Higher Taxes On The Rich Wildly Popular

by: Chris Bowers

Wed Apr 15, 2009 at 12:51

Today is teabagging and tax day. As such, here is a quick reminder from Gallup that higher taxes on the rich are wildly popular:

If we are going to achieve the 40% social investment economy, the public sector will require more revenue. More public sector revenue basically means more taxes. Clearly, the only new taxes that will be politically feasible will those targeted toward higher income groups. The best options are to repeal all Bush-era tax cuts, put a tax on all carbon (if this means 100% auctions on cap and trade, that's fine, too), and to eliminate the income cap on Social Security income taxes.

While these are both moderate (relative to other wealthy countries) and achievable (both President Obama and the Democratic congressional leadership have endorsed all, or part, of each of these three pillars of new revenue) goals, there are still major barriers. In fact, there are still major barriers in our own party. A prime example is Arkansas Senator Blanche Lincoln, who two weeks ago authored and, with the support of nine other Democrats, passed an amendment to reduce the amount of rollback the House had proposed on the estate tax. A reader explains over email (more in the extended entry):

Chris Bowers :: Higher Taxes On The Rich Wildly Popular
Another major difference between the House and Senate budget resolutions concerns the estate tax. In the House version, they basically adopt Obama's proposal to make the 2009 levels permanent, indexed to inflation. This means that estates worth up to $3.5 million (per person) pay no estate tax. Assets above that amount are taxed at a 45 percent rate. Personally, I think this is too generous considering the amazing tax benefits wealthy Americans already enjoy, but it could be a lot worse.

Unfortunately, the Senate has decided to make it worse. Blanche Lincoln and Jon Kyl introduced an amendment to the budget resolution that would raise the exemption to $5 million per person and lower the rate to 35 percent. Insane. The Center on Budget and Policy Priorities estimates that we'll lose $91 billion in revenue over 10 years as compared to the current estate tax levels (over $440 billion compared to 2011 levels).

In a $3.5 trillion budget, losing about $9.1 billion in public revenue isn't huge. However, during a time when we need to be increasing public revenue to meet the 40% social investment economy, any lost opportunities like this are terrible.

Some people might defend Democrats like Blanche Lincoln, by claiming they are "voting their districts" with bills like these. However, the absurdity of this argument is made clear by the graphic from Gallup at the beginning of this post. In every state and every congressional district in the country, either a huge majority or a clear plurality believe that higher income earners should be paying more taxes. Further, not only are higher taxes on the rich wildly popular, but the House version of the estate tax does not even return it to pre-Bush era levels.

One could argue that while higher taxes on the rich are popular in the abstract, individual higher tax proposals on the rich don't poll as well. This is true, but relying on such an argument to justify voting for the Lincoln amendment on the estate tax demonstrates not only an unwillingness to fight against conservative policies, but also an unwillingness to fight against conservative messaging. Given the Gallup polling numbers, arguments over issues such as the estate are eminently winnable anywhere in the country as long as they are framed as making the rich pay their fair share.

Voting for the estate tax isn't about 'voting your district," it is just about voting for rich people and nothing else. In the end, that is the truly unpopular position, and what we should be rallying against on tax day.  

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Random question... (0.00 / 0)
Where does the 40% number come from?  I realize that you calculated this by essentially removing the stimulus/bailouts from the current budget, but why is this necessarily considered the ideal number?

I guess what I'm saying is... who's to say that 35% isn't better, or 45%?  Why 40%?

I guess another way to look at this is... (0.00 / 0)
I'm wondering if we've looked at this in this way:

1) What are the social programs that we want?
2) How much do these social programs cost?
3) Given this cost, how do we setup the tax brackets to pay for this?

Then we can calculate what percentage this is... In other words, starting with the percentage seems like we're attacking this from the wrong angle.

[ Parent ]
Too many Democrats vote for unpopular (4.00 / 1)
polcies ONLY when it benefits the wealthy.

Lincoln is wholly owned by the Walton family.  She should be ashamed, but having sold her soul, lacks any shame.  

Please help me understand (0.00 / 0)
what kind of society are we trying to create.  are we looking to create a society that is totally dependant on government for our food and shelter?  are telling the american people to just sit around and wait for your welfare check, your health care, your food stamps, etc.  are we saying the government will take care of you so you don't have to succeed, you don't have to strive for a better life, you don't have to dream, you can just sit around and wait for your check.

We will take this money from the people who are successful, who have gone to school, who have opened and or created businesses or invented a product, or writes music, or entertains, and we will give it to you.  And you will get this money without having to do anything at all.  

If by chance any of you decide you want to make a better life for yourself by going to school, starting a business, becomming weatlhy, you will now be our enemy and we will come after you and your money.  Be warned...you are not allowed to succeed without dire consequences.

This is the exact message my parents heard in Cuba in 1959.  They were strpped of everything as was every Cuban family rich or poor.  

What a great messsage to America.

Well (4.00 / 2)
sitting around waiting for government checks seems to work alright for the top 1%. Why shouldn't the rest of us get some, too?

Montani semper liberi

[ Parent ]
yes. successful people like Ken Lay and Bernie Madoff. (4.00 / 2)
And the DuPonts.  Pillars of society, all.

[ Parent ]
yes (4.00 / 3)
because there is no middle ground between Castro's cuba and Bush's America.  Do you ever make an honest argument?

[ Parent ]
So you're saying there's no value in the success, only the money. (0.00 / 0)
We will take this money from the people who are successful, who have gone to school, who have opened and or created businesses or invented a product, or writes music, or entertains, and we will give it to you.  And you will get this money without having to do anything at all.

All men are not created equal, and there needs to be safety nets and equal opportunity.  How inhumane is it to take advantage of people who are already losing at the game.   There are other things besides money, like principle.  You can succeed and non-grudgingly share at the same time.

[ Parent ]
The Missing Ingredient (0.00 / 0)
is how the public feels about the balance of taxes that individuals pay, as opposed to how much corporations pay.  Gallup didn't ask that question in this poll.  

I went to the Federal FY 2009 budget and downloaded the table that shows historical federal income tax taxes for individuals and corporations from 1934 to 2011.

I was born in the year of Eisenhower, 1952.  The ratio then was 1.3 to 1 - that is, individuals paid about $28 billion, while corporations paid somewhat less, at under $22 billion.

Fast forward to 2007.  Two years ago, the ratio was almost a mirror image of 1952's at 3.1 to 1.  Meaning that individuals were now paying $1.63 trillion.  But corporations?  Only $370 billion!  

Since 1952, individuals' income taxes have increased 360% more than corporations.

Thinking about all the things we could do if we made corporations pay their fair - or at least, 1952 - share is a fitting message for tax day.

Decarbonize, Deglobalize, Demilitarize


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