David Wallace - The Pale King - An Unfinished Novel

As for my father, I have to admit that I don’t know how he did any of the major thinking that led him in the directions he followed all his life. I don’t even know whether there was any major, conscious thinking in his case. Like many men of his generation, he may well have been one of those people who can just proceed on autopilot. His attitude towards life was that there are certain things that have to be done and you simply have to do them — such as, for instance, going to work every day. Again, it may be that this is another element of the generation gap. I don’t think my father loved his job with the city, but on the other hand, I’m not sure he ever asked himself major questions like ‘Do I like my job? Is this really what I want to spend my life doing? Is it as fulfilling as some of the dreams I had for myself when I was a young man serving in Korea and reading British poetry in my bunk in the barracks at night?’ He had a family to support, this was his job, he got up every day and did it, end of story, everything else is just self-indulgent nonsense. That may actually have been the lifetime sum-total of his thinking on the matter. He essentially said ‘Whatever’ to his lot in life, but obviously in a very different way from the way in which the directionless wastoids of my generation said ‘Whatever.’

My mother, on the other hand, changed her life’s direction very dramatically — but again, I don’t know whether this was as a result of concentrated thinking. In fact, I doubt it. That is just not how things like this work. The truth is that most of my mother’s choices were emotionally driven. This was another common dynamic for her generation. I think that she liked to believe that the feminist consciousness-raising and Joyce and the whole thing of her and Joyce and the divorce were the result of thinking, like a conscious change of life-philosophy. But it was really emotional. She had a sort of nervous breakdown in 1971, even though nobody ever used that term. And maybe she would eschew ‘nervous breakdown’ and say instead that it was a sudden, conscious change in beliefs and direction. And who can really argue with something like that? I wish I had understood this at the time, because there were ways in which I know I was kind of nasty and condescending to my mother about the whole Joyce and divorce thing. Almost as though I unconsciously sided with my father, and took it upon myself to say all the nasty, condescending things that he was too self-disciplined and dignified to allow himself to say. Even speculating about it is probably pointless — as my father said, people are going to do what they’re going to do, and all you can really do is play the hand that life deals you to the best of your ability. I never knew with any certainty whether he even really missed her, or was sad. When I think of him now, I realize he was lonely, that it was very hard for him divorced and alone in that house in Libertyville. After the divorce, in some ways he probably felt free, which of course has its good sides — he could come and go as he pleased, and when he squeezed my shoes about something he didn’t have to worry about choosing his words carefully or arguing with someone who was going to stick up for me no matter what. But freedom of this kind is also very close, on the psychological continuum, to loneliness. The only people you’re really ultimately ‘free’ with in this way are strangers, and in this sense my father was right about money and capitalism being equal to freedom, as buying or selling something doesn’t obligate you to anything except what’s written in the contract — although there’s also the social contract, which is where the obligation to pay one’s fair share of taxes comes in, and I think my father would have agreed with Mr. Glendenning’s statement that ‘Real freedom is freedom to obey the law.’ That all probably doesn’t make much sense. Anyhow, it’s all just abstract speculation at this point, because I never really talked to either of my parents about how they felt about their adult lives. It’s just not the sort of thing that parents sit down and openly discuss with their children, at least not in that era.

Anyhow, it would probably help to provide some background info. The easiest way to define a tax is to say that the amount of the tax, symbolized as T, is equal to the product of the tax base and tax rate. This is usually symbolized as T = B × R, so you can then get R = T/B, which is the formula for determining whether a tax rate is progressive, regressive, or proportional. This is very basic tax accounting. It is so familiar to most IRS personnel that we don’t even have to think about it. But anyhow, the critical variable is T’s relationship to B. If the ratio of T to B stays the same regardless of whether B, the tax base, goes up or down, then the tax is proportional. This is also known as a flat-rate tax. A progressive tax is where the ratio T/B increases as B increases and decreases as B decreases — which is essentially the way today’s marginal income tax works, in which you pay 0 percent on your first 2,300 dollars, 14 percent on your next 1,100 dollars, 16 percent on your next 1,000, and so on and so forth, up to 70 percent of everything over $108,300, which is all part of the US Treasury’s current policy that, in theory, the more annual income you have, the greater the proportion of your income your income tax obligation should represent — although obviously it does not always work this way in practice, given all of the various legal deductions and credits which are part of the modern tax code. Anyhow, progressive tax schedules can be symbolized by a simple ascending bar graph, each bar of which represents a given tax bracket. Sometimes a progressive tax is also called a graduated tax, but this is not the Service’s term for it. A regressive tax, on the other hand, is where the ratio T/B increases as B decreases, meaning you pay the highest tax rates on the smallest amounts, which arguably doesn’t make much sense in terms of fairness and the social contract. However, regressive taxes can often appear in disguise — for instance, opponents of state lotteries and cigarette taxes often claim that what these things amount to is a disguised regressive tax. The Service has no opinion on this issue either way. Anyhow, income taxes are almost always progressive, given our country’s democratic ideals. Here, on the other hand, are some of the types of taxes which are usually proportional or flat: real property, personal property, customs, excise, and especially sales tax.

