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The New Aristocracy (Let Them Drive Bentleys!)

Since the Reagan Administration, it has been an article of faith among the Republican Party faithful that the best way to grow and help the economy is to cut taxes on the wealthy, and to otherwise make rich people’s lives more comfortable. As a result, the wealthy will spend more money and the wealth will “trickle down” to the middle class and poor.

Yet history shows us that the idea that our economy cannot thrive when the rich are highly taxed is patently false – the postwar boom years of 1946 – 1963 featured the wealthiest Americans paying up to 91 – 92% of their income to the IRS. Until 1982, the last time the wealthiest Americans paid less than a 63% rate was in 1931, when it was 25%.  The masters of the universe, undertaxed and unfettered, love plunging the world into massive depression spirals; we learn little from history. 

Reaganomics was not the panacea it’s remembered as.  The Reagan Administration dropped the top marginal tax rate from 70% to 50% to 38.5%, but as a result income inequality has skyrocketed, and median household income has risen by a paltry 30%, while the richest Americans’ income has tripled or quadrupled in the same time frame. 

When your nation is built upon a mythology of equality not only at birth but in opportunity, this sort of thing – a system that is designed to comfort the comfortable and stymie regular people – tends to cause widespread anger and disgust.  We cut taxes on the people best able to afford them and propose the privatization, cuts, or elimination to social programs like Medicaid, Medicare, Social Security, and other portions of our hodgepodge of a safety net. 

When you complain about how the system is now bought and paid for by the superwealthy – how the very rich have bought a political party, (if not the entire government), aided and abetted by an almost complete absence of campaign finance limitations, right wing America dismisses you as a Soviet communist engaging in Marxist class warfare. 

But class warfare is patriotic; class warfare is the very cornerstone upon which this country was founded. Our late 18th century revolt against Great Britain was a bourgeois revolution, which overthrew an oppressive colonial aristocratic superpower and established a constitutional representative republic based not on birthright and divine providence, but on law. Gentleman farmers, educated professionals, merchants, and traders united to create the first nation forged out of the ideas of the Enlightenment

Yet now, we are told that helping the bourgeoisie is communism, while a new aristocracy is being created and we are repeatedly told that assisting the aristocracy will help the common man. The facts, however, don’t bear that out. Why that isn’t part of the political discussion has a lot to do with misinformation and propaganda. The New Aristocracy and their paid-for media and politicians have in the past two generations mastered how to frame the argument – help us, help yourselves! 

The perfect crystallization of this was revealed this weekend. Republican / New Aristocrat Presidential candidate Mitt Romney attended fundraisers this past weekend in the Hamptons – the uberglitzy, exclusive, and home of ridiculously conspicuous overconsumption – the east coast playground of the New Aristocracy. The Los Angeles and New York Times interviewed attendees, and these quotes ought to be that new class’ “Let them Eat Cake” moment. 

A New York City donor a few cars back, who also would not give her name, said Romney needed to do a better job connecting. “I don’t think the common person is getting it,” she said from the passenger seat of a Range Rover stamped with East Hampton beach permits. “Nobody understands why Obama is hurting them.

“We’ve got the message,” she added. “But my college kid, the baby sitters, the nails ladies — everybody who’s got the right to vote — they don’t understand what’s going on. I just think if you’re lower income — one, you’re not as educated, two, they don’t understand how it works, they don’t understand how the systems work, they don’t understand the impact.”

and 

A few cars back, Ted Conklin, the owner of the American Hotel in Sag Habor, N.Y., long a favorite of the well-off and well-known in the Hamptons, could barely contain his displeasure with Mr. Obama. “He is a socialist. His idea is find a problem that doesn’t exist and get government to intervene,” Mr. Conklin said from inside a gold-colored Mercedes as his wife, Carol Simmons, nodded in agreement.

Ms. Simmons paused to highlight what she said was her husband’s generous spirit: “Tell them who’s on your yacht this weekend! Tell him!”

Over Mr. Conklin’s objections, Ms. Simmons disclosed that a major executive from Miramax, the movie company, was on the 75-foot yacht, because, she said, there were no rooms left at the hotel.

