by Victor Davis Hanson
The usual liberal complaint against the conservative opposition to higher income taxes is greed and the better-offs’ self-serving reluctance to pay their “fair share.” But while perhaps true in some instances, I don’t think that is an accurate writ against most of those in that now demonized $200,000 and above categories who resent forking over more. Rather, here are a random 12 complaints that I hear from those who become furious about preposed higher income tax rates:
1) The Entire Bite
The most common lament is that taxes are already too high for those who either chose not, or do not have the resources, to find loopholes. I know that pre-Reagan top-bracket rates were often between 70%-94%; but few paid at those rates given the myriad of former deductions. At first glance, 33-35% federal top rates do not seem that steep; but income taxes do not fall in isolation. Many of the higher-income payers are small business people and self-employed professionals, who pay 15.3% in FICA and Medicare taxes on a sizable and growing portion of their income. And that portion and the rate itself always go up, never down. In 2013 a surcharge will hit those in the now near “criminal” $200,000 and above brackets. Many of the top incomes (believe Sen. Schumer, not me) fall in high-tax states like New York and California, where state income taxes can hit 10%. Add in property taxes on homes and businesses, and it is not hard to envision a theoretical 50% + rate, or over half one’s income. So, the conservative asks, at what total rate would local, state, and federal governments be happy — 60%-70%-80% of annual income?
Liberals reply that income inequality is worse than ever. (Note here in their own lives they have no problem with other “merit”-based inequality: e.g., Why can’t Johnny Depp turn down a couple of roles so other less fortunate actors could star? Why doesn’t Cornel West at last break up his endowed mega-salaried professorship into three or four lectureships for the struggling part-timers? Why doesn’t Maureen Dowd go down to one column every other week to allow less compensated New York Times op-ed writers a chance to catch up? In other words, why not back off from the trough and let others have a go?) But back to income inequality: some of those figures are not just attributable to the proliferation of $200,000 orthodontists, but to factoring in the mega-fortunes of a Johnny Depp ($50 million last year in income alone) or a Warren Buffett. The onset of a globalized market allowed a new top bracket to make tens of millions of dollars, a world away from the lesser professional. There is no aggregate homogenous group of “the wealthy.” My big-farming near neighbor (500 acres in vineyard plus), who probably nets $300,000 on a rare good raisin year like this one, is a world away from the late Steve Jobs or the thousands of million-dollar-plus incomes in Silicon Valley. This incongruence is not a rhetorical point or special pleading, but evident through the president’s own rhetoric: “Millionaires and billionaires” is a deliberate attempt to weld two disparate groups together — one making 1000 times the other (if the president is talking of annual income), or one worth 1000 times more than the other (if the president is talking about net worth). But is the Menlo Park bungalow owner who teaches at Foothill College and might be “worth” $1 million (given housing inflation) really comparable to Meg Whitman? Mr. Obama knows that there is not enough of the 1% of the 1% to come up with enough revenue to cover his new $4 trillion in debt, but does he think that by going after the top 5% or 10%, well, there just may be?
3) Wise Spending?
Then there is the manner in which the collected money is spent. It is not true to say Great Society programs have not helped millions, but it is legitimate to ask “at what cost?” came the expansion from a safety net to a sort of guaranteed livelihood. The spread of food stamps to almost 50 million recipients, the increase in unemployment to 99 weeks, the plethora of housing, health, and education supplements — all that creates not just necessary charity, but a mechanism for millions to find an alternative lifestyle, where subsidies, occasional cash, off-the-books work, and “other” activities can supplant work. Mindless “Black Friday” splurging is not just done by the well-off. Once legitimate questions have simply become taboo: “Do you make enough to support that additional child? Do you really think you needed to buy that flat-screen TV? Do you avoid alcohol and drugs?” To inquire like that is to earn liberal invective, but not to ask such questions is intellectually dishonest. The number of generally fit men my age (e.g., 58) in my small community that, I know personally, are not employed full-time, and have not been so for years, is in the dozens. They are not starving. Obesity is the plague, not malnutrition, as the first lady understood.
4) Always More Spending?
Generally as revenues increased, spending on social programs and entitlements far outpaced them. We have almost doubled federal spending since 2000. Deficits widened despite (until the recent recession) constant annual gains in revenue. In the conservative mind, the higher the taxes, the more likely it is that millions will disconnect from the private sector and dream up ways of spending hundreds of billions on entitlements and billions on those who administer them. Whether the top rate is 35% or 50%, the deficits will probably be the same, given trends in spending. (Yes, I know a Republican Congress forced the Clinton administration to accept spending caps in exchange for higher taxes; but try that now [e.g. back to the Clinton tax rates and freeze spending at 2011 levels] and the deficit is still there.)
5) Less Efficiency?
Conservatives believe that they can spend their own earned money more efficiently than can unneeded (note that I say “unneeded,” because in every budget crisis, government threatens layoffs in fire and police first to scare the public into maintaining all sorts of social service agencies) state departments, whose employees are not subject to market forces and view yearly funded budgets as sacrosanct rather than predicated on a good peach crop, a fickle oil well, or uncertain demand for a vacuum cleaner. Millions of conniving minds figuring out the best way to save money and maximize profit have an efficiency that a monolithic centrally planning government octopus simply does not. Bigger government and higher taxes, whether in Greece or California, are not a prescription for economic growth that can best get us out of this deficit cycle.
6) Inequality by Income?
