I have long been puzzled by the enthusiasm with which many young liberal bloggers cheer on proposals to raise tax rates on high earners. I can understand why they might favor them, but not why they seem to invest so much psychic energy in the issue.
Some of this may just be team ball: You cheer when your side puts up numbers on the scoreboard. So Democratic cheerleaders are rah-rahing what they insist on calling repeal of the Bush tax cuts (which have been in effect now longer than the Clinton tax increases they rolled back).
But the liberal bloggers cannot be entirely ignorant of the fact that we have a pretty progressive income tax already. In 2009, the top 1 percent of earners reported 17 percent of adjusted gross income and paid 37 percent of total income-tax revenues.
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By some measures, the American tax system, including the payroll tax and state and local taxes, is more progressive — in the sense of extracting disproportionate shares of revenue from high earners — than most European tax regimes, which rely heavily on value-added taxes.
Plus, as liberal economist Lane Kenworthy points out, you don’t get much income redistribution from higher tax rates.
You get more from transfer payments. But, as House Budget Committee chairman Paul Ryan has documented, federal transfers are getting less progressive. Social Security and Medicare increasingly transfer money from young low earners to old people with relatively high incomes and considerable accumulated wealth.
One argument for higher rates is that increased revenues will reduce the federal budget deficit. But do liberal bloggers really care all that much about budget deficits? These same people often rue the fact that the Obama Democrats didn’t plow an additional $1 trillion into their stimulus package.
I think the answer to the puzzle can be found in a remark Barack Obama made during the 2008 fall campaign — a remark that seemed to go mostly unnoticed.
ABC’s Charlie Gibson asked candidate Obama if he would raise capital-gains taxes even if, as in the past, that brought in less revenue to the federal government.
Yes, said Obama. “I would look at raising the capital-gains tax for purposes of fairness.”
Ponder that answer for a moment. A candidate for president — president now — said he wants to take more money from people who earned it even though doing so would produce less money for the government.
The philosophy that has to be behind that answer is also behind the Obama-administration budgets that have proposed capping the charitable deduction for high earners. The clearly intended result would be a massive transfer of money from the voluntary sector of society into government.
Alexis de Tocqueville in the 1830s identified the voluntary sector as a unique feature of American democracy, one that gave it strength and character. He compared it positively with his own France, where centralized government stifled initiative and innovation.
The cap on charitable deductions has gone nowhere in Congress, where many Democratic members undoubtedly heard protests from their friends and supporters in the voluntary sector. We can see where that proposal leads from the Obama mandate that voluntary-sector organizations must buy health insurance that finances procedures their leaders consider deeply immoral. Centralized government will decide what’s moral, and you’ll be forced to pay for it.
Higher tax rates on high earners, even if they produce less revenue, are an attempt to centralize power in government and to limit the autonomy and countervailing power of individuals in the voluntary sector.
Which is why the liberal bloggers cheer them on. And why they eagerly join the Obama White House in demonizing the Koch brothers, who donate large sums to conservative causes. (Disclosure: I have spoken at two Koch conferences and was reimbursed for travel expenses.)
The Obama Democrats don’t want their funders such as George Soros getting competition from the likes of Charles and David Koch.
Similarly, the prospect of Republicans spending as much money as Democrats (unlike 2004 and 2008, when Democrats spent more) led Obama to declare inoperative his denunciations of super PACs and to create his own, with Cabinet members authorized to raise money for it.
This election is a contest between a Democrat who wants to make this country more like Tocqueville’s France and Republicans who want to keep it more like Tocqueville’s America. The liberal bloggers are rooting for France.
You forget the rich liberals that welcome tax increases.
Rich people have nothing left to do, other than to rule. But, in America they cannot rule outright, because we still have freedom. These rich will gladly exchange their extra money to get power over "the little people" in return.
You have mindless left-wing idealists being backed by people that can manipulate the strings of government once government takes over yet another aspect of life.
This is far more insidious than idealizing "fairness".
There are two conclusions I have come to regarding the left and tax "fairness":
1). Fairness has nothing to do with tax rates, proportion of total taxes paid, or the hard dollar amount. It only matters how much an individual has left after the taxes have been paid. Liberals would have no problem with a 90% rate because if someone has $10,000,000 taxed at that rate, it means he still has $1,000,000 left after taxes. In the mind of a liberal, this is plenty of money for anyone to have except,
2). In the case of liberals, it seems that they would exempt themselves from observation #1. Confiscatory taxes are reserved for those whose income is produced in the dark arts - investment banking, consumer lending, manufacturing, insurance, etc... Entertainers, union bosses, lawyers, liberal pols, just a to name a few, are compensated from virtuous pursuits and are therefore entitled to as much of their income as they can shelter.
George Clooney "invests" $7.8 million in an Italian villa (purchased from John Kerry), and he is celebrated as an overworked actor just looking to decompress from such a stressful life. Al Gore has amassed tens of millions promoting the farce of man-made global warming and he is hailed as champion of the world. Meanwhile, Mitt Romney has a portion of is wealth socked away in some offshore accounts, and he is excoriated as some nefarious, unAmerican robber-baron.
