Speaking to members of the Laborers International Union of North America in Akron, Ohio this afternoon Joe Biden called McCain’s approach to the current economic crisis “the ultimate bridge to nowhere” and said that paying higher taxes would be patriotic for wealthier Americans. “We want to take money and put it back in the pocket of middle-class people,” Biden said. Of those who would pay more, he said: “It’s time to be patriotic… time to jump in, time to be part of the deal, time to help get America out of the rut.”
Naturally, John McCain — an inveterate liar these days, it seems — distorted Biden’s remarks while addressing a rally in Cedar Rapids, Iowa, claiming the Democratic vice-presidential candidate had said “raising taxes is patriotic.”
“Raising taxes in a tough economy isn’t patriotic. It’s not a badge of honor. It’s just plain dumb,” McCain said. “The billions in tax increases that Sen. Obama is proposing would kill even more jobs during tough economic times. I’m not going to let that happen.”
McCain’s dissembling and blatant lies aside, the notion of it being a “patriotic” act for the highest earners to pay additional taxes in order to help America reduce its massive deficit or otherwise claw its way out the present “rut” and get the economy back on a more even keel is an interesting one to say the least, politically speaking. The redistribution of tax burden being proposed represents an idea that’s become something of an anathema in the U.S. (and to a lesser extent in Canada, Britain and Australia) over the last 30 years, ever since supply-side economics took hold as the prevailing dogma through four successive administrations.
Even Bill Clinton, hardly as liberal as some pretend, cut taxes for the wealthiest percentile by 2.6%. Bush is only the latest president that’s preached the gospel of the “trickle down effect” while slashing tax rates for the wealthiest. As a result, the marginal tax rates on the highest-income tax bracket now stands at 35% and the capital gains tax rate is at an all-time low of 15%. This is why the middle class, who are dependent on earned income, effectively pay taxes at a higher rate than do the wealthy — a simple fact pointed out not that long ago by Warren Buffet, one of the richest men in the world.
Doubtless, there may well be some on the right who feel even the current rates are egregious and would love nothing more than to cut them further still. Many will be conditioned to automatically militate against the changes being proposed to the tax regime and will brand it as invidious “socialism” or some such rubbish.
But it wasn’t always so. During the Eisenhower years — arguably, a conservative idyll of sorts — the highest tax rate on income over $400,000 stood at a whopping 92 percent, almost three times higher than the present top rate! Unlike the situation today where capital gains are taxed at a far lower rate than earned income, in Ike’s time, capital gains weren’t treated differently. In other words, the rate on this particular form of income has dropped over the years from 92% to 15%. The rich get richer and all that…
It should be noted that in 1955, in the middle of Ike’s presidency, the typical (median) family paid less than 20% in all taxes. By 2003, the total of all taxes paid by a typical family in the U.S. had more than doubled, to almost 40% of income. The bottom line is that in Eisenhower’s day, the rich paid a tremendous amount of taxes, the middle-class paid comparatively little taxes, and yet… somehow it all worked out. Take a look at nation’s balance sheet now and see if the same thing can be said.
So was it “patriotic” of the wealthiest to carry such a massively lopsided share of the tax burden back then? Perhaps that may not be the most apposite word to describe it, but consider Ike’s reaction when pressured by some in Congress at the time to reduce taxes on the rich. “We cannot afford to reduce taxes, reduce income, until we have in sight a program of expenditure that shows that the factors of income and outgo will be balanced,” he said. In fact, Ike did relent somewhat during his last term, lowering the top rate on earned income by a paltry 1%. Now that’s fiscal conservatism!
Still, getting people to accept the somewhat novel concept of “patriotic” taxation for the highest earners will likely prove to be a challenging proposition for Obama and Biden in the present economic climate. The first problem is that it can and will be misrepresented; indeed, McCain has already done so.
Secondly, it has to be considered that for a great many people, all they’ve heard throughout their entire working lives is the now conventional wisdom of “trickle down economics” emanating from the halls of elite think tanks like the Heritage Foundation and preached ad nausea by right-wing ideologues. According to this theory — once quite rightly described as “voodoo economics” — any rise in tax for the highest earners will have a devastating effect on the economy and would inevitably “kill jobs” as future President Sarah Palin so eloquently put it. And what proof do we have of this? Absolutely nothing, in fact. Nothing that is, but the dire predictions of the same bunch of geniuses that are the architects of the present mess — so why should anyone believe them I wonder?
Update: Well, that didn’t take long did it? As Mark Twain famously said, “A lie can travel half way around the world while the truth is putting on its shoes.”