckraking book about what he rightly sees as an injust transformation. The message of the book, ultimately, is that the tax code is promoting income inequality.

Johnston blames the current situation on the power of the “political donor class,” the rich few who make the bulk of political donations in this country. That’s undoubtedly true, but I think it’s only part of the story. I think that the rise of an anti-tax ideology as the key pillar of the dominant political party in this country — and the attribution of Republican success to the party’s opposition to taxes — has meant that, regardless of how it happened, taxation doesn’t need explicit opposition from the political donor class anymore.

His chapters on the lack of enforcement of the tax code among the rich and the tax-deniers were, I thought, the most interesting and informative. He also goes into great and informative detail Alternative Minimum Tax; the AMT has been discussed a lot, but Johnston makes clear how far from its original purposes it is today.

The book does has flaws. The biggest is probably that it’s very repetitive. On the other hand, for a book on taxes, it’s not in the least dry — this is a book which should make you angry.

The question, of course, is how to do anything about it. As a political donor, it makes me want to give money to candidates who’ll fix the system, even if that runs counter to a narrowly-constructed version of my self-interest. But nobody’s even running on a “collect the taxes we’re owed” or “make the tax system more progressive” ticket — as Johnston points out, people run away from those ideas today. I don’t think the American political mainstream includes the notion that taxes can be done well; ultimately, I don’t think the country can survive that for very long.