Taxing the real and imagined rich, is a tenant of Leftism; Marxism specifically, and a cornerstone of the lie. Progressive taxation is a must for the lie of fairness to propagated in any society, that is why it is embraced by liberal bloggers as well as by the sitting President. It is true that over taxing the "rich" does not benefit the poor. Transfer payments are a much more direct way of redistribution, but as we see from Social Security, Medicare and the like, their future is not only precarious, but doomed to collapse, so much for the government being able to responsibly manage those programs.
These liberal bloggers, whoever they are, are nothing more than foot soldiers in a war - not for fairness, but to bring about misery and the collapse of the civil society. Always remember fellow wing nuts; with the Left the issue is never the issue.
In this case, the first order for all Conservatives is to understand the big picture. When you hear "Tax the rich, help the poor!" from the Left, you know that is not what they are interested in. Rush says it best, to liberals misery equals equality.
Over taxing the rich accomplishes nothing. It never has and it never will.
But there is a simpler and non-ideological reason why these young bloggers support over-taxing the rich. As Liberal Arts graduates of American Universities they have no marketable skills to offer the private sector. They know that their only hope for future employment, power and security lies in working for a vastly expanded government.
Their highest ambition is to be members of The New Class.
To put it simply, you cannot get blood from a stone. Do you know what liberals would like to do even more than tax the rich? Tax a massive middle class. In order for that to happen businesses need to pay a decent wage. Most of the jobs that have come back are low-paying...and that will continue to be the trend as long as we kowtow to the 1%, who claim to be job creators, but are really more job shifters. They shift jobs from the United States to Asia...and those jobs are not coming back. Some of those low-paying call center jobs are though. And Wal-Mart greeters. Part-time no-benefit low-wage crap jobs are what people are going to be fighting for if we don't put a stop to this laissez-faire nonsense.
>> "Part-time no-benefit low-wage crap jobs are what people are going to be fighting for if we don't put a stop to this laissez-faire nonsense."
Good luck finding examples of "laissez-faire" in our economy. Do you mean laissez-faire like crushing government regulation on every aspect of a business endeavor (it can take tens of thousands of dollars and months if not years of delays to get the most basic start-up off the ground thanks to government goons -- try it some time)? Do you mean laissez-faire like industries dominated by unions who insist that someone doing a job a monkey could do should make $50/hour and up? Do you mean laissez-faire like a punitive corporate tax rate that makes us an uncompetitive laughingstock on the global stage?
We do things the way the left has always wanted to do them and then, like the sun rising in the East -- the results are disastrous and completely at odds with their supposed gooooood intentions. But here you are wondering why all those jobs went over to Asia (unions? regulations? corporate taxes? Nah, too far-fetched.) and then impotently waving your arms around yelling "laissez-faire!". Because leftism is nothing if not an invincible religious belief system. It's never wrong, even when it's wrong 100% of the time.
How about we stop trying it your way -- protectionism, big government, corporatism-bordering-on-fascism -- and instead try some of this "laissez-faire" stuff that hasn't been seen in America for over a century.
A1 S8
The Congress shall have Power To lay and collect Taxes, Duties, Imposts and Excises, to pay the Debts and provide for the common Defence and general Welfare of the United States; but all Duties, Imposts and Excises shall be uniform throughout the United States
GDP has become collateral, and taxes are the government's income to pay. When collateral becomes insufficient to secure a loan, government needs to show an increased ability to repay. To justify the increase of taxes, government needs to buy the approval of a working majority, so targets one specific population at a time - increasing the amount of the "required" loan.
Thus we see how taxation has moved from it's original purpose to retire debt, fund defense and provide for the General Welfare; and has become a punitive means of wealth redistribution providing for the welfare of a selected group, and means to increase debt.
I often wondered how Congress' ability to appropriate funds evolved into it's ability to appropriate debt?
Whatever the bloggers are, they're not "liberal" but deranged lawless fascists who don't really work for a living, like the white house 0 who never worked an honest day's work in his life.
Mr. Barone, your remarks about SS just are not true. Nearly half of the elderly would be poor without it - 13 million elderly Americans. Also, most elderly beneficiaries rely on it, NOT on pensions that are no longer offered, nor their IRA accounts, if they have them, where values have dropped, for the majority of their income. And due to their overall lower earnings, Social Security is particularly important for African Americans and Hispanics.
I get tired of SS being lumped in with welfare, medicaid etc., as if the beneficiaries of the former have done nothing to get these benefits. The benefits ARE based on the earnings on which we pay Social Security payroll taxes.
While there are poor people on social security, you don't understand what poverty or wealth actually are. A great number of people on social security have other sources of saved income, whether IRAs, mutual funds, 401k or just money saved in the bank. More importantly, many of them own their homes outright or sold them and live in a smaller setting and live off the proceeds of the house. Then of course there are the people who have a reverse mortgage.
On average, those who are 65 and over have much GREATER WEALTH than the people who are paying for their retirement. Any study of wealth will actually demonstrate this. It should be no surprise that those who are retired have lower incomes but greater wealth; they saved up for retirement and aren't working.
