by Linda Beale
crossposted with Ataxingmatter
When I was asked by the New York Times to write a brief op-ed to counter arguments made in the Washington Post that the economy would be helped by cutting taxes for the rich (so that they stay the same as they were under the Bush temporary provision), I jumped at the chance. See Extending the Tax Cuts for the Wealthy–the discussion continues (ataxingmatter, with link to the New York Times Open Forum). It seems quite clear that the “trickle-down” theory that assumes that if you help the rich, the world will be better off for all the rest of us has been clearly proven wrong by the four decades that it has held sway over economic, tax and social policy in the United States, starting with the presidency of Ronald Reagan. We have not had the stellar growth in jobs and opportunities for the middle class workers that the “reaganomics revolution” promised for good reason–those policies simply give more to big business and the rich, and do nothing to assure that any growth that does occur is shared with the vast majority of ordinary Americans.
Some of the comments to that post were from people who made more than $250,000 a year, complaining that they were not rich and why should their taxes increase. As I noted in a comment on the Times website, this is a common occurrence. We humans measure ourselves by those around us. If you make $300,000 a year, you probably know lots of other people who make about $300,000 a year and then a few who are clearly even better off than you are, making a half a million or a million or more a year. Certainly, many of the partners at the law firms in New York make a million or so a year, so that associates who made $200 thousand or so a year may have felt that they were “not rich” in comparison to the rich partners with whom they worked. But the fact is, anyone making that much is in the very privileged set–just not necessarily in the absolutely most privileged set. Being privileged to decide whether to buy private horsebacking riding lessons in Manhattan or whether to have a private in-ground pool in your back yard or whether to send your children to one of the ritziest colleges in the northeast is to be rich. For those with average incomes, sending their children to any college at all is often an impossible dream, and all those “extras” that the well-to-do think of as “must haves” are pipedreams.
The New York Times article on the Definition of Rich Now A Tax Issue, New York Times (Sept. 30, 2010) spends a lot of time before it gets to that key point. Sure, some families that make more than $250,000 may think they identify more with people who make less than with multimillionaires. But odds are they haven’t really ever focused on what life is like for the majority of Americans who make less than half what they do. As Brad DeLong says in the article, those in the top 5% are comparing themselves to those in the top 2% rather than looking down at multitudes with less assets than they have. To quote DeLong:
It is pathetic and embarrassing that somebody with five times the median household income, someone in the top 2 or 3 percent of the population, thinks of himself as just another ‘average Joe.’ Why don’t you ask someone who makes $40,000 or $50,000 a year if they have a lot in common with a family making $250,000.