Class Warfare: As American as Apple Pie
At a time when the Buffet Rule—the idea that millionaires ought to be paying an effective income tax rate of 30% or so—has been blocked by Senate Republicans (minus Susan Collins, but plus David Pryor) as an outrageous, demagogic excercise in class warfare, it’s nice to recall now and then that progressive taxation is hardly an un-American concept. Annie Lowrey’s profile of two young economists and their growing influence on the inequality debate includes some valuable reminders:
Emmanuel Saez and Thomas Piketty have spent the last decade tracking the incomes of the poor, the middle class and the rich in countries across the world. More than anything else, their work shows that the top earners in the United States have taken a bigger and bigger share of overall income over the last three decades, with inequality nearly as acute as it was before the Great Depression….
Both admire, even adore, the United States, they say, for its entrepreneurial drive, innovative spirit and, not least, its academic excellence: the two met while re-searchers in Cambridge, Mass. But both also express bewilderment over the current conversation about whether the wealthy, who have taken most of America’s income gains over the last 30 years, should be paying higher taxes.
“The United States is getting accustomed to a completely crazy level of inequality,” Mr. Piketty said, with a degree of wonder. “People say that reducing inequality is radical. I think that tolerating the level of inequality the United States tolerates is radical.”
Ah, but Saez and Piketty are French! Surely they just don’t understand American exceptionalism! If so, it’s not because they haven’t thought about it:
Mr. Piketty and Mr. Saez argue that history is on their side: Many countries have higher tax rates — and the United States has had higher tax rates — without stifling growth or encouraging the concentration of income in the hands of the very rich.
“In a way, the United States is becoming like Old Europe, which is very strange in historical perspective,” Mr. Piketty said. “The United States used to be very egalitarian, not just in spirit but in actuality. Inequality of wealth and income used to be much larger in France. And very high taxes on the very rich — that was invented in the United States,” he said.
Class Warfare: As American as apple pie.
This or that level of marginal taxation may or may not be justifiable on grounds of fiscal policy or economics. But the idea that higher taxes on the wealth is somehowun-American is just plain wrong.