Big differences among nations can become smaller, however, and seemingly durable ones can crumble. It is telling that Republicans have been no bolder or more successful in reducing government by leveraging Americans’ aversion to taxation than Democrats have been in raising taxes by leveraging Americans’ aversion to austerity. As Molly Michelmore, a historian at Washington and Lee University, argues in the new book Tax and Spend, the “consequences of a liberal consensus that promised the cost-free expansion of the activist state and a conservative counterrevolution that promised its cost-free contraction has been a political and ideological stalemate.”
Stalemates usually resolve in one direction or the other. The 2012 elections don’t prove, but do suggest, the resolution will be on liberal terms. On Election Day, Californians approved a ballot proposition increasing taxes, despite abundant evidence that the state’s public sector had been falling well short of getting the most bang for the mountain of bucks already at its disposal. Most of the increase was in the income taxes on affluent Californians, along the lines of what Democrats have won at the national level. The top bracket, on taxable income above $1 million, will increase from 10.3 percent to 13.3 percent. Three new brackets will also increase income-tax rates on Californians making between $250,000 and $1 million. In the wake of the fiscal-cliff resolution in Congress, this means that Californian families with taxable incomes above $450,000 (and individuals making more than $400,000) will face combined federal and state marginal income-tax rates above 50 percent. Arguments that such increases will make the state’s finances more unstable — both because rich Californians may choose to reside and do business in other states rather than be taxed at that level, and because heavy reliance on top-bracket income taxes means state revenues will soar and plummet over the course of the business cycle — were unavailing. Moreover, the tax increase, approved with more than 55 percent of the popular vote, cannot be interpreted simply as an act of redistributive zeal. The state sales tax, already the highest in the nation at 7.25 percent, will be increased to 7.5 percent as a result of the ballot proposition.
Finally, as a result of the 2012 elections, more than two-thirds of the members of each house of California’s state legislature will be Democrats. Thus, the high wall erected in 1978 by Proposition 13, which requires a supermajority to raise taxes, can now be breached without a single Republican vote. California, home to one-eighth of the U.S. population, is the birthplace of the national tax revolt, triggered by the passage of that ballot proposition almost 35 years ago. If Americans in general continue to become more like Californians, and if Californians are becoming more like Swedes in their desire for activist government and their willingness to pay for it, then 2012 will be remembered as the beginning of the national tax capitulation.
Such a development argues that we are becoming Swedenized in a deeper sense: not just adopting social-democratic policies but acquiring a sociological character that will leave us resembling present-day Europe more than the America Tocqueville discovered, in which families, communities, and churches turned individualism from a social solvent into a social adhesive. In a 2009 lecture at the American Enterprise Institute, where he is a resident scholar, Charles Murray made the connection between governance and sociology this way: “Almost anything that government does in social policy can be characterized as taking some of the trouble out of things.” The problem, according to Murray, is that “every time the government takes some of the trouble out of performing the functions of family, community, vocation, and faith, it also strips those institutions of some of their vitality — it drains some of the life from them.”