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Soaking you and me

One of the themes going around Left Blogovia these days is a sort of mockery of the people who are making more than $250,000 a year, but who don’t think of themselves as rich—and view the prospect of the tax hike that was enacted under Our Previous President and the legislature under the Other Party with a sort of anxiety normally reserved for the middle third of monster movies, after the first disappearances and deaths but before we have whittled our cast down to the named characters. This is part of Blogovia’s push (quite reasonable push, I should add) to have our current legislature force a vote on cutting taxes on only the first $250,000 of income, and allowing the aforementioned tax hike to sunset.

Three talking points, by the way, for those that don’t follow these things: (A) yes, these tax hikes were legislated under Our Previous President (and his secretive cabal of crooks and incompetents), (2) under the new tax cuts that My Party is pushing, everybody who pays taxes will get a tax cut, and (iii) those who make more than $250,000 a year will have their taxes raised from what they were last year under Our Only President’s plan, but will also have their taxes cut, because of the way brackets work. The upshot will be that the break-even point will be something like $270,000—but I’m making that up, and I’m sure there are calculators on-line to get a real number. But the point is that earlier legislation set up these tax hikes, and current legislation is poised to cut taxes for everybody who pays income tax from where that legislation had it, while a small number of people will see their tax share rise from what it was last year.

The discussion point is about those people. Most of us in our party call them rich people; not everybody agrees with that. Particularly, it seems that many if not most people who make between $250,000 and $500,000 a year don’t consider themselves rich, and feel that a soak-the-rich policy will mistakenly soak them. Left Blogovia does want to soak those people, probably feels that the marginal tax on that money should be closer to 50% than 35%, and thinks that anyone who is making over a quarter of a million dollars a year and is complaining should be mocked with all the viciousness and snark that the Blogosphere can spare.

The main target seems to be a fellow named Todd Henderson, who is guilty of writing a remarkably smug blog post (reposted on Brad DeLong’s site after he took the post down, presumably tired of being vilified) in which he claims that he is not the super-rich. He also made the mistake of misspelling Brad DeLong’s name in a later post. Not really wise, although of course the sort of eror Your Humble Blogger makes all the time. Mr. DeLong writes that Mr. Henderson seems to feel that he ought to be able to pay off student loans, contribute to retirement savings vehicles, build equity, drive new cars, live in a big expensive house, send his children to private school, and still have plenty of cash at the end of the month. I think this is the really important point. Other people (including Mr. DeLong himself and John Scalzi are focused on the interesting issue of why Mr. Henderson and many like him do not feel rich, but for understanding what is going on, I think that quote covers it.

Here it is: If I have a big house, and my kids go to private schools, and I have retirement savings, and I have a new car, and I have someone come in to clean the house every now and then, and I pay somebody to cut the grass every now and then, and if I have a nanny for the kids, and I have a vacation every year (or two), and go out to eat or to concerts or to ball games, then I am a rich man, in political terms. We are not mistakenly targeting people like that with our soak-the-rich policies, we are deliberately targeting people like that. Because they can towel themselves off with thousand-dollar bills, if they are soaked too much.

In point of fact, YHB and my Best Reader own a smallish house in a goodish neighborhood with a biggish mortgage, mow our own grass but were able to pay someone to powerwash the vinyl siding, go out to eat a couple of times a month, go to concerts or shows three or four times a year, have a vacation twice a year, eat like princes, have decent health insurance (including dental and prescriptions), save a very small amount toward retirement, have a car that is less than five years old (barely), we are (still) paying off our student loans—and we do all that on a household income less than a fifth of Mr. Henderson’s. Depending on how you count our income, as we do get some assistance from family and so on, but still.

And we are rich. I mean, we’re not rich, but we’re rich enough, and we probably aren’t taxed enough to pay for all the things I want my federal, state and local governments to provide. On the other hand, I would have been happy not to have, you know, invaded Iraq. So there’s that. And, frankly, I’m not absolutely convinced that the proposal is the better policy. There’s an argument that we shouldn’t let taxes increase for anyone while we’re still slowly digging ourselves out of the recession. And another that we shouldn’t cut taxes for anyone while we’re still digging ourselves a bigger deficit every day. But if the argument is that we shouldn’t raise taxes on people like me, because I’m so nice, well, the problem with that argument is that it’s crap.

And here’s the thing: we are going to run the government on the backs of the wealthy because that’s where the money is. It’s why we swim in the pool and not in the puddle on the deck. And if you are in the top half of the richest country in the world, then you are rich, like I am. And if you are in the top quarter, then yes, we are looking at you to shoulder more of the burden. And if you are in the top tenth, then our soak-the-rich policies are aimed right between your eyes. And if you are in the top twentieth, then, yes, even if it really will make your life worse, and maybe even make life worse for your lawn guy, we want to hike your taxes.

Did you think—did we all think—that we were going to get ourselves out of the recession and balance the budget without hurting anyone?

Tolerabimus quod tolerare debemus,


But then you'll just force us to kill all the baby animals in the zoo.

