Home -> Law Blog Directory -> Corporate & Securities Law Blogs -> Truth on the Market

Corporate & Securities Law

: Truth on the Market

Obama’s class warfare

A week ago my co-blogger Todd Henderson had some thoughts about the Obama plan to raise taxes for the “rich” — over-$25o,000 earners: 

If our taxes rise significantly, as they seem likely to, we can cut back on some things. The (legal) immigrant from Mexico who owns the lawn service we employ will suffer, as will the (legal) immigrant from Poland who cleans our house a few times a month. We can cancel our cell phones and some cable channels, as well as take our daughter from her art class at the community art center, but these are only a few hundred dollars per month in total. But more importantly, what is the theory under which collecting this money in taxes and deciding in Washington how to spend it is superior to our decisions? Ask the entrepreneurs we employ and the new arrivals they employ in turn whether they prefer to work for us or get a government handout.

In later posts he added:

As marginal taxes rise, so does the disincentive to work. * * * This is a losing proposition from a social welfare perspective* * *

And:

I?d be happy to pay more to help out my neighbors and fellow citizens. If I thought I could pay, say, $12,000 more in taxes and this would help educate poorer kids in my area, I?d gladly do it. I?ve seen no evidence that it would.

These later posts responded to personal attacks asserting that Todd was essentially lying about his personal finances  and, from Brad DeLong, that he was whining when he should be happy about how well off he really is, and “angry at the senior law firm partners who extract surplus value from their associates and their clients, or angry at the financiers” — not at “Barack Obama, who dares to suggest that the U.S. government’s funding gap should be closed partly by taxing him, and angry at the great hordes of the unwashed who will receive the Medicare, Medicaid, and Social Security payments that the government will make over the next several generations.”  And even Paul Krugman, who accused Todd of “self-pity.”

And if you think this is rough, you should see the comments these intemperate posts inspired.

To all of which I have the following responses:

1.  Todd’s posts are not about whether he is or deserves to be rich or to be taxed more.  It was about the real incentives he faces if his taxes go up — incentives to cut back on spending and engage in less socially productive activities. 

2.  However, instead of having a debate about the economics of raising taxes on >$250k earners, or about the profligate spending that has brought us to these difficult choices, what we got was very nasty class sniping and an attack on the messenger.

3.  This is exactly the sort of debate the President wanted to have when he decided to tax the “rich” and not the “middle class.”  Certainly not about how the tradeoffs between increased taxes and reduced government spending as ways of addressing our current economic problems.  Not about how to construct the tax so that it has the least harmful effect on economic activity.  No, let’s pit rich against poor.  Let’s exploit resentment for political gain. 

4.  Exploiting resentment — is that what hope and change was supposed to be about?

Filed under: economics, taxes, truth on the market

Full post as published by Truth on the Market on September 20, 2010 (boomark / email).