The Tax Monster
If there was one thing that was revealed during the excruciating end-of-year fiscal cliff imbroglio, it was this: Americans are no longer buying Republicans’ carefully crafted fiction that modest tax increases on the wealthy are an automatic death sentence for the economy.
An AP/GfK poll released at the beginning of December revealed that 48% of respondents believed the Bush-era tax cuts for those earning more than $250,000 per year needed to expire, while the cuts for those making less than that needed to be retained. Added to the 13% of respondents who said the tax cuts needed to expire for everyone, the poll showed that a clear majority of Americans are no longer buying the argument that slightly higher tax rates on the wealthy (we’re talking a small increase in the top marginal rate from 35% to 39.6%, after all) would be the economy-killer the GOP consistently says they would be.
It’s a heartening development, for it shows that Americans are increasingly willing to avert their eyes from Sean Hannity’s basilisk-like stare and Grover Norquist’s bewitching bedroom eyes in order to widen their gaze to the rest of the world.
It’s also not all that surprising, because the GOP conventional wisdom on taxes was a wobbly house of cards all along.
Despite the stunning flares of stupidity you see on display during Jay Leno’s on-the-street interviews and House Science Committee members’ proclamations about anything related to science (at this rate, I fear we’re just 10 years away from legislation reclassifying witch burning as a renewable energy source eligible for subsidies and tax credits), there’s something to be said for the wisdom of the crowd.
First of all, it bears repeating (and repeating and repeating) that high top marginal tax rates in the past not only failed to sink the economy, they corresponded with unprecedented prosperity. In the ’50s, the top marginal rate was a redonkulous 91%. If today’s Republicans are correct, those rates must have led to economic ruin, quickly prompting policymakers to correct their mistake.
But that’s not what happened. The economy soared like it never had before, and those rates persisted for more than a decade. In addition, the Clinton tax increases on the wealthy preceded a decade of robust growth, while George W. Bush’s tax cuts preceded the Great Recession.
So despite what your neighborhood Tea Partier tells you, we’re not creeping toward socialism. If anything, we’ve been slowly creeping away from it. (And, anyway, it’s not socialism. Tea Partiers universally fail to grasp the meaning of the word.)
We can also look to the experience of the rest of the world. While the eurozone crisis has prompted critics to say that Europe’s social democracies are too sclerotic and economically naive to prosper, you’d be hard-pressed to blame social democracy for what’s happened over there.
Yes, Europe’s situation is a mess, but not all countries are affected equally. Among the nations whose fiscal houses are in relatively good shape are Germany and Sweden – countries with tax rates that would make your average American conservative’s eyes bleed. (It’s also telling that Sweden currently does not use the euro.)
So just as Finland proves that unionized teachers do not doom an education system, and just as the experience of the rest of the industrialized world proves that universal coverage doesn’t turn one’s health care system into an expensive mess (in fact, it does the opposite), Germany and Sweden prove that there’s nothing magical about low taxes on the wealthy.
One thing that Europe does prove, however, is that austerity can stifle an economy. Limiting the spending power of the poor and middle class in order to preserve historically low tax rates for the rich is not just unfair, it’s unwise. If this economy is going to thrive in the future, we need to take a much broader view of the world and its history. Thankfully, the American people are starting to catch on.
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