DownWithTyranny!: Plutocrats And Ponnuru

Obama never mentions it-- and seems to try peaceful coexistence with it-- but earlier presidents recognized what a tremendous danger plutocracy is to democracy. We should think about that at a time when Mitt Romney is telling TV audiences that he favors putting one of the first of the plutocratic presidents, John Adams, on Mt. Rushmore. Adams' one term followed George Washington's and preceded Thomas Jefferson's. He was pointedly skipped over when it came to Mt. Rushmore. It was Jefferson who is remembered for saying that "I hope we shall crush in its birth the aristocracy of our moneyed corporations, which dare already to challenge our government to a trial of strength and bid defiance to the laws of our country." That isn't something you would have ever heard from Adams. Decades later, in his autobiography, Teddy Roosevelt wrote that "Of all forms of tyranny the least attractive and the most vulgar is the tyranny of mere wealth, the tyranny of plutocracy." He's on Mt. Rushmore as well and this kind of thought isn't held in high regard by the plutocrats, like Romney, who dominate the Republican Party today. Roosevelt also said (in Chicago in 1912) that "We wish to control big business so as to secure among other things good wages for the wage-workers and reasonable prices for the consumers. Wherever in any business the prosperity of the businessman is obtained by lowering the wages of his workmen and charging an excessive price to the consumers we wish to interfere and stop such practices. We will not submit to that kind of prosperity any more than we will submit to prosperity obtained by swindling investors or getting unfair advantages over business rivals." Sensible... but is there a Republican today who would embrace anything like that? Or this (also from Teddy Roosevelt): "It is essential that we should wrest the control of the Government out of the hands of rich men who use it for unhealthy purposes, and should keep it out of their hands."

I admit I don't often turn to right-wing propagandist Ramesh Ponnuru for... well, for anything. But earlier today he wrote something in the National Review that willfully ignorant Republicans (i.e., Fox consumers) ought to take note of. (Yes, the study found that Fox News leads people to be even less informed than those who they don't watch any news at all.") Ponnuru actually ties to set the record straight on the Republican "freeloader myth" about 47% of Americans not paying taxes, some prime ignorance Fox has foisted on their pathetic audience-- as has the Wall Street Journal and the stumbling campaigns of Bachmann and Perry.

Rep. Paul Ryan of Wisconsin echoes this concern. “We’re coming close to a tipping point in America where we might have a net majority of takers versus makers in society and that could become very dangerous if it sets in as a permanent condition,” he said in a recent speech to the Heritage Foundation.

This point of view has even inspired a bit of agitprop. In response to left-wing activists’ claim to represent the oppressed “99 percent” of Americans, some conservatives launched a website where people could post statements from “the 53 percent” who pay income taxes. Slogan: “Those of us who pay for those of you who whine about all of that... or that... or whatever.”

The argument these conservatives are making has two components. First, it is wrong as a matter of civic morality for some people-- let alone large numbers of people-- to contribute nothing to the support of the federal government. Second, this situation is politically dangerous because it means that, for a large number of voters, big government is, or appears to be, free. These voters will therefore support the expansion and oppose the retrenchment of government, voting themselves goodies at other people’s expense.

The good news is that these fears are overblown. The 47 percent figure does not mean we are near a tipping point. Most of the people included in that figure do make financial contributions to the federal government, and there is no reason to think that nonpayment of income taxes is turning millions of Americans liberal. The bad news is that worrying too much about this number will lead conservatives down an intellectual and political dead end.

According to the Tax Policy Center, provisions of the tax code that exempt subsistence levels of income from income taxes-- the standard deduction, personal exemption, and dependent exemption-- are the reason for about half of the tax filers who owe no income tax. Another large group of filers pays no income tax because its members are elderly and benefit from such features of the code as the non-taxation of some Social Security benefits. The tax credit for children and the earned-income tax credit, an effort to boost the pay of low-income workers, wipe out income-tax liability for other taxpayers. Those credits are “refundable,” meaning that beneficiaries can get money on top of paying no income tax. Other provisions of the code account for the rest of the 47 percent: education credits, the non-taxation of welfare payments, itemized deductions, and so on.

...The Tax Foundation has calculated the percentage of filers in each state who pay income tax. The ten states with the highest number of non-payers are a strongly Republican bunch: Eight of them went for John McCain in 2008, and nine of them have Republican governors. Keith Hennessey, an economic adviser in George W. Bush’s administration, notes that the historical data suggest that the child credit [a Gingrich policy] was the main reason for the increase in the number of non-payers between 1995 and 2007. If the conservative story about falling income-tax rolls is true, then, we should expect to see middle-income parents moving left, compared with the general electorate, during that period. There is no evidence that anything of the sort has happened.

The story also relies on implausible psychological assumptions. It assumes that people who pay payroll taxes but not income taxes make a sharp distinction between the two. But what if they, or many of them, simply think that they have paid taxes? It assumes, further, that immediate circumstances matter more than long-term ones. When conservatives argue for tax cuts for high-income voters, or against tax increases for them, we often point out that some people who are “rich” today will not be in ten years, and vice versa. We argue, further, that high taxes reduce the incentive to work, save, and invest, which presupposes that people can anticipate the taxes they will pay if they gain income. But if they can anticipate future taxes, then the fact that they do not happen to pay income taxes at the moment should not matter.