Oh, the common person is “getting it”. 

I’d very much like it if these people paid a bit more in taxes if it means that regular people get improved access to health care, shoring up Social Security, strengthening of Medicaid and expansion of Medicare, and to help pay for our many overseas military adventures – disproportionately fought by the children of the bourgeoisie and proletariat – and ultimately to help reduce the deficit. 

Fiscal responsibility begins when you ease and help lives that are tough. There’s a class war being waged, and it’s being aggressively promoted by the modern, New World version of titular nobility. 

 


  • BlackRockLifer

    The concentration of our nations wealth in the hands a of greedy few is by far the greatest threat to our democracy. No country can thrive when so many are denied the opportunity to earn a decent living and enter the middle class.  We can not have a strong and civil society with a majority struggling to make ends meet, we can not make good citizens when they do not have a piece of the pie. We have allowed  our government to be nothing more than an enabler for the enabled,  both parties seem enamored with the wealthy and fail in their responsibility to advocate for the rest of us.
    We need a change in values, we need to reject the crass materialism and culture of greed, too many Americans seem to admire and want to emulate that lifestyle. Until that changes we can expect more of the same.

  • Colin Eager

    The idea that trickle down economics dates to 1980 is a bit too neat.  You can trace it all the way back to the 1940s, when New Deal liberals and organized labor decided against recognizing that capitalism has inherent flaws that produce poverty, and instead committed themselves to a vision of prosperity and justice that depended on an endlessly expanding economy.  Rather than redistribute the wealth that existed, they wanted to increase the total wealth with the hope that enough of it would trickle down to allow a decent life for everyone.  Reagan invented the rhetoric and sharpened the policies, but the basic idea predates him.

  • Carey1518

    Alan you need to dig a little deeper into your “facts” on tax rates.  The reality is that back in the days of those massive tax numbers, there were massive tax shelters, and a good CPA could get you down to paying nothing regardless of your income level.  The difference in the rate change in the later years, and reduction in tax rates, but bigger returns on the overall tax collected by the US government was in the form of closing most of those tax rates.
    It makes for good shock value, but the reality is that actual tax revenues have gone up and frankly the richer portion of the population is paying more as an increase than the middle class.
    There are a lot of good resources out there that dives into the tax data and it is mostly nonpartisan, including the IRS site that shows statistical data.
    I am not suggesting there are problems with the tax code, I personally think the LTC gains is far too low for non-earned income 15-20% and that is where a lot of your high net-worth individuals will earn a big portion of their income, but the code does apply to everyone and those with greater amounts of assets are paying the lion’s share of the taxes.
     

    • BlackRockLifer

      Those with greater amounts of assets are not taxed at near the rate of wage earners.  The top 10%  hold 80% of our nations wealth yet pay just 71% of Federal taxes.  This is not in any way progressive or fair. The average worker is nickled and dimed by regressive sales taxes,  FICA, Medicare, and other charges and fees.  All said and done it is the lower middle and middle class that are truly burdened. Disposable income is the real issue and is the best indicator of fairness, presently there is a great inequity that continues to undermine our economy and our society.

      • Carey1518

        Everyone is taxed the same, that is how it works, it just depends where you land in the rates.  You apply the same rates to the same income, sales tax, etc. One could also take your simple argument and argue that taxing more dispossable income will in fact undermine the economny and society.  Additonally, who is the average worker getting nickled and dimed?  I am an average worker and I feel like I am more or less getting back for what I pay into the system, especially with kids in public school, I am probably getting back more than I pay in at this point.

        Finally, if there is an “average worker” the current tax rate, all federal not just income but combined federal taxes, on the middle class is the lowest it has been for the past 60 years or so, so I am not sure what you are talking about in terms of fairness? As far as Medicare and FICA etc, those are things you will get back and then some when the time comes.  What is left that takes a bite is really fed income tax and your property tax, and property tax is probably the easiest one to control because you need only decide where you want to live and how much you want to live in.  Too much, go smaller.  But in terms of “fairness” property tax is as fair as it gets, value your home and pay a mil-rate of x, that is applied to all the homes in the same town the same way, simple and completely fair.

