Now that President Bush has a fight on his hands over his proposed tax and budget program, the usual suspects are insisting that anyone who challenges these plans is promoting class warfare. Defenders of progressive taxation stand accused of resenting the rich, who presumably achieved their wealth through good, old-fashioned hard work.
Moreover, the entrepreneurial class generates the jobs for the rest of us. So why kill the goose that lays the golden eggs, even if the goose sometimes seems overfat?
In addition, tax-the-rich is said to be bad politics. Conservative essayist David Brooks elegantly laid out the argument in last Sunday's New York Times (though I am suspicious of conservatives giving liberals tactical advice.) First, Brooks wrote, most people "vote their aspirations" rather than their current economic self interest. The fellow making $30,000 a year hopes that some day he will be a millionaire, too. He doesn't like the idea of paying taxes on his imaginary millions. Further, he wrote, most Americans admire the rich. We are not a nation that sees the world in terms of class conflict. This is all broadly true, and also entirely misleading. It begs several questions.
For starters, a federal tax program is about necessary choices. If we as a nation decide to cut estate taxes on very rich (dead) people, a policy decision that President Bush rammed through Congress in 2001, that choice removes revenues that we might rather spend on things that ordinary living people need.
You needn't resent wealthy people to believe that those revenues are needed for everything from health coverage to schools. Now, Bush is proposing to do it all over again -- a tax cut of nearly $700 billion, tilted toward the very wealthiest, at a time when state and local governments are having to shorten school years, reduce spending for police and raise their own taxes in a recession.
It's a sweet trade. The most affluent of Americans get tax cuts averaging several thousand dollars, while ordinary working Americans will likely pay more in sales and property taxes levied by states. Am I lapsing into hate-the-rich rhetoric? I don't think so. I'm posing choices.
There is another buried question here. How much private wealth is enough -- enough to reward hard work, and enough to generate all those jobs?
Not all that long ago, during the 20-year post World War II boom, top personal and corporate tax rates were much higher than they are today; ordinary working people had a much lower tax load; and the economy generated more jobs and more growth than it is doing in this decade.
Two decades ago, the average corporate chief executive earned about 50 times the pay of the average worker. Today, the figure has swelled to over 500 times. Do we really think that the typical chief executive has become 10 times more productive -- or only that the constraints on insider enrichment have eroded? Some CEOs make annual salaries, bonuses and stock compensation in the hundreds of millions. Aren't there plenty of talented executives who'd gladly do the job for just $10 million?
There also happens to be a war on -- an ongoing war against terrorism and in all likelihood a shooting war later this winter. In every previous war, the ethic has been shared sacrifice. In this war, the ethic is that insiders with political connections take everything that isn't nailed down.
Brooks is right about one thing: The politics and the rhetoric of fair taxation and common endeavor are very tricky. This is an individualist country -- and also one capable of great common enterprise. We can all want to be rich, yet still feel an obligation to the common.
Noblesse oblige -- the idea that the well-off have an obligation to society -- isn't quite dead. Bill Gates Sr. has organized a group called Responsible Wealth to lobby for keeping the estate tax. The more than 1,100 supporters include billionaires George Soros and Ted Turner.
Even those fabulously successful entrepreneurs lobbying for more tax cuts and feeling virtuously prosperous benefited from the common investments of those who came before. Many were educated at public schools or state universities. Most built on the stock of common knowledge and publicly financed research. They enjoyed the security of a free country defended by common investments in defense.
It is common investments that create opportunities, keep Americans healthy and strong. They have to be financed somehow, and why not levy taxes based on the ability to pay? Shame on those who want to pull up the ladder in the name of rewarding opportunity.
Robert Kuttner is co-editor of the Prospect.
