Tax The Rich
There's something new in the air in Democratic politics, or at the very least something old that is now getting a whole lot more attention now than it has in a long time. Nothing shows the pivot in the Democratic Party away from Clintonian centrism (or corporatism) back to the party's workingman roots as much as the newfound eagerness to tax the rich. So far, the only real disagreements among Democrats are how to tax the rich, not over whether they should be taxed more at all. This is a sea-change from what the party stood for back in the 1990s, when being "business-friendly" was something Democratic politicians strove for.
Alexandria Ocasio-Cortez sparked this whole discussion with her proposal to create new marginal income rates at the top of the income scale, which would go as high as 70 percent for the top earners. She rather brilliantly explained that this would not affect almost everyone else, by stating that "only your ten-millionth dollar and above would be taxed at 70 percent." Republicans love to muddy the waters by scaring everyone into thinking that all income would be taxed at the highest rate, but this just isn't true. And, as many have been pointing out, the American economy ran just fine in the 1950s and 1960s when the top marginal rates were sometimes as high as 90 percent. Taxing the rich doesn't equate to the economy grinding to a halt, in other words, no matter how much Republicans try to convince everyone that this would automatically be the case.
The next idea came from Elizabeth Warren, who is running for president. She proposed a "wealth tax" that would tax assets instead of just income. If you were worth $50 million, then you'd pay a yearly tax on your wealth (2 percent, rising to 3 percent for those with the most assets). This would be a radical change in tax policy, since to the best of my knowledge raw wealth has never been taxed this way before in America. This means it would be challenging to build a compliance system from scratch, since it would require more than just tweaking everyone's income tax forms here and there. But the idea itself is a bold one, that's for sure.
Bernie Sanders, who is also reportedly considering running for president, just jumped into the fray today with a proposal to hike the estate tax, so that the wealthiest estates would pay 77 percent on a wealth transfer that reached into the billions of dollars. The Washington Post ran some numbers on this proposal to show that the wealthiest individuals in the country (Bill Gates, Jeff Bezos, etc.) would wind up paying roughly twice as much estate tax as they would under current tax law. Their heirs would still get a pile of money, but the pile would be slightly smaller, in other words. Sanders introduced this idea to counter a bill proposed by Republicans which would eliminate the estate tax (or, as they like to call it, the "death tax") altogether.
This all represents a growing eagerness on the part of Democrats to directly attack inequality in America. There is no better way to address inequality than raising taxes on the rich, really, but it has been a taboo subject in American politics for the past few decades. The GOP has transformed into a party which has only one real core belief left -- that lowering taxes on the rich is the answer to all of life's problems. Think this is an overstatement? Well, what did the last Congress accomplish in its two-year term? Republicans ran the place, and the only bill they could all agree on was to slash the taxes on billionaires and Wall Street once again. In all that time, the party could not move any other part of its legislative agenda than these tax cuts. They couldn't agree on what to do with the budget, they couldn't agree on what to do about all the culture war issues they regularly obsess over, and they couldn't agree to even give Trump money for his wall. The only thing which the party could agree on -- the only remaining core tenet of Republicanism, in other words -- was to cut rich folks' taxes.
But maybe finally the people have had enough of the "trickle-down" nonsense. Maybe they're finally realizing that the little guy never seems to see much benefit from showering wealth on those who don't need it. Raising taxes on the wealthy is actually a very popular issue, even though this fact never gets talked about much. Even red-state voters think Wall Street and the billionaires are not paying their fair share, so it's a potent issue that has so far remained untapped.
But the issue has gained an enormous amount of momentum in the past decade. It really started with the Occupy Wall Street protests, in fact, which were angry but ultimately ineffective. They changed the political discourse (nobody spoke of "the one percent" versus the rest of us before Occupy happened, for instance) but didn't achieve any real lasting change in the political system. Then came the Bernie Sanders presidential run, which shoved the issue into the center ring in a way that previous populist or progressive candidates in modern times hadn't managed to. John Edwards ran a very similar campaign theme as Bernie, but it didn't gain much traction after he dropped out of the race. Bernie's campaign, on the other hand, sparked a movement within the Democratic Party that has yet to abate. Now, I don't think that Bernie was that much better than others (Edwards, Jesse Jackson, Jerry Brown, etc.) at making his case, rather I think that Bernie was the right progressive at the right time. He fit what the electorate wanted when it wanted it, in other words. Being in the right place at the right time in history doesn't mean Bernie had a magic about him that others didn't, in other words, but it's undeniable that his campaign has changed the whole tone of Democratic politics. Towards taxing the rich, in particular.
