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Tax Hikes as Back Door Clawback

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The past couple of weeks have provided a neat illustration of Marshall’s Law – Washington is wired for Republican control. Through lots of breathless reporting we have seen story after story from DC-based outlets that glory in the interpersonal dramas and palace intrigue of the capitol. All of it has centered around the Bush tax cuts, and whether to extend all of them or just the ones for those earning less than $250,000 per year.

Much has been made of how the public favors extending them at the lower level. Meaning: tax cuts are a foregone conclusion, we just need to figure out where. In this wired-for-Republican-control environment the policy debate is about Republican priorities. A Democratic Congress and a Democratic president are haggling over how fully to implement the GOP agenda. (Substitute "legacy party versus outsider" or "individual versus corporation" for the two party dichotomy if you’d like.)

Polling is problematic, though, because it does not measure intensity of opinion. As Vanderbilt political science professor Dana Nelson wrote on pages 52-3 of her book Bad For Democracy:

Polling, like the media, is another technology that promises more neutrality than it has ever delivered. Before the advent of polling, the government discovered public sentiment through the political behavior of citizens: through the actions of citizens groups and the voices of their representatives. Polling allows government to bypass activist groups, who feel passionately about the subjects that organize them to action, drawing instead on a more "scientific" and putatively representative picture of "opinion" from individual people who are no longer required to do anything other than answer their phone when a pollster calls. The people who don’t care or know much about particular issues and who often easily form the statistical majority in any given sample end up rationalizing government inaction in response to civic agitation.

The "support" for tax cuts may be largely indifferent. After all, many lucky duckies do not pay any income tax, and for the rest a small amount of cash distributed throughout year is not terribly compelling. Fifty bucks more in taxes is a much bigger psychological burden to the wealthy than even to the poor (many of the rich are maniacally fixated on money, meaning they feel a terrible sting and insupportable vexation over even a tiny increase).

The lower and middle classes may have different expectations. Maybe they pay taxes thinking it will produce some tangible benefit. Cutting taxes might poll well, but that is a far cry from saying it is something people are energized about.

They might get fired up about taking part in the class warfare that has been waged against them for three decades. Unions have been under relentless assault ever since Ronald Reagan fired the air traffic controllers. On every issue of consequence, from the firing to trade agreements like NAFTA and WTO in the 90s, to the degradation of worker safety and protections in the 2000s, to the current inability to even bring the Employee Free Choice Act up for a vote, it has been an unbroken string of losses for unions. And as they weaken, the benefits they produce for all workers, union and non-union alike, begin to disappear.

Poverty has soared, wages have stagnated, and the fruits of the nation’s labor have gone massively disproportionately to the rich, who unsurprisingly enjoy disproportionate influence as well (via). Household income is declining as employers try to coerce workers into voluntarily leaving the middle class to join the ranks of the working poor. Officials collude with those who have put workers in a vise. Pensions, homes and nest eggs have been looted by Wall Street in history’s greatest smash and grab, yet none of the perpetrators have even been charged. Other remedies like disgorgement and clawback seem to have become quaint.

So maybe, after having been carved up for decades, citizens are not as much interested in tweaks to their own tax rates as a big hike in the rates of those who have benefited the most and contributed the least. Maybe voters are more interested in keeping libraries public, the profit motive out of incarceration, schools open and roads paved.

Americans as workers have little bargaining power. Even if they were able to negotiate better wages, the Fed would consider that inflation, the almighty bond market would howl with fury and the moneyed class would redouble efforts to reverse them.

Americans as voters have options, though. A politician who advocates, say, a 70% top marginal rate on income over $5 million per year, with proceeds going towards keeping public trusts public, repairing our infrastructure, investing in community benefits like education and the environment, and, I don’t know, Medicare for all, might just do better than poll well. Such a politician might actually lead a movement.

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