Why Raising Taxes on the Rich Is So Hard
Washington needs money. The wealthy are prospering. Much of the middle class, meanwhile, is falling behind. Normal patterns of elective politics would suggest that tax hikes on the rich are in the bag.
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That’s what has happened before. Taxes on the wealthy soared during the Great Depression. After World War II, the top marginal rate went as high as 91 percent, staying there for 14 years before beginning a gradual decline toward today’s level of 35 percent. Recent polls show that a solid majority of Americans—between 60 and 70 percent—favor higher taxes on the wealthy to help pay down the national debt and finance other priorities. There’s even a group of “patriotic millionaires” who have pleaded with Congress to raise taxes on them and their fellow 0.1 percenters.
But raising taxes, even on a small sliver of people who would barely notice the extra withholding, has landed squarely on Washington’s lengthy too-hard-to-do list. Democrats, of course, want to raise taxes for the top income bracket to the Clinton-era rate of 39.6 percent, or higher. But most Republicans are dead-set against tax hikes, even on billionaires, regardless of polls suggesting that they’re violating the will of the people. In theory, Republicans are risking payback on Election Day, since voters who feel they’re prioritizing the privileged few over the neglected masses could send them packing.
But protecting the wealthy could be a better political strategy than polls reveal. Here are four reasons why:
Many people sympathize with the wealthy. A meager paycheck doesn’t automatically make people want to wield a pitchfork or join the Occupy movement. As economist J. Bradford DeLong explains, many members of the working class have long viewed the comfortable life of the wealthy as a kind of utopian ideal. “We don’t wish to disrupt the perfect felicity of the lifestyles of the rich and famous,” he writes. In modern America, it’s generally understood that many people at the middle or even the bottom of the earning ladder—especially young people—like to imagine themselves as rich some day, so they’re naturally sympathetic toward well-heeled people who, in their fantasies, happen to be their neighbors. That doesn’t make it impossible to raise taxes on the rich, but it creates ambivalence.