Not unlike "being tough on drugs," raising anyone's taxes has been used as a very effective blunt political instrument by the Republicans for decades. Scared Democrats ran away from the idea in fear of being voted out of office. This is what gave Bill Clinton his opening in 1992, in fact. But this pendulum has now swung back to more of an F.D.R. outlook, which is why all the new tax proposals by prominent Democrats are getting so much serious attention.
I should mention that some Democrats have always been for taxing the rich. They've been out in the political wilderness for a long time, though. They've made such tax proposals before, but they never garnered the attention that they are now getting. That says that the media (and by extension, the public) is a lot more interested in these ideas now. It doesn't guarantee that they'll be winners at the ballot box quite yet (or in Congress, for that matter), but the fact that they aren't being dismissed out of hand by the pundits now means the Overton Window has indeed shifted on the subject.
Nobody has yet proposed returning to the days of Dwight D. Eisenhower, when the top tax rate hit 90 percent. Or, for that matter, the tax rate the Beatles famously complained about in their early song "Tax Man." In Britain at the time, the Fab Four were paying 95 percent, which is right there in the lyrics: "There's one for you, nineteen for me." But top rates of 70-plus percent are indeed now being proposed, rather than the sub-40-percent top rate of today. As well as other creative ways to tax the rich. This could signal the end not just to the Clintonian Democratic Party, but perhaps also to the Reaganesque "trickle-down theory" (which was famously ridiculed by the man who eventually became his vice president as "voodoo economics").
The Republicans really only have themselves to blame. They've successfully sold this snake oil so many times that the crowd has finally gotten tired of it. The Trump tax cut that was just passed was the most unpopular tax cut in modern history. And it could get a whole lot more unpopular in the next few months, as many American workers will be unpleasantly surprised by having to pay additional income taxes rather than getting their expected refund (this tax season is going to be the first under the new tax plan, so such surprises will indeed happen).
The public -- even the reddest of voters -- just don't seem to buy into the "let's give your boss another tax cut, and things will be wonderful for everyone!" GOP logic anymore. Now, this doesn't automatically mean that they'll wholeheartedly support any of the Democratic plans to tax the rich -- that has yet to be seen, even among Democratic voters -- but it does signal at least an openness to listening to new ideas on the subject.
It's about time. Our political debate has been hampered for too long by the idea that raising anyone's taxes is automatically a horrible thing to do with disastrous consequences right around the corner. People are now considering other paths to take. Not since the 1970s, in fact, has the political climate been so open to what used to be a rallying cry in the Democratic Party: "Tax the rich!"
-- Chris Weigant
Follow Chris on Twitter: @ChrisWeigant
Database gremlins... this article appeared yesterday, then disappeared.
I'm posting it again, and my apologies if some comments were lost in the process...
-CW
I sincerely hope that the Democrats run away from the 'Tax the rich' slogan. If they hope to beat Trump, that is.
Well, I said it better the first time around … :(
We should replace all federal taxes with a tax on those evil and greedy rich corporations that produce all the goods that we love to consume. That way, we would pay our taxes included in the price of everything we buy. That is far less painful than having it deducted from our paychecks, which has the additional benefit of concealing the true magnitude of our tax burden from the economic illiterate (i.e. damn near everybody), and makes stupid people happy! How could you beat that?
i wouldn't tax the rich exclusively, but a tax code that didn't give extreme wealth such a lopsided advantage over the rest of us would not necessarily be a bad thing.
Democrats need to find a way to talk about this.
There are the rich, and then there are the people who are trying very hard to be rich.
Why not talk about fair taxation ...
okay. taxes aren't fair. the rich get all the breaks, and everybody else gets broke. make taxes fair.
Liz and Poet
The concept of "Fair", much like the concept of beauty, lies notoriously in the "eye of the beholder".
Rich people are rich (and, by-the-way, I am definitely NOT rich) because they have more talent, skill, ability, motivation, ambition, etc than the non-rich, NOT because they are "greedy". But they don't get to drive on better public roads, nor do they get more defending by the military, than do poor people.
The desire of the unrich (unproductive) to share in the fruits of the labor of the rich, (productive) is, ironically, simply a manifestation of simple greed.
I say "ironic", because Dems/Libs think the unwillingness of the productive to share the fruits of their labors is the definition of greed, but it's really the other way about!
