The `rich people curse' in politics

November 14, 2007|By Jonah Goldberg

"The question is, should we be giving an extra $120 billion to people in the top 1 percent?"

So asked Gene Sperling, Sen. Hillary Rodham Clinton's chief economic adviser, at a recent National Press Club panel discussion. Translation: It's the government's money, and anything left over after Uncle Sam picks your pockets is a "gift."

Indeed, to hear leading Democrats talk about the "richest 1 percent" - a diverse cohort of investors, managers, entrepreneurs and, to be sure, some fat-cat heirs - one gets the impression that wealthy Americans are a natural resource, to be pumped for as much cash as we need. Further, the Democrats don't think that well will ever run dry.

This sort of thing used to be a staple of the hard left. But now this vision simply defines liberal economics. John Edwards' unending campaign for president is based on the idea that there are two Americas and everyone will be better off when un-rich America mugs rich America. According to Democrats, it's greedy to want to keep your own money, but it's "justice" to demand someone else's.

Michael Boskin, Rudolph W. Giuliani's economic adviser, said, "There is no - let me repeat - no example in the last quarter-century of a large, complex economy that has been successful with high taxes." He added: "The Western Europeans have seen their standards of living decline by 30 percent in a little more than a generation because of their high taxes." The U.S., meanwhile, has outperformed the competition over the last quarter-century.

I'm with Mr. Boskin. But I think there's a more pressing issue. What does it do to a democracy when people see government as something only other people should pay for?

The top 1 percent of wage earners already provide nearly 40 percent of federal income tax revenues. The bottom 50 percent of taxpayers contribute only about 3 percent.

Taxes are a necessary evil. But their silver lining is that they foster a sense of accountability and reciprocity between the taxpayer and the tax collector. Indeed, democracy is usually born from this relationship. Widening prosperity brings a rising middle class, which in turn demands the rule of law, incorrupt bureaucracies and political representation in exchange for its hard-earned money.

The one great exception is what development experts call the "oil curse." In countries "blessed" with oil wealth or similar resources, the relationship between the government and the governed gets distorted.

Today, our politics seem to be suffering from a "rich people curse." We treat the rich like a constantly regenerating pinata, as if they will never change their behavior no matter how many times they get whacked by taxes. And we think everyone can live well off the treats that will fall to the ground forever.

Of course, typical wage earners pay plenty of taxes, but not in ways that foster a sense of reciprocity with the government in Washington. Their biggest federal payment is the regressive payroll tax intended to fund Social Security and Medicare. Even though, as a matter of accounting, these payments are no different from other taxes, they're sold simply as retirement and health insurance programs.

Meanwhile, Democrats keep telling the bottom 95 percent of taxpayers that America's problems would be solved if only the rich people would pay "their fair share" of income taxes. Not only is this patently untrue and a siren song toward a welfare state, it amounts to covetousness as fiscal policy.

I don't know what the best tax rates are, for rich or poor. But I'm pretty sure that it's unhealthy for a democracy when the majority of citizens don't see government as a service they're reluctantly paying for but as an extortionist that cuts them in for a share of the loot.

Jonah Goldberg is a syndicated columnist. His e-mail is jonahscolumn@aol.com.

Thomas Sowell's column will return soon.

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