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July 23, 2007
The Politics of Taxes
Responding to a poll showing robust majorities support raising taxes on the rich in the US, Germany, the UK, France, italy, and Spain, Andrew Leonard writes:
For a citizen of the United States such as myself, who has watched Republican presidential candidates campaign, mostly successfully, on the holy writ of tax cuts for the rich since 1980, these poll results take on a dreamlike quality. What alternate reality is this, where the rhetoric of a quarter century is suddenly turned on its head? As recently as just a few years ago, if you tried to suggest that government should consider raising taxes on the wealthy, the notion was immediately dismissed as a throwback to the "failed redistributive policies" of the past. But now it's all the rage.
I don't have the numbers from the 80s in front of me (does anyone know of some good sites that allow you to compare historical poll data?), but in 1992, 77% of Americans thought the rich were paying "too little" in taxes, and I'd bet that number didn't dip below 50% in the preceding years.
It was never the populace dismissing taxes on the rich as "the failed redistributive policies" of the past -- it was the elite. In other words, the rich. And they happen to have a lot of power in our system -- and that power (and money) has gone, in no small part, to convincing Americans that their tax burden is too high, and that cross-the-board tax cuts are the only answer. But it's important to note that there's never been any campaigning on "tax cuts for the rich." There was just a lot of campaigning on tax cuts, and anti-tax sentiment, followed by policies that quietly amounted to tax cuts for the rich. And all of this was enabled by the media, which derided tax increases as failed redistributive policies, and happily pocketed tax cuts for themselves...
July 23, 2007 in Taxes | Permalink
Comments
Well said.
Political reality is a harsh mistress.
Posted by: Meh | Jul 23, 2007 4:49:15 PM
The thing I found most remarkable about that poll was that the two countries with the worst income mobility, the US and UK, were the only two countries that thought its citizens had full opportunity no matter their background.
Perhaps the US and UK have the worst income mobility precisely because their electorates think they have the best income mobility. Perhaps continental Europe has better outcomes precisely because they understand that income mobility is a problem which must be addressed.
Posted by: Petey | Jul 23, 2007 4:51:04 PM
I think this reinforces my point that democrats should run on, among other things, middle class tax cuts and shifting the burden off of the middle class. There's two easy ways to get to the heart of people. Social programs that work and money in their pocket. I'm beginning to think more and more that these two battle with one another but are NOT mutually exclusive.
Posted by: phil | Jul 23, 2007 4:54:40 PM
The Cokie Robertses always say Americans are against tax cuts for the rich because everyone "aspires" to be rich some day. As if (1) that is realistic for most people, and (2) people who "aspire" to be rich would stop "aspiring" if they thought it would mean paying a marginally higher tax rate once they got there. Ultimately the Cokie Robertses are just trying to reassure themselves.
Posted by: bobbo | Jul 23, 2007 5:10:37 PM
I'm so sick of this bullshit "tax cut for the rich" crap.
Its intellectually dishonest no matter what side of the aisle you are from, and I'm on the side that wants to tax the fuck out of rich people.
As long as the tax cuts are the same % in each bracket, then its NOT a "tax cut for the rich."
So yes, of course rich people saved more money than poor people because they PAID more money to begin with.
Posted by: joe blow | Jul 23, 2007 8:01:03 PM
77% of Americans thought the rich were paying "too little" in taxes
This is not surprising even though most people don't have a clue about how much the rich actually pay in taxes either in absolute dollars or as a percentage of their income. I think this attitude actually reflects most people's desire to shift as much of the tax burden as possible onto someone other than them. One of the main reasons why the income tax was able to get through the legislative and constitutional amendment process in the early 1900's was that virtually all of the people who would actually pay it lived in six comparatively wealthy states. The tax did not affect low income wage earners in cities or most farmers. Moreover, the tax brackets ranged from only 1% to a maximum of 6%.
In my own case, I would not like to see the top income tax rate increased much beyond its current level, though I do think it would be OK to count capital gains and qualified dividends as income for purposes of computing the Alternative Minimum Tax. On the other hand, I like tobacco taxes, not only because I think higher cigarette taxes will reduce smoking in the short term and lung cancer in the long term, but I won't pay it because I don't smoke. Same for alcohol taxes. Gasoline taxes are also fine by me both because I think it would reduce gasoline consumption and dependence on foreign oil and because they hit me lightly because I don't drive nearly as many miles as most people.
At the end of the day, good tax policy to most people boils down to: Don't tax you, don't tax me, tax that fella behind the tree.
Posted by: BC | Jul 23, 2007 8:14:16 PM
'As long as the tax cuts are the same % in each bracket, then its NOT a "tax cut for the rich."'
joe this is so wrong. The only tax cut that actually goes equally to all workers is a cut on the lowest marginal rate. Once you cut the rates on the brackets above it you are cutting taxes for a smaller and smaller percentage of the population. If you reduce the lowest marginal rate by 2% everyone who pays taxes gets that cut. If you cut the top rate by 2% only those few percent that earn above that rate get the cut. So if you cut each bracket the only people who see all of the cuts are those in the top bracket.
Add to that the fact that most of the wealthy derive a majority of their income from dividends and capital gains which, if they are even taxed at all, are often taxed at a rate that is only higher than the lowest marginal rate (long-term gains max out at 15%, short-term gains are dealt with like earned income), and you have a tax system that favors the wealthy.
The unfortunate problem with a progressive marginal tax system is that it is easy to not understand how taxes are calculated when one party spreads misinformation that the media eats up and spews back out.
Posted by: Ricky | Jul 24, 2007 9:41:06 AM
'As long as the tax cuts are the same % in each bracket, then its NOT a "tax cut for the rich."'
joe this is so wrong. The only tax cut that actually goes equally to all workers is a cut on the lowest marginal rate. Once you cut the rates on the brackets above it you are cutting taxes for a smaller and smaller percentage of the population. If you reduce the lowest marginal rate by 2% everyone who pays taxes gets that cut. If you cut the top rate by 2% only those few percent that earn above that rate get the cut. So if you cut each bracket the only people who see all of the cuts are those in the top bracket.
Add to that the fact that most of the wealthy derive a majority of their income from dividends and capital gains which, if they are even taxed at all, are often taxed at a rate that is only higher than the lowest marginal rate (long-term gains max out at 15%, short-term gains are dealt with like earned income), and you have a tax system that favors the wealthy.
The unfortunate problem with a progressive marginal tax system is that it is easy to not understand how taxes are calculated when one party spreads misinformation that the media eats up and spews back out.
Posted by: Ricky | Jul 24, 2007 10:14:49 AM
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