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The Campaign Spot

Election-driven news and views . . . by Jim Geraghty.

How Many Wealthy Democrats Really Want to Pay Higher Taxes?



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In the Morning Jolt, further thoughts on structuring the tax hikes so that they hit the blue states hardest:

Of course, there are some wealthy right-leaning folk living who will get snared under this plan. But they will have at least two options to alleviate their tax bill: first, move to red states with lower real-estate prices, lower state and local taxes, and lower costs of living. Secondly, move as much of their money into investments so that they pay the lower rate on capital gains as a larger share of their income.

(Yes, yes, I can hear you shouting, “Why are we even talking about raising taxes?! Why can’t we focus on cutting spending!?” The short answer is because right now we have a president hell-bent on avoiding any spending cuts outside of defense and who is convinced that going over the cliff is a win for him — and it probably is. So you can keep insisting that we shouldn’t raise taxes; I’m throwing this out as a way to make the Democrat-demanded tax hikes as politically painful to them and their donor base as possible.)

It was rather fascinating to see the lefties on Twitter denouncing my proposal, as it consists of three ideas from President Obama that they hadn’t previously opposed. You could almost hear the gears in their minds turning as they realized that the soak-the-rich ideas they’ve been demanding for years now are going to hit the “cool” rich people that they like: the Silicon Valley tech folk, the successful lawyers, the Hollywood crowd, the the folks who paid to go to all those $35,000-per-plate fundraising events for Obama for the past two years. There might be a lot of Susan Estriches out there, looking at their potential tax bills and feeling sudden, intense pangs of buyer’s remorse:

I did not vote for Obama because I think I am paying too little in taxes.

Like many people I know, I am “rich” by Obama’s standards. I pay more taxes, percentage wise, than Mitt Romney and Warren Buffett, because I earn virtually every penny of my income.

I work. And yes, all those deductions that allow the truly rich to not work, or at least to not work all the jobs I do, make me angry.

I am all for closing loopholes. I am all for ending deductions for things I don’t even understand. But I am not for putting a low cap on deductions that would make it all but impossible for the charities I support to raise funds. I am not for putting a limit on the mortgage deduction that would mean, as a practical matter, that “middle class” (not rich) people in California would be priced out of the housing market, and the charities I support would not be able to raise what they need to survive.

And frankly, I don’t think I’m alone. As a matter of fact, on this one, I don’t think 51 percent of all Americans are to my “left” — if that’s how you define the higher tax constituency.

You may not be alone, Ms. Estrich, but you are too late.

In fact, as the sharper lefties gradually noticed, just about any tax hike plan is going to hit the blue states harder than the red states. It’s just a question of which provisions of the tax code change, and in the deductions for mortgage interest and state/local taxes, we have as close to “Obama state” provisions as we can find. Heck, if you think limiting or eliminating these deductions is a bad idea, just keep calling them the “Blue State Tax Hike” and you might get some liberals denouncing an idea they supported just a short while ago.

A lot of the Lefties immediately began sneering that the red states already collect more in benefits and payouts from Washington than they pay in taxes. (Payouts can get measured pretty broadly, of course, from simple transfer payments and entitlement programs to spending on Indian reservations, military bases, federal research labs, farm subsidies, the space program, civil-service pensions, to poverty and nutritional aid.) To which I say, “so what?” All of those red states have voted, several cycles in a row, for the candidates who at least claim to support less federal spending. They’re willing to support budget cuts, at least in the abstract.

A few wanted to launch a cut-spending-in-red-states crusade, but I think they would be surprised to see who their allies and foes were in a crusade to cut, say, agricultural subsidies. (In fact, Obama learned this hard lesson back in 2009.) I and lots of other non-farming, non-benefiting conservatives would support cutting agricultural subsidies, and our lefty friends might suddenly find themselves taking fire from Tom Harkin and those Democratic senators in the Dakotas and Montana. Of course, agricultural subsidies have always been one of the ways the forces for big government could build broad coalitions in favor of greater spending everywhere; the day the farm state Democrats find their favorites are getting cut, they may get stingy with spending in the big cities. Who knows, we might even get a virtuous cycle of tit-for-tat spending cuts going.

Naturally, anytime Matt Yglesias agrees with you, it warrants some deep introspection upon how you’ve gone so wrong.


Tags: Barack Obama , Taxes


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