Raise taxes on the wealthy? Them’s fightin’ words, mister! Everybody knows it’s positively un-Amurrcan. And if you dare to even think such a think you’re gonna get pelted with a few soundbites. In fact, you’re gonna get pelted with the same tried and true soundbites that have greeted such a recommendation for, lo, these many years. To wit:
“High taxes stunt economic growth and low taxes encourage it.”
You have to conclude that people who conclude this must be peering into a crystal ball. They certainly haven’t been peering into a history book. History shows that higher taxes on the rich have normally accompanied economic growth while lower taxes on the rich have accompanied economic downturn. Of course, there are ramifications that make such generalizations risky. But if you’re going to generalize, it clearly makes much more sense to do so in favor of higher rather than lower taxes.
“It penalizes success.” “It destroys incentive.”
These twin soundbites, the Tweedledee and Tweedledum(b) of anti-tax spin, are founded on or at least imply three curious presumptions: (1) that the rich are all greedy bastards who care about nothing but stacking up profits; (2) that increasing taxes means raising them to a level of 100%; and (3) that tax revenues, once collected, are flushed down a toilet. The first of these really ties your brain into a Gordian knot: in hearing arguments in favor of higher taxes, the anti-taxers huff over the suggestion that the rich are all greedy (a suggestion nobody has made) while giving indications they harbor such greed themselves, and then by invoking these soundbites, intimate that the rich are motivated by nothing but greed. Phew.
Well, some of the rich are motivated by nothing but greed – otherwise there wouldn’t be so much resistance to taxes. But there are plenty of exceptions. Bill and Melinda Gates have pledged to give away a whopping 90% of their fortune. (Do you really suppose they’ll ever miss it?) But aside from sheer greed, another major problem is myopia, bred by the Ayn Rand mentality that pictures the wealthy (or successful, if you will) as existing in a vacuum, conjuring money out of thin air utterly independently of the unwashed masses who try to leech off their incentive, and dogged by the socialist government regulations that try to hamper their achievements and drag them down to the level of mere mortals.
The truth is that unless you enjoy a hell of a sweetheart deal with the U.S. Mint, every dollar you acquire came from someone else; and it ends up in your pocket through the exchange of goods or services, the generosity of a donor, or good old-fashioned theft. No matter how you look at it, you become wealthy by obtaining money from other people. Even if you were born wealthy -and it’s especially amusing to hear complaints about penalizing the “success” of George W. Bush or the Walton heirs. Far from “penalizing” your success, taxes allow you to reinvest in the system that makes it all possible. (True, government officials don’t always use your taxes for the most constructive of purposes. But that’s another discussion.) Paying little or none in taxes might help safeguard your past income, but it seriously jeopardizes your future returns.
Many rich people understand this, including the super-rich Warren Buffet, who in an insightful editorial in the New York Times, urges Congress to raise his taxes and blows a big gaping hole in the oft-repeated assertion that higher taxes will discourage him and his fellow investors from investing.
The highest marginal tax rate in U.S. history was in 1952 and 1953, at 92%. That’s more than double what Obama is proposing. So if taxing the rich makes you socialist, then you’d have to surmise that Eisenhower was at least twice as socialist as Obama. Nobody is ever going to propose that anybody be taxed 100%, but let’s suppose for the sake of an extreme example that the top rate rose to 99%. Would that “destroy incentive”? Assume that you, a tycoon, derive no satisfaction whatsoever from providing quality goods or services or jobs for your fellow citizens. Just focus on what really matters: the moolah. Can you imagine how much dough you’d have to pull in to be taxed at 99%? Probably not, if you’re like most of us. But suppose it left you a mere million after taxes (in reality, it would probably be much more). Can you conceive that such a paltry sum would constitute any incentive whatsoever? Being a patriotic American, do you think you could bite your lip and bear it?
“It’s class warfare.”
This is the granddaddy of them all, and you can always expect it to be trotted out at the slightest provocation. But what you must always remember is that “class warfare” is waged in only one direction: against the rich. Never, never, never against the rest of us.
When politicians, egged on by wealthy supporters, block increases in the minimum wage, that’s not class warfare. When assistance to the needy is slashed to the bone, that’s not class warfare. When CEOs get millions in bonuses while hundreds of thousands of jobs are cut, that’s not class warfare. When you have an Enron, that’s not class warfare. When you block disaster relief or medical benefits for 9-11 responders, that’s not class warfare. When you cut benefits for veterans, that’s not class warfare. When Barrick Gold (a major mining concern with ties to the Bush family) bulldozes sacred burial grounds of the Shoshone tribe and allegedly buries alive as many as 50 peasant miners in Africa, that’s not class warfare.
But if you try to restore the taxes on billionaires to their pre-Bush level and bring them in line with those of working stiffs – that, by god, is class warfare.
And here’s the really cool thing. That “conservative” brother-in-law of yours who so predictably spouts these soundbites is almost certainly in the bottom 99% income stratum rather than the top 1%. That is, assuming he still has a job at all. And yet he will swear to you, with fist-pounding, spittle flecked-fury, that it’s really those poor, defenseless billionaires who are the victims of class warfare.
Ain’t propaganda beautiful?
The Propaganda Professor 
Shit and money flow downhill but not necessarily at equal speed! T.
POP,
When the whole Tea Party thing began and cries of “class warfare,” became popular, I was completely confused, since even though I was raised in a lower-middle class household, I had no opinions about the wealthy being particularly greedy or entitled. I held the old notion which at times has actually contained some truth–that the expansion of business provided fertile soil for economic growth that lifts all Americans to a higher standard of living and more economic stability among all classes. Sadly, little of this pleasant possibility has manifested itself in an age of overseas tax breaks and cheap labor pools as the result of outsourced business expansions. Instead of trickle down, or even trickle sideways, we now have a steady leak which trickles up to the wealthy. But even considering this current reality, I had never stereotyped the wealthy as being nothing but greedy bastards, who are only interested in feathering their own nests at the expense of all others. Ironically, it was the cries of “class warfare,” after the 2008 crash, as well as the fact that many very well paid corporate executives helped cause it, that energized many of us into seeing the truth!—even though this term was really invented to help those in the top 1, and even .1% manipulate awareness about their supposedly good intentions, while being self-portrayed as poor misunderstood pillars of our present high standards of living.
I don’t think many people like me really want to entertain the thought that those in upper 1% are heartless pigs, but after attempting to cause an economic default and to extort Congress by shutting down the government over what really amounts to small change resulting from very reasonable tax increases—like the ones Democrats often proposed—that I am beginning to think that most of our fat cats really are evil and unpatriotic, all in the name of the almighty dollar! Still most of us would be satisfied to let the rich be rich, if they would only agree to play by some simple friggin regulations and rules, rather than knocking the monopoly board off of the table and storming away in a huff, after failing to win Park Place.
I particularly like your mention of the fact that whenever class warfare is brought up, it is almost always used to implicate that the lower classes are threatening hard working, god fearing, flag waving oligarchs, who of course, are the ones who originally popularized the term to work in their favor while demonizing the working class instead. As a result, many of us who had previously been willing to grant the wealthy some tax breaks and juicy Federal grants, in the pursuit of the common good, can finally see through the illusory veil which has previously been used to disguise corporate and individual greed.
So, if there is now a valid reason to talk about class warfare, it’s only as a result of the actions taken by greedy tycoons and Wall street executives themselves that the word has acquired real political meaning. The oligarchy has succeeded in implicating themselves as the usual suspects in a way that is now hurting us all as they continue their attempts to rig the game—instead of promoting the social beneficence that has previously projected them as representing a much desired, and completely opposite, characterization.