Not all conservatives believe “inequality” is definable by income alone. Does the chiropractor who makes $150,000 and sends his kid to Santa Clara University ($50,000 per year) on his own dime do all that much better than the DMV supervisor who makes $60,000 and has his child eligible for state and federal college grants? To the conservative, most (not all, to be sure) subsidies and breaks for college, housing, medical care, occasion debt relief, etc., are income adjusted and go to the lower and lower-middle classes. The subsidized housing tract 2 miles away from my farm has houses (ca. 1800 sq. feet) that are as nice or nicer than those in the old section of Palo Alto where I have 600 sq. ft. studio apartment. I imagine that the Selma counterparts also have an array of subsidies not extended to the upper-middle classes in Silicon Valley who are paying $1 million for an older and much smaller home. Income is not the only benchmark of poverty or wealth.
Conservatives are also tired of being demonized. One “pay your fair share” is OK; dozens of “millionaires and billionaires” and other class warfare rhetoric become tiring. Psychologically, the top-bracket earner is now resigned to something like this: “The more I pay the more ‘they’ hate me, so why pay any more if the slurs will be the same either way?” Does anyone believe that should Obama get his new tax hikes, he will cease the class-warfare demagoguing as in, “Thanks to that noble 5% we finally balanced the budget”? (As opposed to, “Now that we have that problem of income tax hikes temporarily out of the way, we can go after….”)
8) Sic Transit Gloria
Income is not static. Most go in and out of top brackets, especially in non-salaried business. Many of the top earners that I know are not salaried and were not making what they are now at 40 and won’t be at 65. They view their 50s as a brief window to store enough nuts for winter — a fleeting period in their lives when they are mature, experienced, still hale, and finally figured out how to make some cash for the less rosy future when they will be not so healthy or fortunate.
9) The Private HHS Department
Tax-resistant Americans also find ways to redistribute their money without government help. I know dozens who give far more to charities than do far wealthier liberals. I think statistics will back that up. Somehow paying the mortgage for a daughter, picking up the funeral bill for a cousin, loaning a brother-in-law cash for his business — all that never computes into wealth and poverty statistics, despite the fact that in every family there are “cash cows” whom everyone seems to approach for help (and they rarely go away refused). Is there a government form that asks of the middle class, “How much help, direct or indirect, have you obtained from a relative — parent, sibling, cousin, child — this year?”
10) The Technocratic Class
Then there is the class and cultural divide. Opening a bakery at 5AM for forty years or owning a fleet of semis is a constant headache in a way being the regional director of the Department of the Interior is not. By that, I mean it is far harder to net $150,000 in the muscular private sector than in the world of the tenured bureaucratic technocracy. If one reads the resumes of a Steven Chu, Hilda Solis, Eric Holder or Barack Obama, there is a long governmentcursus honorum that almost ensures that none of these grandees has a clue how a business works, how fragile is expected income, or how sure are expenses. So the technocratic class that soared to prosperity through government subsidies and employment is somewhat resented by the more conservative small business private sector that both supports it and so frequently finds itself on the receiving end of the latter’s disdain. The biggest myth is the prior Obamas’ boast of something like, “I could have made more in the private sector, but nobly chose to serve the community.” I doubt whether either Obama had the skill to soar in the corporate predatory sky. And why is it that the well-salaried bureaucrat always sighs that he could have made more in the private sector, as if he could have walked into a similarly tenured job at Exxon and would not have had to first hustle as a salesmen to earn what he does?
The 5% who pay nearly 60% of the taxes, while not monolithic, feel that they are pawns in a larger jaded chess game, in which the bishops and rooks have rigged the board: always higher taxes fuel bigger government, which fuels an expanding recipient class which pays homage by reelecting more big-government statists who further fuel government for sympathetic dependent voters. For the conservative, who sees dependencies and overregulation everywhere, each extra dime in taxes means more of what will turn us into a failed redistributive Greece. One group is expanding, the other shrinking in our Darwinian world of tax and spend.
Liberals talk as if we live in the world of coal-dusted Dickensian London and the Cratchits, or perhaps millions are still like the Joads putt-putting in smoky cars from Oklahoma during the Dust Bowl. Yes, there is poverty, but it transcends income, entitlements, and most of the rules of what used to apply in the pre-globalized world. My local Wal-Mart — in the poorest section of one of the poorest counties in a near bankrupt state — does a brisk business in new cell phones, DVDs, big-screen TVs, laptops, and discretionary purchasing. Black Friday was nightmarish when I drove by. When I was ten, few of the middle class had air conditioners; now most of the poor do, whether in their homes or cars. The onset of a billion new global workers, cheap consumer items, technological revolution, and government cash has meant that someone with a “below the poverty line” income can purchase cheap clothing and gadgetry that forty years ago were the mark of an aristocrat. The ability to call a foreign country on a cell phone for 5 cents a minute from the check-out counter never computes in any standard of wealth and poverty. In our world, it is “What THEY have,” not “What I have,” that counts.
The above is not a bold plea not to pay taxes, but a feeble rear-guard action to remind some why 50% of an income paid in assorted taxes is enough — and why more is not just unnecessary, but will more likely make things far worse. Had Obama been, even for a year, an electrical contractor or Starbucks manager rather than spent a lifetime in academia, community organizing, or comfortably employed by some sort of government, he would have had a different view of taxes and expenses. I might suggest from experience that I knew a lot of independent farmers who could have done graduate work at a Stanford or UC, but not too many Stanford PhDs who could have run and survived on a 400-acre operation of cotton, almonds, and citrus.
©2011 Victor Davis Hanson