The money you were forced to put aside, whether you liked the idea or didn't, has all been spent. You are taking money from people who currently work, who will have to soon provide for a group of retirees so big that they will never afford it. You may think you paid in your dues but they're all gone and you'll take out far more than you put in.
While I agree that because the government made stupid promises they should be forced to keep them, that doesn't make this sustainable or moral. Yes, social security is welfare for those who have more wealth and assets. You may be bothered when people say that but it is still true. It must be phased out over time.
It is the other half Paul Ryan is referring to, the wealthier half. Comments like yours frigten people away from the third rail. Adjustments to Social Security benefits can be achieved if less attention is paid to the fear tactics.
As far as payroll taxes are concerned, there is no "lock-box" . In the end it is just a tax and a promise to pay. At what point does this promise become too much foru our country to afford?
I think the reasons why liberals love taxing the rich change as they go through school. I am in grad school and have been watching this happen. There are three stages I've observed.
Stage 1: They are in middle school or high school and becoming aware of things like poverty and America's history. Their knowledge isn't very deep but they start forming opinions even so. The first opinion they form is that if some people are poor anywhere in the world it is immoral for other people in this country to be so wealthy. They come up with stupid notions like income caps for all or that every dollar a person earns over, say, $500,000 should be taken and given to starving people. All they know is that someone somewhere is buying a Ferrari while someone else is starving and that is wrong. They have not yet considered the question of why is the wealthy person not starving in the first place and what can be done to help the starving person become more like the Ferrari buying person.
Stage 2: They attend college. They learn that poverty is not solved simply by limiting wealth and that poverty is a little bit more complicated. Still their knowledge is limited but they learn that Bush and Reagan lowered taxes and Clinton raised them. They don't have a clue what the rates were but they are sure that Clinton was a hero and Reagan and Bush caused the 2008 housing bust. All they "know" is that if we went back to the Clinton tax rates there would be no deficit, and poor people currently pay more taxes than the wealthy. They are of course astonishingly wrong but they are satisfied with their current level of knowledge because it doesn't challenge their predetermined conclusions. A lot of liberals stay at stage 2.
Stage 3: They study economics. As they learn that markets actually react to government attempts to confiscate more money they realize that they'd better be more thoughtful about tax policy. At this point they take one of three roads. Either they accept freemarkets (rare for devoted liberals, sometimes they become libertarians,) they become Keynesians or they throw it all out the window and become marxists. If they become Keynesians it is because they learn that some economists believe in a multiplier effect and that there is a market based reason for a country to be about 70% socialist. They don't bother asking whether or not those theories have worked, they are just satisfied that people at Berkeley, MIT and the London School of Economics believe it works. Those who research this and are still committed realize that there is no economically viable way to stick it to the rich. They become marxists because they are so mad that wealthy people will stay wealthy and that poor people will still exist in any system. They realize that they only way to hurt the rich is to take their wealth from them by rising up. They don't think about the real consequences of that action, nor of its track record nor of its viability or morality. The only moral question is did we take money from people who currently have wealth to make up for "injustice?"
This is the standard progressive road to tax policy. You either get people who don't understand the tax code but believe the rich aren't paying their fair share, keynesians who don't care about deficits but think Europe should be the model, marxists who are just plain bitter or a few converts to freemarket economics.
Your conclusions are correct: taxing the rich isn't really about fairness or redistribution, it is about increasing the size of government, creating even more of a Leviathan. However, you don't follow the argument to the end. The real goal is not a greatly enlarged and more powerful central government. It is the use of this Leviathan to compel everyone to conform to how uber-liberals believe every right-thinking person should live. Some of their agenda:
ban handguns, eliminate fossil fuel dependence, eliminate the family and other vestiges of traditional American life, prevent people from having more than two children (later this will become one child except for a privileged few). Well, you get the idea. This is the goal - a complete tyranny of government, but for OUR OWN GOOD.
I've often made the some point to my Liberal friends who call for a repeal of the Bush "Tax Cuts for the Rich" that they are calling for a less progressive tax code.
It is often met with stone silence because #1. They never let the facts get in the way of great demagoguery. and #2. By ignoring "inconvenient truths," they can pretend that they don't exist and therefore, don't ever have to confront them. It is a large part of the reason why I pity those on the Left because they refuse not only to live in reality, but even to acknowledge it.
Two points: First, Social Security and Medicare are disparaged as "entitlements," in the same category as food stamps, housing subsidies, and other forms of welfare. People like me who contributed to the funds in all but two quarters of my 48-year active full-time working career earned our payments. Many of us rely on them. I don't feel guilty in the least.
Second, tax rates for the wealthy should in fact be much higher than they are, especially property taxes and estate taxes. Mortgage deductions should be scaled back considerably. If that depresses the housing market, fine. Then perhaps people with lower incomes will be able to afford a small part of the American dream. I am not a young person, and I have owned seven homes at various times, but I can sympathize with some of the concerns of our youth.