@crs,
because they have more talent, skill, ability, motivation, ambition, etc
that is sometimes the case, other times not the case. there are many ways people can become rich - some relating to talent, ambition, thrift, risk-taking and wits, others relating to aggression, deceit, crime, exploitation, luck or accident of birth. any generalization that assumes "the rich" must belong to one or the other of those groups is propaganda.
since the government cannot easily discern between those who justly earn their fortunes and those who come by them through other means, there needs to be a balanced pattern of taxation that allows those in the former category to continue to thrive while placing reasonable limits on those in the latter categories.
JL
"the rich stay healthy, the sick stay poor"
and
"eat the rich"
economic fairness is what's lacking these days. single payer health care would go a long way to alleviate this. but stacking the deck in favor of the rich is still a stacked deck. it's not talent, or skill, or ability when all you're doing is exploiting unfair tax loopholes.
full disclosure i grew up in the 50s and 60s and am in the 3%ers. society was way more cohesive with those tax laws. and the underlying assumption has to return, as noted above, that we all use infrastructure.
nyp
For the most part, well said, and I basically agree.
However, "accident of birth" is not something that in and of itself justifies punitive taxation. Why shouldn't legitimately successful and highly productive people get to pass along their savings to descendants?
Also, income/wealth taxation is not the cure for "aggression, deceit, crime and exploitation". The cure for criminal activity should be prosecution and/or confiscation, not income or wealth taxation.
Iharvey
As I stated above, fairness lies in the eye of the beholder, whether its taxation or loopholes fairness that's under discussion.
No rich person ever got rich by "exploiting unfair tax loopholes". You only get rich by being productive. Exploiting tax loopholes doesn;t increase your earnings, it only keeps the greedy folk from stealing quite as much of what you have earned.
Re "infrastructure", as I pointed out in my [7] above, we do "all use infrastructure", but the rich don't use it more than the poor. The military protects all citizens equally, why should high earners pay for more of it? Same with highways, etc. We all drive on the same roads, why should the rich pay for more of it when there are far fewer of them???
@crs
in your view, what makes taxation "punitive?" that term in psychology means likely to result in the decrease of a behavior. at least from that perspective, i see no evidence that higher tax rates have made those who are rich do either more or less of whatever it was that made them rich. in what other way is it punitive?
the liberal point of view is that society as a whole is entitled to (and will benefit more from) a larger percentage of the gains that come to those who are well-off. at least from the benefit standpoint there's evidence to support that point of view. the conservative point of view is that people are entitled to what they own, irrespective of how they got it, and the government should only be allowed to take the bare minimum required for mutual needs (needs in the economic sense).
i find myself somewhat in the center of those positions, but would very much like for the government (as you pointed out) to do a better job discerning between wealth that is justly earned, unjustly taken, and received by chance.
JL
Fairness lies in knowing the difference between right and wrong.
I'm not surprised that this can be a foreign concept, especially in the case of taxation, because very few political leaders in the US, especially during the course of the last few decades, have ever really attempted to talk about taxation in terms other than strictly partisan.
Unfortunately, I don't expect that situation to change for America or Americans.
CRS,
This is a serious question and, like an idiot, I'm hoping you'll treat it as such and answer honestly - or don't answer at all.
What does it mean to you to be a citizen of America, or of whatever country you call home?
UTC??
nyp [12]
I used the term "punitive" in my [10] only in regard to estate taxation, in response to your "accident of birth" terminology. It was arbitrary usage on my part, and it probably has no connection to the question of de-incentivising the highly productive. That's a whole other question in its own right.
In the case of transfers of estate wealth, the highly productive person is by definition dead, so de-incentivisation isn't applicable.
If you prefer, re-read my usage to be "excessive" or some such rather than "punitive".
Liz
Actually, I'm a citizen of Lower Slobovia. (I'm guessing you're too young to be familiar with Al Capp geography, so forgive the joke.)
ALL my responsess to you are "Honest", even the ones you can't relate to.
Citizenship means to me the obligation to take care of my dependants so they don't become a burden on my fellow citizens.
What does it mean to you?
I'm done with your nonsense, CRS - not worth my time.
TFB!!
CRS
11
You only get rich by being productive.
Spew alert! This is sincerely barking mad.
I got to hand it to you, Stucki. This qualifies without doubt as the outright stupidest thing I have read on this blog. :)
@kick,
productivity as an economic concept is very different from the lay definition. money invested in bonds or securities can be very "productive" in terms of generating wealth, but it's not as if the investors (or even many of the companies being invested in) are actually doing anything useful.
JL
JL
21
Yes, I understood his concept he repeats ad nauseam, and it's bollocks. Any fool who keeps spewing this ridiculous shit and believes that the "rich don't use [infrastructure] more than the poor" and that "the military protects all citizens equally" is wearing some ginormous blinders and has multiple screws loose. :)