Democrats May Hate The Rich But Most Americans Do Not


The class warfare invective that poured from the lips of liberals and Democrats recently during the debate over extending Bush-era tax cuts was memorable.  It has become, perhaps, the centerpiece of modern liberal governing philosophy.  The narrative seems to run (in one form or another) something like this: "The filthy rich have screwed the rest of us and now its our turn to screw them."  Indeed, it was difficult to find a Democrat anywhere who demurred even slightly from this perception of the "wealthy" as evil incarnate that so animates the liberal imagination today.

Senator Bernie Sanders of Vermont described the wealthy as the "...most powerful forces in the world, whose greed has no end."

Rep. Peter Welch (D-Vt.) circulated a letter urging House Democrats to oppose the deal, calling it "fiscally irresponsible" and "grossly unfair."

Representative Jim McDermott  (D-WA) went so far as to call the compromise Obama's "Gettysburg" and compared the GOP to the Confederate Army.

Then House Speaker, Nancy Pelosi, railed against the "$700 billion dollars in tax cuts for the top 2 percent in our country."

Democrat Senator Claire McCaskill suggested that if we "give more money to millionaires, it really is time for the people of America to take up pitchforks."

Congresswoman Louise Slaughter of New York described the extension of the Bush tax cuts for the wealthy as an "atrocity" for which we should be "ashamed."

What is perhaps most insidious about such rhetoric is the premise behind it: the belief by liberals that your money is not your's but the government's.  How else to conclude that tax cuts for a particular class increases the nation's deficit?  Or that a tax cut is giving money to millionaires?  How, in other words, does keeping more of one's money increase someone else's debt?  Such reasoning holds only for those who believe in economic redistribution.  For the rest of us, it is predatory taxation. 

For successful Americans, there is probably nothing more galling than to listen to liberal politicians disparage them as odious reprobates, getting away with something.  Those professionals, innovaters, and small businessmen who make more than $200,000 annually (which hardly qualifies someone as rich in the manner say of any number of wealthy liberal politicians such as Senators John Kerry, Jay Rockefeller, or Diane Feinstein) may wonder what it is exactly that they did wrong and whether hard work, initiative, and risk taking are welcome any longer in this nation. 

Conservatives defend the "wealthy" by reminding detractors that small businesses are responsible for new job creation in this country, but are such explanations necessary?  Is it not sufficient to say that individuals pursue their self interest to enjoy the fruits of their labor as we have for the history of the nation? 

There is also the matter of the government's capacity to manage its finances properly.  Washington recieves more than $2 trillion a year in revenue (roughly 18% of GDP historically) and every year manages to spend more than it recieves, whether in recession or in a growth economy: Obama has added nearly $3 trillion of debt in just two years; the nation has accumalated $14 trillion of debt, nearly 100% of the GDP; interest on the debt alone in 2009 was close to $400 billion; unfunded liabilities approach the $100 trillion mark, a looming fiscal catastrophe.  Who could defend the government as a prudent financial steward of our resources?

Americans also do not despise the rich, at least not nearly as much as the left does.  They are not obsessed with income disparities as the left is; nor do they spend sleepless nights despairing over the sucess of others.  "Soaking-the-rich" schemes, quite apart from their shortcomings as economic policy, may not resonate politically either.  In 2004, Thomas Frank, liberal author of "What's The Matter With Kansas," bemoaned the tendency of many middle class voters to vote Republican, failing, as he saw it, to appreciate the tender mercies of the left's redistributive policies. 

But most Americans hope someday to become successful themselves.  And, if not them, then, perhaps, their children.  There is a "dream" aspect to American life that liberals do not properly appreciate.  America has always been percieved as a land of opportunity, and a check from the government, for the first class among us, just will not do. 

Americans also understand that the deficit will not go away no matter how high liberals raise taxes on the rich; that politicians and bureacrats will fritter away the nation's wealth regardless of taxation levels.  They recognize that Washington will eventually need to go after them, the middle class, because ultimately there will simply not be enough revenue to accomplish all the left wishes to do without raising taxes on everyone.

