The new Rising staff is outraged that there are leaks of Billioinaire tax returns.
G.O.P. cynics have been coddling crazies for a long time.
One striking aspect of the Capitol Hill putsch was that none of the rioters’ grievances had any basis in reality.
No, the election wasn’t stolen — there is no evidence of significant electoral fraud. No, Democrats aren’t part of a satanic pedophile conspiracy. No, they aren’t radical Marxists — even the party’s progressive wing would be considered only moderately left of center in any other Western democracy.
So all the rage is based on lies. But what’s almost as striking as the fantasies of the rioters is how few leading Republicans have been willing, despite the violence and desecration, to tell the MAGA mob that their conspiracy theories are false.
Bear in mind that Kevin McCarthy, the House minority leader, and two-thirds of his colleagues voted against accepting the Electoral College results even after the riot. (McCarthy then shamelessly decried “division,” saying that “we must call on our better angels.”)
Or consider the behavior of leading Republicans who aren’t usually considered extremists. On Sunday Senator Rob Portman declared that we need to “restore confidence in the integrity of our electoral system.” Portman isn’t stupid; he has to know that the only reason so many people doubt the election results is that members of his party deliberately fomented that doubt. But he’s still keeping up the pretense.
And the cynicism and cowardice of leading Republicans is, I would argue, the most important cause of the nightmare now enveloping our nation.
Of course we need to understand the motives of our homegrown enemies of democracy. In general, political scientists find — not surprisingly, given America’s history — that racial antagonism is the best predictor of willingness to countenance political violence. Anecdotally, personal frustrations — often involving social interactions, not “economic anxiety” — also seem to drive many extremists.
But neither racism nor widespread attraction to conspiracy theories is new in our political life. The worldview described in Richard Hofstadter’s classic 1964 essay “The Paranoid Style in American Politics” is barely distinguishable from QAnon beliefs today.
So there’s only so much to be gained from interviewing red-hatted guys in diners; there have always been people like that. If there are or seem to be more such people than in the past, it probably has less to do with intensified grievances than with outside encouragement.
For the big thing that has changed since Hofstadter wrote is that one of our major political parties has become willing to tolerate and, indeed, feed right-wing political paranoia.
This coddling of the crazies was, at first, almost entirely cynical. When the G.O.P. began moving right in the 1970s its true agenda was mainly economic — what its leaders wanted, above all, were business deregulation and tax cuts for the rich. But the party needed more than plutocracy to win elections, so it began courting working-class whites with what amounted to thinly disguised racist appeals.
Not incidentally, white supremacy has always been sustained in large part through voter suppression. So it shouldn’t be surprising to see right-wingers howling about a rigged election — after all, rigging elections is what their side is accustomed to doing. And it’s not clear to what extent they actually believe that this election was rigged, as opposed to being enraged that this time the usual vote-rigging didn’t work.
But it’s not just about race. Since Ronald Reagan, the G.O.P. has been closely tied to the hard-line Christian right. Anyone shocked by the prevalence of insane conspiracy theories in 2020 should look back to “The New World Order,” published by Reagan ally Pat Robertson in 1991, which saw America menaced by an international cabal of Jewish bankers, Freemasons and occultists. Or they should check out a 1994 video promoted by Jerry Falwell Sr. called “The Clinton Chronicles,” which portrayed Bill Clinton as a drug smuggler and serial killer.
So what has changed since then? For a long time Republican elites imagined that they could exploit racism and conspiracy theorizing while remaining focused on a plutocratic agenda. But with the rise first of the Tea Party, then of Donald Trump, the cynics found that the crazies were actually in control, and that they wanted to destroy democracy, not cut tax rates on capital gains.
And Republican elites have, with few exceptions, accepted their new subservient status.
You might have hoped that a significant number of sane Republican politicians would finally say that enough is enough, and break with their extremist allies. But Trump’s party didn’t balk at his corruption and abuse of power; it stood by him when he refused to accept electoral defeat; and some of its members are responding to a violent attack on Congress by complaining about their loss of Twitter followers.
And there’s no reason to believe that the atrocities yet to come — for there will be more atrocities — will make a difference. The G.O.P. has reached the culmination of its long journey away from democracy, and it’s hard to see how it can ever be redeemed.
When politicians raise taxes on the rich, what do the rich do to protect their $$$? This Prof. shows how high taxes actually made America less equal.
The tax code was 11,000 pages long, full of exceptions that the rich had lobbied for.
Here’s a short test of your value judgments. (There’s no right answer.) If free markets start dishing out increasingly unequal pretax incomes, should the government
- ignore it,
- mitigate it by making the tax system more progressive, or
- exacerbate it by making the tax system less progressive?
The question isn’t hypothetical. And you may be surprised to learn that the U.S. political system has given a clear answer: Exacerbate it.
In September, the U.S. Census Bureau released two important reports containing data on inequality. First came the annual report on poverty and income inequality, based on the Current Population Survey, which showed inequality in 2018 just a hair’s breadth below the all-time high set in 2017. This finding received little coverage.
But the media snapped to attention about two weeks later, when the bureau released different data, this time from the American Community Survey, showing that inequality in 2018 surpassed last year’s high. New records get attention.
Superficially, it sounds as if we have conflicting data: One measure of inequality points up while the other points down. But the differences between the two measures are tiny. By either measure, income inequality in America now stands at, or just a tad below, its all-time high. The essential fact is that inequality has been rising for almost 40 years. Whether the high-water mark came in 2017 or 2018 is immaterial.