        Also, assuming your 10% paying 71% is correct, that doesn’t strike me all that bad, because you need to add in corporate taxes and what is left being paid by the remaining 90% of American tax payers?  Seems pretty reasonable to me. 

        Look at the following:
         
                       1-  The top 1 percent of taxpayers paid 33.7 percent of all individual           income taxes in 2002. This group of taxpayers has paid more than 30 percent of individual income taxes since 1995. Moreover, since 1990 this group’s tax share has grown faster than their income share.
                          2-  Taxpayers who rank in the top 50 percent of taxpayers by income pay virtually all individual income taxes. In all years since 1990, taxpayers in this group have paid over 94 percent of all individual income taxes. In 2000, 2001, and 2002, this group paid over 96 percent of the total

        My math shows that if the above is correct than 50% (and these would be lower wage earners or obviously no wage earners) are paying  no taxes, yet you go on and on about the tax code not being fair.

        I will repeat that there are issues that need to be addressed, ie LTCG rates, but don’t say it is unfair.  It seems to be quite fair following your average guy theory.

      • BlackRockLifer

        Your missing the point, it is about disposable income, how much is left after taxes and necessities.  The top 10% pay 71% of Federal taxes because they have 80% of our nations wealth, not because our system is fair or progressive.  The bottom 40% share just 1% of our nations wealth, not much ability to extract anything from these folks. That leaves 19% for the rest of us (50%) of taxpayers. As for corporate tax, this is only about 9% of Federal receipts.
        We can agree on property tax, this is one area of basic fairness. Also we can agree on capital gains, need to raise these rates to the same as earned income.
        Finally, the “50% don’t pay taxes” is a simplistic right wing talking point. Only 14% of Americans do not pay either income or payroll taxes, they are made up largely of the elderly and disabled.

      • Carey1518

        I’m not missing any point, the reality is that th middle is paying less in taxes than they have in 60 years. This is not a right wing lie, this is argreed upon fact to across the board.  So, your argument is flawed, there is more disposable income for the 19% you refer to above, and frankly you see it in the Walmart effect, how much junk fills every middle class garage, basement and backyard?

        The fact is everyone thinks they pay too much in taxes than everyone below them and the people above them pay far too litte.
        The 50% statistic is on “income” tax, that is not a fake number either, it pans out in most reviews of federal income tax.  If you want to talk about FICA etc, that is different and as mentioned above you will get that back and likely much more when you begin to draw on those entitlements.

        I guess I don’t understand why you keep repeating this “holds 80% of our wealth stat”  do you want there to be a fed personal property tax?  Some states use to do this, they would come into your house and walk around giving value to the stuff you owned then put a tax on it similar to the property tax.  Everyone hated it, it is horribly invasive and frankly rather impossible in this day and age where your things can be anywhere. 

        Again if they have it, where do you see the tax issue?  If they make money off of existing wealth, then they already have to pay a tax on that income, either income or captial gain.  What do you want to have the tax code tax?

      • dbienko

        shorter Carey. They have too much stuff, then they don’t pay enough. Those pesky tax shelters they closed, like deducting interest on credit cards and auto loans. That hurt those rich ones alright.

      • Carey1518

        No, like allowing loss from passive investments or hobby careers to be written off against income from your primary profession.  ie Dr.s and depreciating buildings is the best example of those days. the current write offs are peanuts compared to what you use to be able to work out.
        The new code is as favorable to the middle class as it is to the wealthy, that is a fact. 
        There is no statement here or anywhere as to what exactly you or the other guy wants to see in the tax code, and shorter is not the answer as that does nothing.
        The majority of the tax code is simply trying to determine what is “income” and most of that goes to inputs before you have a final output product.
        Labor, material, shipping, etc, this is the code for the most part.  The part that tells you what to pay is about 6 pages long.
        I asked for more meat and less snark, but I should have known to expect better from you guys.