The Public Overwhelmingly Wants It: Why Is Taxing the Rich So Hard?
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When even the New York Times, the supposed bleeding heart of the liberal media, is asking whether it’s more “ perilous politically” to accept tax increases for 3 percent of households or benefit cuts for everyone, you’d assume that even Americans who aren’t rich are are opposed to raising taxes on those who are. But you’d be wrong: nearly three-quarters of Americans support raising taxes on the wealthy. So why is raising taxes on the wealthy so hard—or why do we think it is?
The obvious answer is that rich people have political clout—but can it really be so simple? A growing mound of evidence suggests that while wealthy people’s preferences may not be the only factor in political decision-making, it’s a worrisomely important one. In a recent study, Princeton political scientist Larry Bartels found that senators outright ignored the views of their least advantaged constituents while catering to the preferences of the wealthy. Princeton’s Martin Gilens has also found that policy changes reflect the preferences of the most affluent, while the preferences of poor and middle-income Americans have almost no bearing.
Politicial scientists Lawrence Jacobs and Benjamin Page have found that the preferences of foreign policymakers correspond more to the preferences of executives of multinational companies than to the general public. Page and Jeffrey Winters estimate that the top 10 percent of income earners hold about 90 percent of materially based political power, and that “each member of the top 1 percent averaged more than 100 times the power of a member of the bottom 90 percent; about 200 times if the index is calculated in terms of the more politically relevant non-home wealth.” These numbers are staggering, and should be seriously troubling to anyone who thinks political equality worth defending. Indeed, by Page and Winter’s definition of oligarchy as “the extreme political inequalities that necessarily accompany extreme material inequalities,” it’s pretty hard to argue that the United States isn’t an oligarchic society.
The simple fact of the matter is that the people who can afford to fund and engage in Beltway politics, from idea-generating to legislation-drafting, are disproportionately wealthy, so it’s difficult to suss out just how much of politicians’ deference to the preferences of the wealthy is responsiveness to the wealthy themselves as opposed to the general alignment of rich people’s interests with those of influential elites, organized special interest groups, business lobbies, and those of policymakers themselves.
Because of course, plenty of politicians are themselves wealthy—the median net worth of members of Congress is just under a million dollars. Being wealthy doesn’t necessarily mean you’re a shill for lower taxes—indeed, John Kerry and Jay Rockefeller, two of the richest senators, have advocated more progressive tax rates—but it certainly means that most representatives have a different perspective on economic matters than the average American. Indeed, the 10 richest members of Congress—supporters of progressive taxation or no— all voted to extend the Bush tax cuts.
Of course, it’s no secret that as political campaigns have grown increasingly more expensive, campaign contributions have grown increasingly more important: the 2010 midterms cost $4 billion, and President Obama is already planning to spend a billion dollars on his bid for reelection. Meanwhile, citizens in the top income quarter provide nearly three-quarters of campaign contributions, while those in the lowest quintile account for just 2 percent. But as Bartels notes, campaign contributions don’t explain the whole story.
If anything, we probably understate the political influence of the rich. In part, that’s because we can’t quite comprehend the magnitude of economic inequality and the extent to which political power is correlated with it. The real numbers—like that the wealthiest 300,000 Americans received as much income as the bottom 150 million—sound too crazy to be true. As a result, proposals to raise taxes on the wealthy are so often dismissed as wild-eyed populist rhetoric—“soaking the rich”—rather than legitimate, reasonable policy prescriptions.