What about tax progressivity? Two economists at the University of California, Berkeley, Emmanuel Saez and Gabriel Zucman, just published an important new book, “The Triumph of Injustice: How the Rich Dodge Taxes and How to Make Them Pay.” Perhaps the most stunning finding: “For the first time in the past hundred years, the working class today pays higher tax rates than billionaires.”
Chew on that for a moment. You may remember Warren Buffett bemoaning that he paid a lower average tax rate than his secretary. Apparently, he wasn’t alone.
Reaching this conclusion took a lot of number-crunching. The federal personal income tax, which gets the most attention, is certainly progressive. But Messrs. Saez and Zucman went beyond that measure in their analysis. They took great pains to evaluate all federal, state and local taxes (including the highly regressive Trump tax cuts), and to attribute to shareholders tax payments by corporations. This last adjustment is crucial because most of the ultrarich earn their money from investments, not paychecks.
Messrs. Saez and Zucman also painstakingly traced tax records as far back as possible—in some cases, all the way to 1913, when the 16th Amendment allowed a federal income tax. These efforts found that the average tax rate (taxes as a percentage of income) on the top 0.1% of income earners rose from about 19% in 1913 to an average of 53% between 1930 and 1974. An “Age of Progressivity,” you might call it. After that, however, policy reversed, and the tax rate on the upper 0.1% has now fallen to about 31%.
For the 400 highest earners, whose taxes can be traced back only to 1960, the drop was a veritable implosion: from 56% in 1960 to 23% today. As a consequence, working-class Americans now pay the tax collector a slightly larger share of their incomes (about 25%) than do the richest 400, who earn more than $450 million a year on average. Does that strike you as fair?
How did this happen? Messrs. Saez and Zucman find that the biggest driver was the collapse of the corporate tax as a source of revenue, followed by the near-death of the estate tax. Both were policy choices.
When we juxtapose the data on inequality with the data on taxes, a sad story emerges. Since about 1980, the market has been handing out increasingly unequal rewards in the form of pretax incomes. This trend toward greater inequality isn’t uniquely American—within-country inequality has risen in most advanced market economies. But instead of mitigating that trend by making the tax system more progressive, America’s political system did precisely the opposite. The present Age of Inequality is also an Age of Regressivity.
One can perhaps excuse Ronald Reagan, who couldn’t have known at the time of the 1981 tax cuts that the market would produce more inequality for decades. But by the time of the 2001 and 2003 tax cuts, George W. Bush’s team certainly knew that. And by 2017, when Donald Trump hammered the latest tax regressivity nail into the inequality coffin, virtually every sentient American knew that inequality was at or near a historic high.
Since it’s football season, we should probably call those tax changes “unnecessary roughness.” On the field, the referee would blow the whistle and penalize the culprits 15 yards. But our political system seems to impose no penalty for piling on. That’s just sad.
Mr. Blinder is a professor of economics and public affairs at Princeton University and a former vice chairman of the Federal Reserve.
Presidential candidate Bernie Sanders proposed an annual wealth tax topping out at 8% for the richest Americans, offering the farthest-reaching Democratic plan to pay for expanded government programs and break up concentrated fortunes.
Mr. Sanders’ plan would hit more households and raise more money than the tax proposed by Sen. Elizabeth Warren of Massachusetts, his chief rival for progressive voters. According to an analysis by economists who consulted with both campaigns, Mr. Sanders’ plan would generate $4.35 trillion over a decade, compared with Ms. Warren’s $2.75 trillion.
Mr. Sanders’ plan would increase federal revenue by about 10%, all from around 180,000 households.
“Enough is enough,” Mr. Sanders, a senator from Vermont, said Tuesday. “We are going to take on the billionaire class, substantially reduce wealth inequality in America and stop our democracy from turning into a corrupt oligarchy.”
‘Enough is enough,’ Sen. Sanders said. ‘We are going to take on the billionaire class, substantially reduce wealth inequality in America and stop our democracy from turning into a corrupt oligarchy.’ PHOTO: GERARDO BELLO/ASSOCIATED PRESS
The tax would apply to married couples with net worth of at least $32 million and individuals with net worth of at least $16 million. The rate would start at 1% per year and rise to 8% for married couples with assets of least $10 billion. That 8% rate would mean that megabillionaires who don’t earn at least an 8% return would see their fortunes shrink, and Mr. Sanders said Tuesday that there should be no billionaires.
During this election cycle, Democrats have offered more expansive proposals to tax the super-rich than they did in years past. That is in part a reaction to income and wealth disparities, and it is also an attempt to fill what they see as gaps in the income-tax system.
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Under the current tax code, gains in wealth aren’t taxed as income unless people sell assets and realize gains. Unrealized gains also escape income taxation when a person dies, though the estate tax may still apply.
But implementing a wealth tax would face challenges. Such a change would require new rules and procedures for determining wealth and additional Internal Revenue Service resources to prevent tax avoidance and tax evasion. A wealth tax would also have unknown effects on economic growth and could be declared unconstitutional because courts could declare it a direct tax that would have to be apportioned among states according to their population.
Mr. Sanders calls for imposing an exit tax of up to 60% on wealthy people who renounce their U.S. citizenship. He would also expand the IRS to audit at least 30% of people in the lowest wealth-tax bracket and audit all billionaires every year.
Analysts have questioned whether wealth taxes would actually raise as much money as the campaigns estimate, both because of tax avoidance and because of disagreements over how much wealth is concentrated at the top of the distribution.
“These wealth taxes raise a lot of money, perhaps not as much as the advocates hope,” said Janet Holtzblatt, a senior fellow at the Tax Policy Center, a Washington group run by a former Obama administration official.
Robert Reich debunks 12 misconceptions about tax policy in America.