This is sad.
Politico reports this morning that “polling suggests that when it comes to soaking the rich, the American public is increasingly on board.” According to a poll they conducted along with Morning Consult, “76 percent of registered voters believe the wealthiest Americans should pay more in taxes.” The story by Ben White also notes that a “recent Fox News survey showed that 70 percent of Americans favor raising taxes on those earning over $10 million — including 54 percent of Republicans.” Even Alexandria Ocasio-Cortez’s plan “to slap a 70 percent marginal rate on income earned over $10 million clocked in at 59 percent,” according to a recent Hill/HarrisX poll. Even worse, Liz Warren’s constitutionally questionable “wealth tax” on high earners was opposed by just 20% in that same Politico/Morning Consult survey.
Politico has become increasingly shrill about its leftism in recent years, so maybe take the report with a grain or two of salt. But the current zeitgeist seems to support it.
Here’s why it’s sad, if true.
One of the big selling points for these confiscatory tax rates is, “Hey, rates were this high in the ’50s, and we had a lot less income inequality.”
There were a lot of reasons for less income inequality back then, not the least of which is there was a lot less income, and far fewer things to spend it on. Look around your house — likely two or three times the size of one from the ’50s — and count the things in it which didn’t exist in 1959. We’ve come a long way, and one of the results of that is that the rich have indeed gotten richer. But so has most everyone else. We could do a lot worse than income inequality, and we will, if the soak-the-rich types get their way.
What’s missing from our “national discussion,” the Left likes to say, is one vital piece of information about the old 70% tax rate: Nobody paid it.
The tax code was so full of loopholes that it looked like a sieve, attacked with wire cutters, then blasted at close range with a 12-gauge. Because when rich people are faced with a 70% tax rate, they hire accountants and lobbyists (and the occasional congresscritter) to help make sure they don’t pay anything near the published rate. Tax shelters, loopholes, shady deductions — these were the rules of a very crooked game.
If you think things would be any different this time around, you’re as crazy as a committed socialist. In fact, you probably are one.
ASIDE: There are two types of socialists. There are the True Believers and the Cynics. AKA, The Dupes and The Elites. The Cynics hold power or hope to. The Dupes vote for them expecting free stuff. Meanwhile, the Elites use the enhanced powers of the state to engage in all kinds of cronyism, while the Dupes get just enough stuff to keep them voting for the Elites, but never enough to wean them off the government teat. The powerful grow rich, and everyone else is kept down.
If the whole Cynic/Dupe codependent/abusive relationship weren’t sad enough, there are also the economic ripple effects. Instead of investing money in the latest innovation, the rich shop around for tax shelters instead. That means less growth and jobs for the rest of us — which is exactly where the socialists (the cynical kind) want us. We could get away with that in the 1950s and ’60s, when Western Europe and Japan were still recovering from the Second World War, Eastern Europe and the USSR were Communist basket cases, and China was still decades away from joining the modern world. There was no one to compete with us, so we could afford to be stupid.
Those days ended in the ’70s, and the results were awful.
What dragged us out of that malaise? At least in part, Reagan’s tax cuts — reductions in marginal rates, and the elimination of loopholes. People more or less paid the published (and far more reasonable) rates, and could devote their creative energies and investment dollars in ways which benefitted everyone, rather than in looking for ways to dodge the tax man.
The results, as you’ll recall, were totally ’80s awesome.
But an uncluttered tax code, as Glenn Reynolds likes to say, results in “too few opportunities for graft.” Which an honest cynic might say is the entire point behind the Democratic-Socialist Left’s moral preening about “fairness.”