Mature minds realize that the growing disparity between rich and poor has many causes, some of which include illegitimacy, divorce, education gaps, immigration, global competition, social stratification, technology, and, of course, misguided government politicies, none of which point necessarily to some conspiracy by the rich or powerful or a failure of capitalism. 

There is also a difference between relative poverty and absolute poverty.  If Bill Gates, Warren Buffet, and the next eight richest individuals in the country decided to move their wealth to Switzerland, income disparities would shrink but no one's life would be improved.  Income inequity does not equal destitution or poverty.  

Indeed, the middle class (defined as those between the 40th and the 60th percentiles of income), in fact, is not disappearing, but getting richer, anywhere from between $12,000 and $23,000 more annually (after inflation) since 1967, with 50% more buying power than 30 years ago. 

Americans also recognize that punishing or demonizing the rich will not improve their lives in the least and may in fact make it worse. When the rich do well, they tend to spend their money, start businesses, hire, invest, or save it for others to borrow, invest, and create jobs with.  Taking money from them does nothing to help working Americans and may in fact hurt them. 

The worst option appears to be giving it to the government, which allocates resources inefficiently, attempts improperly to pick winners and losers, pays off cronies and constituents, enlarges itself, increases dependency, and racks up huge debts. 

Furthermore, the average American may not be consumed with envy for the "millionaires and billionaires," but may instead be concerned with his neighbor who, as a public sector employee, for example, enjoys a guaranteed job, built-in raises, platinum plated health insurance, early retirement and fabulous pension, that he and others in the private sector are forced to pay for.  Regular working Americans not lucky enough to land government jobs are more likely to resent the high taxes they have to pay to fund unsustainable public sector benefits, even as their states and municipalities face budget shortfalls and high unemployment - in part owing to those very same overly generous benefit packages promised to public sector unions by their political allies. 

Those states that employ high income taxes have watched their productive class leave their states for more business friendly climes.  California and New York, the deepest of blue states with massive welfare states, are ranked 49th and 50th in business climate tax environment (a composite of various state taxes); despite high taxes, they still confront budget shortfalls of $28 billion and $8 billion respectively; they and other other deep blue states (Michigan, Illinois) have seen their populations decline, in particular, their entrepreneurial class, with significant losses of wealth and tax revenue.  Other states, on the other hand, with more favorable tax and regulatory environments, such as Texas, have seen population increases along with higher productivity, economic growth, and revenue. 

It is also inaccurate to say that the upper class in America is undertaxed.  The Organization of Economic Cooperation and Development (OECD) in a 2008 study of the 24 leading economies reported that the ratio of taxes paid to income recieved by the top 10% was highest in the US at 1.35, compared with 1.1 in France, 1.07 in Germany, 1.01 in Japan, and 1.0 in Sweden.  The US, in other words, is more progressive in its taxation policies than our more socialist friends in Europe and elsewhere including even Scandinavia. 

It is similarly inaccurate to suggest the wealthy do not pay their fair share.  The top 1% pay approximately 40% of the taxbill, while earning about 20% of the nation's adjusted gross income.  The top 5% pay more taxes than the bottom 95%.  The top 10% pay close to 70% of the nation's tab.  The bottom 50% earn 13% and pay 3% of the bill, a top heavy and unstable arrangement.    

Progressive tax policy also runs afoul of the 14th amendment, which asserts that "no state shall ... deny to any person ... the equal protection of the laws."  Equal protection under the law would imply equal rates of taxation as well.  A flat tax would be more fair and pass constitutional muster.

Americans understand that private property is key to proper functioning of our unique society that is based on individual liberty and opportunity; private property encourages thrift, proper husbandry of resources, and provides incentives to work, innovate, and create wealth, which benefits everyone: when the political class goes after a particular group, ultimately everyone becomes a target, as the ambitions of government continue to grow and the need for greater revenue steams increase. 

If the private property of the so called "wealthy" is contingent and temporary, subject to confiscation by relentless politicians, than the assets of the middle class are also at risk.

Economic populism, class warfare, politics of envy, neo-Marxist progressivism, confiscatory taxation of the rich is a failied economic policies and political dead ends.  Unfortunately for liberals, most Americans do not share their hatred of the rich.  Nor do they see them as outlaws or villains.  Indeed, many hope to join their ranks someday; that is the American way.



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