As many people here remember, in 1977, during high inflation, high deficits, and my second enrollment at DePaul, there was a state fiscal experiment in Illinois in which the state sales tax was to be made progressive instead of proportional. This was probably my first experience of seeing how the implementation of tax policy can actually affect people’s lives. As mentioned, sales taxes are normally almost universally proportional. As I now understand it, the idea behind trying a progressive sales tax was to raise state tax revenues while not inflicting hardship on the state’s poor or discouraging investors, plus also to help combat inflation by taxing consumption. The idea was that the more you bought, the more tax you paid, which would help discourage demand and ease inflation. The progressive sales tax was the brainchild of someone high up in the State Treasurer’s Office in 1977. Just who this person was, or whether he wore the brown helmet in some way after the resulting disaster, I do not know, but both the state treasurer and the governor of Illinois definitely lost their jobs over the fiasco. Whoever’s fault it ultimately was, though, it was a major tax-policy boner, which actually could have been easily prevented if anyone in the State Treasurer’s Office had bothered to consult with the Service about the advisability of the scheme. Despite the existence of both the Midwest Regional Commissioner’s Office and a Regional Examination Center within Illinois’s borders, however, it’s an established fact that this never occurred. Despite state revenue agencies’ reliance on federal tax returns and the Service’s computer system’s master files in the enforcement of state tax law, there is a tradition of autonomy and distrust among state revenue offices for federal agencies like the IRS, which sometimes results in key communication lapses, of which the 1977 Illinois sales tax disaster is, within the Service, a classic case, and the subject of numerous professional jokes and stories. As almost anyone here at Post 047 could have told them, a fundamental rule of effective tax enforcement is remembering that the average taxpayer is always going to act out of his own monetary self-interest. This is basic economic law. In taxation, the result is that the taxpayer will always do whatever the law allows him to do in order to minimize his taxes. This is simple human nature, which the Illinois officials either failed to understand or neglected to see the implications of for sales tax transactions. It may be a case of the State Treasurer’s Office allowing the whole matter to get so complex and theoretical that they failed to see what was right in front of their nose — the base, B, of a progressive tax cannot be something which can be easily subdivided. If it can be easily subdivided, then the average taxpayer, acting out of his own economic interest, will do whatever he can legally do to subdivide the B into two or more smaller Bs in order to avoid the effective progression. And this, in late 1977, was precisely what happened. The result was retail chaos. At, for instance, the supermarket, shoppers would no longer purchase three large bags of groceries for $78 total and submit to paying 6, 6.8, and 8.5 percent on those parts of their purchases over $5.00, $20.00, and $42.01, respectively — they were now motivated to structure their grocery purchase as numerous separate small purchases of $4.99 or less in order to take advantage of the much more attractive 3.75 percent sales tax on purchases under $5.00. The difference between 8 percent and 3.75 percent is more than enough to establish incentive and make citizens’ economic self-interest kick in. So, at the store, you suddenly had everyone buying under $5.00 worth of groceries and running out to their car and putting the little bag in the car and running back in and buying another amount under $5.00 and running out to their car, and so on and so forth. Supermarkets’ checkout lines started going all the way to the back of the store. Department stores were just as bad, and I know gas stations were even worse — only a few months after the supply shock of OPEC and fights in gas lines over rationing, now, in Illinois that autumn, fights also broke out at gas stations from drivers being forced to wait as people ahead of them at the pump tried putting $4.99 worth in and running in and paying and running back out and resetting the pump and putting in another $4.99, and so on. It was the exact opposite of mellow, to say the least. And the administrative burden of calculating sales tax over four separate margins of purchases just about broke retail stores. Those with automated registers and bookkeeping systems saw the systems crash under the new load. From what I understand, the high administrative costs of the new bookkeeping burden got passed along and caused an inflationary spike in Illinois, which then further aggrieved consumers who were already peeved because the progressive sales tax was economically forcing them to go through checkout lines half a dozen times or more, in many cases. There were some riots, especially in the southern part of the state, which abuts Kentucky and tends not to be what you’d call understanding or sympathetic about government’s need to collect revenue in the first place. The truth is that northern, central, and southern Illinois are practically different countries, culturally speaking. But the chaos was statewide. The state treasurer was burnt in effigy. Banks saw a run on ones and change. From the perspective of administrative costs, the worst part came when enterprising businesses saw a new opportunity and started using ‘Subdividable!’ as a sales inducement. Including, for instance, used-car dealers that were willing to sell you a car as an agglomeration of separate little transactions for front bumper, right rear wheel well, alternator coil, spark plug, and so on, the purchase structured as thousands of different $4.99 transactions. It was technically legal, of course, and other big-ticket retailers soon followed — but I think it was when Realtors also got into the practice of subdividing that things really fell apart. Banks, mortgage brokers, dealers in commodities and bonds, and the Illinois Department of Revenue all saw their data processing systems buckle — the progressive sales tax produced a veritable tidal wave of subdivided-sales information that drowned the existing technology. The whole thing was repealed after less than four months. Actually, the state legislators came back to Springfield from their Christmas recess in order to convene and repeal it, as that period had been the most disastrous for retail commerce — holiday-season shopping in 1977 was a nightmare that people still sometimes chat ruefully about with strangers when they become stuck in checkout lines here in the state even now, years later. Rather the same way extreme heat or mugginess will make people reminisce together about other terrible summers they both remember. Springfield is the state capital, by the way, as well as the site of an incredible amount of Lincoln memorabilia.