Grab Your Pitchforks, it’s Class Warfare!…(and has been for 30 years.)

By: - September 17, 2007 11:34 am

Man the ramparts!  Those divisive Democratic populists like John Edwards are coming.  And they want your money.  It’s class warfare.   It’s tyranny, sirs…tyranny of the majority these radical extremists want.

An accusation of “class warfare” is the usual hysterical right-wing response to so-called economic populism.  And what is economic populism, you may ask?  Nothing more than analyzing how certain policies affect different income groups.  In other words…statistical analysis.

The conservatives get particularly fussy when someone analyzes how their supply-side tax policies affect different economic groups.  What you find, of course, is that going back to the Reagan tax cuts (and especially since George W. Bush’s tax policies) there has been a deliberate redistribution of wealth towards the top.  This is both an undeniable and an inconvenient truth for Republicans.

Bear with me while I quote extensively from Jonathan Chait’s new book:  The Big Con: The True Story of How Washington Got Hoodwinked and Hijacked by Crackpot Economics.  I particularly like Chait’s elegantly simple analogy comparing the federal tax code to a layer cake.

Bush’s tax cuts have not merely pared down tax rates in a proportional way up and down the income ladder.  They have sharply cut the proportion of taxes paid by those at the top and therefore raised the proportion paid by those elsewhere.  There is nothing indiscriminate about it.  Let me briefly explain why.  You can look at the federal tax code as a kind of layer cake.  At the bottom is the payroll tax, used to finance Social Security and Medicare.  This tax is a flat rate and covers wage income only up to around $100,000 a year, with all income above that level exempt.  This is the most regressive tax imposed by Washington.  Above the payroll tax sits the income tax.  The income tax is more progressive, exempting low-wage workers and making high earners pay a higher rate.  On top of that are taxes on capital gains and dividends.  These taxes are even more concentrated at the top, since they affect only those who receive lots of income from accumulated wealth.  The most progressive tax of all is the estate tax, the bulk of which is paid by a tiny handful of fabulously wealthy heirs.

It must be noted here that nowhere is there a single example of anyone losing “the family farm” in order to pay the estate tax.  Chait continues:

Compare the layer cake to President Bush’s policies.  The tax at the bottom, the payroll tax, he has not touched at all.  The tax just above that, the income tax, he sliced around a tenth.  The taxes just above that, on capital gains and dividends, he cut in half.  And the tax at the very top, the estate tax, he abolished altogether (though he has not mustered enough votes to abolish it permanently).  Bush’s opposition to any given tax is exactly proportional to the degree that it affects the rich.  And in this he is merely keeping faith with the conservative and Republican thought over the last few decades, which has agitated fiercely against the most progressive taxes and left alone the most regressive ones.

All of which explains why we are seeing a greater concentration of wealth at the top since we have seen since the gilded age.  One of my favorite statistics is from a 2003 book by David Cay Johnston: Perfectly Legal.  He notes that the richest 28,000 men, women, and children in 2000 had as much income as the poorest 96 million Americans (about 5% each).  That is, the super rich would occupy one third of the seats at Yankee stadium while those at the bottom are the equivalent of every American who lives west of Iowa…plus everyone in Iowa (someone let the caucus voters know).  The income gains are flowing straight to the very top, while four out of five Americans made less or were no better from 1970-2000.   Recent reports confirm this trend continued from 2000-2007.

Bottom line:  we have 30 years of data to show that supply side trickle-down economics is fantasy, and in reality looks like this picture.  Or, as Paul Krugman says:

It turns out that when you cut taxes on the rich, the rich pay less taxes; when you raise taxes on the rich, they pay more taxes—end of story.

The point here is not to get into a game of statistical “gotcha.”  One need only accept the overwhelming evidence that the super rich are concentrating wealth at the top while the rest of us are standing still, at best.  So, the next time a conservative warns that playing the “class warfare” card doesn’t work, remind them that it appears to have worked just fine for the wealthy.  Republicans have been waging and winning class warfare for 30 years.  Maybe it’s time to grab your pitchfork and torch,  take them into the voting booth, and tell conservatives you’re mad as hell and you’re not going to take it anymore.

Addendum:  Rob Schofield covered similar ground both first and better than I.  Rob includes a local perspective in his essay The Hijacking of “Conservatism.”

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