Odious is how senior adviser David Axelrod described President Barack Obama's acquiescence to extending tax cuts for the rich as part of a deal struck with congressional Republicans.
Just think about that for a moment. To secure the party's support for an extension of unemployment benefits and a one-year reduction in the employee-paid portion of the payroll tax, the administration had to swallow its pride to demonstrate its disgust at the thought of letting the rich keep more of their own money.
"I respect people who are unhappy," Axelrod told Christiane Amanpour on ABC's This Week on Sunday. "We share their view on the upper-income tax cuts, on the estate tax. That was a part of the deal, odious though it may be."
Certain household chores — cleaning the toilet, for example — are odious. But being allowed to keep money you earned? What is it about tax cuts for the wealthy that so galls the Left?
I can't answer definitely because I don't share the antipathy. My hunch is that folks who abhor tax cuts for the rich see the economic pie as a fixed quantity. Your gain is my loss.
Over the last 60 years, federal government receipts have averaged 18 per cent of gross domestic product (GDP). Whether the top marginal income tax rate was 92 per cent, as it was during the 1950s, or 28 per cent, as it was for a short spell in the late 1980s, the government can't manage to snag a bigger share of the pie.
Far better to find a recipe to bake a bigger pie so that government's 18 per cent translates to more dollars.
Pie size stays same
Try as it might, the US government hasn't been able to increase its 18 per cent share of GDP despite wide variations in the top tax rate. The rich have tax lawyers to help them shield their income.
Besides, the focus on increased income inequality, with its potential to create social unrest, ignores mobility up and down the income ladder. Almost 60 per cent of taxpayers were in a different quintile in 2007 than they were in 1999, according to a report by Robert Carroll, a senior fellow at Washington's Tax Foundation. Forty per cent of households in the top quintile moved down, while 60 per cent of those in the bottom quintile moved up.
Millionaires are here today, gone tomorrow, largely the result of the variability of capital gains realisations, Carroll finds. Politicians should keep this in mind the next time they contemplate a surtax on the wealthy, the only group against which it's politically correct to discriminate.
Class warfare has never been a big seller in the US for the simple reason that most Americans aspire to being rich or achieving some degree of financial security. The door is always open. And many Americans capitalise on the opportunity and walk through it.
