Roger’s Rules

Are We There Yet? Preparing for the Coming Tax-Revolt

Megan McCardle expressed surprise at “just how little money you can raise by slapping a 5.4% surtax on incomes above a million.” She shouldn’t be surprised. After its orgy of irresponsible spending, the Obama administration is certainly going to have to find some way to raise money, especially since its economy crushing initiatives have drastically reduced tax receipts, a trend that most observers predict will continue.

But it doesn’t matter that increasing taxes on successful people will not bring in much dough. What matters is punishing success, not filling the treasury.

No one should be surprised at this. Whatever else you can say about Obama, he has never made a secret of his redistributionist philosophy. Economics for him is not about the creation of wealth. It is about 1) the redistribution of wealth and 2) penalizing those who have had the temerity to succeed.

I wrote about this during the campaign. In April of 2008, for example, I noted that when Obama talked about “fairness” he really meant penalizing success: “It is time for folks like me,” Obama told Rick Warren at the famous Saddleback Church event with John McCain, “who make more than $250,000 to pay our fair share.”

“Our fair share.” That is the Obama refrain. “[W]e will save Social Security for future generations by asking the wealthiest Americans to pay their fair share.” It’s a small step from the invocation of “our fair share” to Obama’s call for a tax on “the windfall profits of oil companies,” a tax increase on capitals gains, elimination of the tax on Social Security tax, etc., etc.

The crucial point here is that what Obama is interested in is not increasing but in promulgating redistributionist policies that make it harder for people to prosper economically. McGurn recalls Obama’s response to ABC’s Charlie Gibson when Gibson observed that raising taxes led to decreased revenues: “Well, Charlie,” Obama replied, “what I’ve said is that I would look at raising the capital gains tax for purposes of fairness.”

“For purposes of fairness”: that means, “for purposes of economic egalitarianism.” McGurn comments:

[I]t doesn’t really matter whether a tax increase actually brings in more revenue. It’s not about robbing from the rich to give to the poor. Robbing from the rich will do, especially if it’s done in the name of fairness.

Now there are good reasons Mr. Obama is not likely to pursue the revenue side of the fairness question. As this newspaper noted in a recent editorial, the latest data from the Internal Revenue Service does not show to Mr. Obama’s advantage. As we come to the end of the Bush administration, the top 1% of American taxpayers already pay 40% of all income taxes — the highest level in 40 years. The top 10% of income earners pay 71% of the taxes.

The bottom line is that when Obama invokes “fairness,” he wants us to feel guilty about economic success. This is the secret of his appeal to the socialistically inclined

Behind this redistributionist fantasy, I noted, is not only the rancid ideal of an egalitarian society. There is also a rage against success and the wealth that it brings in its wake. That rage is a prime emotional ingredient in the liberal worldview. James Piereson, in a memorable article for The Weekly Standard, gave it the perfect name: “punitive liberalism.” “From the time of John Kennedy’s assassination in 1963 to Jimmy Carter’s election in 1976,” Piereson writes,

the Democratic party was gradually taken over by a bizarre doctrine that might be called Punitive Liberalism. According to this doctrine, America had been responsible for numerous crimes and misdeeds through its history for which it deserved punishment and chastisement. White Americans had enslaved blacks and committed genocide against Native Americans. They had oppressed women and tyrannized minority groups, such as the Japanese who had been interned in camps during World War II. They had been harsh and unfeeling toward the poor. By our greed, we had despoiled the environment and were consuming a disproportionate share of the world’s wealth and resources. We had coddled dictators abroad and violated human rights out of our irrational fear of communism.

As I said in the column cited above, Piereson’s great insight is to stress the punitive, the chastising side of this orgy of guilt. Liberals like Obama come telling us they are making a better world; they omit to mention that what they mean by “a better world” is a world that is distinctly worse for certain groups, in particular groups that liberals decided had hitherto been unfairly privileged. “The punitive aspects of this doctrine,” Piereson writes,

were made especially plain in debates over the liberals’ favored policies. If one asked whether it was really fair to impose employment quotas for women and minorities, one often heard the answer, “White men imposed quotas on us, and now we’re going to do the same to them!” Was busing of school children really an effective means of improving educational opportunities for blacks? A parallel answer was often given: “Whites bused blacks to enforce segregation, and now they deserve to get a taste of their own medicine!” Do we really strengthen our own security by undercutting allied governments in the name of human rights, particularly when they are replaced by openly hostile regimes (as in Iran and Nicaragua)? “This”–the answer was–”is the price we have to pay for coddling dictators.” And so it went. Whenever the arguments were pressed, one discovered a punitive motive behind most of their policies.

It was, as Piereson notes, one of Ronald Reagan’s great achievements to overcome, at least temporarily, the emotional mandate of punitive liberalism. Piereson quotes from Reagan’s speech at the Republican Convention of 1980: “My fellow citizens,” Reagan said, “I utterly reject that view. The American people, the most generous on earth, who created the highest standard of living, are not going to accept the notion that we can only make a better world for others by moving backwards ourselves.” What a breath of fresh air, especially after four years of Jimmy “Mr. Malaise” Carter!

The question that confronts us now is what reservoirs of confidence we still can draw upon. Did Reagan really “vanquish” punitive liberalism, or did he merely rebuff it momentarily? The extraordinary, uncritical acclamation accorded to Obama by the Left suggests that “we have scotched the snake, not killed it.” But at least now we know what we are fighting. Punitive Liberalism is alive and well in the Democratic Party, at The New York Times, in our courts and universities. It would be nice if another Ronald Reagan were to appear and remind us that we cannot move forward by moving backwards.

In the meantime, Megan McCardle poses an interesting question in her post about the proposed 5.4% sur tax on families making more than $1 million. “I also wonder, ” she writes,

at what point serious political resistance to taxes sets in. I know, it’s common to claim that Americans are tax haters. But actually, Americans, even the wealthy, pay their taxes at a rate that would shock an Italian. We grumble, but in the end, we pay.

But at some point, that changes.

Indeed. Anyone wish to open a book on when Obama will cross that line?