It's the old disgusting argument that if you cut anything from my total budget, and I have line-item control, I'll cut the item that will hurt you most or that you care about most. We saw the zoo animals threatened in Massachusetts last year, and Brad Henderson is doing the same. He threatens to cut the house cleaning and lawn care rather than the retirement savings, even though savings is actually where he'll cut back.

His actual numbers are revealing if you can wrap your head around the numbers. He currently pays $100,000 in federal and state taxes, and he's not complaining about that. He's saying that if you change his tax burden from $100,000 to $103,000, our economy will collapse and his life will be miserable. Out of his $15,000 monthly after-tax income, he spends 2% on house cleaning and lawn care, and he thinks that's a major economic impact that we can't afford to lose. There's a reason it's called trickle-down economics and not waterfall economics.

At least it's a change from the pitiful small business owner story, which depends on an audience unable to differentiate between gross income and business profit. I'd be dubious about a plan to raise taxes on small businesses that have over $250,000 in annual sales. But if the owner is taking home over $250,000 after you subtract all the business expenses, that's a whole different world. I wouldn't mind living in that world, and I wouldn't mind paying a bit more in taxes if I did.

The counter-threat to the rich who pretend to hold baby zoo animals hostage I think is this: how much is a stable world financial system worth to you? Because that's what this tax increase is doing, by (1) by sustaining confidence that the U.S. government is solvent and can honor its debts, and (B) helping the U.S. government to have the financial resources it needs to keep the U.S. economy stable, which in turn sustains confidence that the U.S. government is solvent and can honor its debts. The rich benefit disproportionately from a stable financial system, which enables them to practice regulated lending of money at interest, so when the system needs propping up (because it has been damaged by short-sighted greedheads who have gotten their hands on the levers of financial power), they should be the ones who pay. What happens to the Hendersons' lifestyle if the dollar suffers a currency collapse? I'd hate to see that happen to such nice people.

I kinda figure that the small-business owner who is taking home $250K in taxable income is doing something very wrong and needs a better accountant. Or, I suppose, is really very rich indeed.

The problem, Chris, with your threat is that it appears that there are many people who feel that universal private health insurance in the US is a danger to the world financial system, and that regulating derivatives is a danger to the world financial system, and that fixing the damn bridges and keeping libraries open is a danger to the world financial system, but that invading Iran would not be a danger to the world financial system, and a millionaire surtax of 40% would certainly blow up the world financial system.

We are not making this up. Neither are we making this up.


FWIW, whether you call it trickle down or waterfall, it's still fucking bullshit (pardon or not my French, as you like) because the rich are paying their lawn guy and their own personal savings account before they're starting a new goddamn company, anyway. Except for the few serial company starters, most capitalists stick to one company at a time, and the notion that a tax break is going to allow these fuckers to start another goddamn company is bullshit. Not to put too fine a point on it.

And venture capitalists notwithstanding.


The effectiveness of the threat does not depend upon whether others have made similar threats (and in this case, the similar threats have been made by selfish greedhead plutocrats and their political lackeys to distract attention from the real issues and so are entirely empty). The effectiveness of the threat lies in whether the one who makes it is credible. Given the present state of the global financial system, a worldwide crash is a real danger, if imprudent policy of the kind pursued relentlessly by the Republican Party during the term of Our Former President were continued. Given this reality, if Our Current President were willing to play Chicken with the Plutocrats over economic policy and tax policy, he would increase his leverage. So far, the Plutocrats' goal has been to make everyone else pay for their own extravagance, and so far they have entirely succeeded. I don't see why making their acceptance of higher taxes the price of fiscal sanity would be a meaningless threat, if the President were willing to stand behind it. As you have said, that's where the money is--all the things that deficit peacocks are strutting about are small change. If the United States is serious about the budget deficit, there are three choices--raise taxes on the wealthy significantly, make deep cuts in military spending, or slash Social Security, Medicare, and Medicaid. The plutocrats are maneuvering for Option Three, and I think it's important enough to stop them to go to the mat and be willing to topple the world financial system rather than letting the plutocrats have their way with the safety net protections for the elderly and the poor. If the remaining social safety net is shredded, we've lost the main securities that justify preventing a crash in the first place, and in a crash, the plutocrats get their share of misery, too.

As a follow-up--I suppose the issue is many of the rich are never going to accept that they can and should pay a higher percentage of their earnings in taxes, so it's futile to try to come up with arguments to make them accept it, or to make threats merely for persuasive effect. Sound political planning entails that we anticipate that a meaningful portion (the greedy, selfish portion) of the rich are always going to use the disproportionate political influence that their wealth provides them to attempt to avoid paying taxes at the rate needed for a sound financial system and a sound economy. We _should_ argue with the greedy rich and their political lackeys, but with the aim not of persuading them (one's opponent in a debate is seldom persuaded) but of persuading a solid majority of the other 98% that raising taxes on the wealthy is a sound national policy, and a fair one, too.

Then we just have to find people we can trust to vote for and implement the policy and elect them to office . . .

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