Besieged and beleaguered on $200,000 a year; the rich feel too poor to pay more taxes. They're wrong, and liberals should let them know why

Washington Monthly, June, 1990 by Charles Peters

by Charles Peters

Hardly a day goes by without a newspaper or magazine article proclaiming that the liberals or the Democrats are in disarray-leaderless, programless, and afraid to take a stand on anything. But I am convinced that there is a way out of the mess. It is a path that goes through some surprising areas usually thought to have little to do with politics and public policy.

The first step is overcoming the fear of taking a stand. It comes from another fear-the one that says avoid ideas that might be unpopular because they might lose elections. But if we advocate what is popular, we are sure to be wrong. The country itself is wrong, still mired in materialism and selfishness. The Me Decade is now in its 21st year. The ostentatious greed of Donald Trump may be on the way out, but there is little sign that social responsibility is on the way in.

The most successful films, even the most charming ones, such as "Big" and "Rainman," are about personal authenticity and relationships among lovers, friends, and family. Few are about our duty to a larger community. Few have characters like George Bailey in "It's a Wonderful Life" or Atticus Finch in "To Kill a Mockingbird."

Sixty percent of our youth say they would be unwilling to volunteer for a year in an organization like the Peace Corps or VISTA. Only 12 percent think good citizenship requires any kind of political activity, even voting. James Fallows reported in a recent issue of The New York Review that this spring 36,000 graduating students applied for jobs at just one mergers and acquisitions house.

These people don't need a leader who agrees with them. They need a leader who says they are wrong and shows them a better way.

A crucial way the country has gone wrong is that the natural aversion to taxes, especially to those on income, has become an obsession. The result is that even though the top tax rate was 38 percent just three years ago, the highest increase being considered today is from 28 to 33 percent, and even that modest proposal seems unlikely to be adopted by the president and the Congress.

Democrats are abandoning the great liberal goal of transferring enough wealth from the rich to the poor to give everyone a fair chance in life. The New Republic's Mickey Kaus says: "Redistribution. Forget it." The New York Times describes the founders of a new liberal magazine as believing that a major reason for the decline of liberalism is "an overemphasis on the concept of redistribution of wealth." And E. J. Dionne Jr. of The Washington Post says, "The half-century old concept that government has a responsibility to narrow the gap between rich and poor no longer guides the design of American economic policy."

Dionne goes on to point out that, even when Daniel Patrick Moynihan proposes reducing the Social Security burden on workers, he does not advocate taxing the rich at a higher rate instead.

I do. It is here that I think the battle line must be drawn. Instead of continuing to surrender to the greedy, we must lead a resurgence of the generous spirit that has been at the heart of the great liberal tradition.

Consider, for a moment, the cruel impact of the social security tax on those who deserve our help most-the working poor-and ask yourself how it fits that tradition.

Suppose the young black ghetto male who fathers two children by a teenage girl does not desert her and take up a career as a dope peddler, leaving the girl and the children on welfare, as many of us fear he will. Suppose instead he marries her and takes a job flipping burgers at McDonald's and manages to make about $8,000 a year. Instead of giving him the medal he deserves, what do we do? We take $612 from his pay in social security taxes.

There is a simple answer to this problem. Have taxes paid only by people who can afford to pay them. Don't crush those who can't afford to pay.

The good news is that there are plenty who can afford to pay and pay a lot more than they're paying now. There are almost three times as many millionaires today as there were just ten years ago.

If the rich can afford to pay, the next question is: Will they pay?

Many conservatives and even liberals like Kaus argue that the wealthy never paid the high rates that prevailed from the 1940s through the 1970s. The lore is that they all hired clever attorneys and accountants who either exploited existing loopholes or persuaded Congress to create new ones to help their clients avoid taxation. Some of this sort of thing did happen, but during almost the entire period most of the affluent did pay much higher rates than they do today. This was overwhelmingly the case with those whose income came from salaries. The shelter business did not become a major industry-and a major factor in tax avoidance-until the latter half of the seventies.

But even if the rich have paid higher rates in the past, will they pay them now, or is the motivation not to pay stronger today than it used to be?

The answer is yes. Two major changes have occurred that make the affluent more resistant to taxation. And if we don't understand them, a proposal to raise taxes will be political suicide.