the national interest

The Right’s ‘53 Percent’ Solution to Occupy Wall Street

In the last few days, the conservative movement has formed its response to Occupy Wall Street. The mere fact of conservative opposition isn’t very surprising — obviously, conservatives aren’t going to love a left-wing movement filled with counterculture types assailing the rich and big business. What’s more interesting is the nature of the conservative response. There is hardly any direct intellectual engagement or forceful restatement of pro-market principles. Instead what we see is a series of evasions.

For instance, David Brooks, in his column today, insists that the whole notion of contrasting the interests of the richest 1 percent against everybody else is simply irrelevant:

If there is a core theme to the Occupy Wall Street movement, it is that the virtuous 99 percent of society is being cheated by the richest and greediest 1 percent.
This is a theme that allows the people in the 99 percent to think very highly of themselves. All their problems are caused by the nefarious elite.

Really? Let’s take a look at the income gains of the richest 1 percent over the last three decades, compared to everybody else:

This is an economy that’s incredibly great for the very rich and pretty lousy for everybody else. If you consider this even mildly problematic, you have several responses. You can try to help workers unionize, or restructure the financial industry, or challenge the loopy way we pay CEOs more and more regardless of performance. You can look for even more radical solutions, which some of the protestors favor, though I would not.

Even if you reject all those options, at the very least, this is an important context in which to understand the debate over taxes. After all, we have a long-term deficit, and we have to figure out how to allocate sacrifice in order to bring revenue and spending more closely into line. Raising taxes on the richest 1 percent would obviously not solve the skyrocketing inequality gap, but it would reduce it slightly, while imposing far less pain than the alternatives. Deficit reduction is (or is, at least, very close to) a zero-sum resource-allocation question. The interests of the richest 1 percent differ from those of everybody else.

Mitt Romney, somewhat like Brooks, simply wants to elide the whole question of the richest 1 percent versus everybody else. After initially dismissing the protests, not altogether inaccurately, as “class warfare,” today he is taking a softer line. Romney now says he wants to help the bottom 99 percent, and isn’t interested in the top 1 percent. This sentiment is not reflected terribly well in Romney’s economic plan, but the man knows how to count votes, and he knows he is running for office in a country where even a majority of Republicans favor raising taxes on the rich.

Other conservatives are obscuring the question by hauling out their time-worn statistical evasions. Matt Labash, in a Weekly Standard cover story on the protests, sneers:

You’re either part of “us,” the “99 percent” (as all the surrounding signage identifies us), or you’re part of “them” — the rapacious 1 percent, who are purportedly strangling our nation by holding roughly one-third of its wealth, even if they also pay 38 percent of all federal income taxes while the bottom 47 percent of the population pay nothing (a Revolution is no place for facts and figures).

Since conservatives keep repeating these misleading figures, I’ll keep correcting them. The trick is that most people hear “income taxes” and think this means all taxes. It doesn’t. The federal income tax is just part of the federal tax code. Payroll taxes, which levy a higher rate on the middle class than on the rich, raise about as much money as income taxes. What’s more, state and local taxes also tend to take a higher share of income from the poor and middle class than from the rich. On top of that, telling people what proportion of federal income taxes are paid by the rich isn’t really useful without knowing what share of the income they earn.

Here’s the total picture. The highest-earning 1 percent take home 20 percent of the national income and pay 21 percent of the total taxes. Unfair to the rich? Exploitative? I suppose you could make the case. But I haven’t seen any conservative actually make it, as opposed to try to mislead their audience about the underlying facts.

Meanwhile, right-wing blogger Erick Erickson has started a counter-group, called “We are the 53 percent.” Here, he is seizing on the statistic, also repeated by Labash, that 47 percent of Americans pay no taxes. You’ve probably figured out that this uses the same trick, pretending that “federal income taxes” means “all taxes.”

If you were to take this argument seriously, it would suggest that there’s some problem with having one particular stream of tax revenue be more progressive than other streams. After all, if you’re an American, you pay a bunch of taxes and you get a bunch of government services in return. You pay some taxes to your city for police and schools and city hall and local roads. You pay some taxes to the state for colleges and Medicaid and some other roads. You pay more taxes to the federal government for defense and Social Security and still other roads.

Does it really matter if nearly half the population is not paying some of those taxes but is paying other taxes? Has the division between these different revenue streams suddenly taken on some vital metaphysical significance? I doubt it. The “47 percent pay no income taxes” statistic, which has gained sudden ubiquity on the right, is an attempt to create a different kind of class consciousness — a reflection of the right’s Ayn Rand–inspired conviction that politics pits virtuous producers in a struggle against venal looters and moochers.

Erickson’s feed features conservatives proclaiming their faith in their own hard work, boasting that they pay taxes, and castigating the freeloaders living off their effort. It’s a framework that binds the middle class with the rich against the poor — 53 versus 47, not 99 versus 1. And it explains away skyrocketing inequality as reflecting the pure genius and effort of the successful. (There is no effort to explain how the rich have gotten so much smarter and more hard-working relative to the rest of America over the last three decades.)

If you search deep enough into the conservative liturgy, you will find genuine arguments on behalf of holding harmless the top 1 percent. There’s the argument that higher taxes on the rich will impair growth (an argument belied by the Clinton years, but never mind.) There’s the argument that the rich, as a matter of fairness, should not be forced to pay higher tax rates than the middle class. Instead of making these arguments, though, the right is evading the question altogether.

The Right’s ‘53 Percent’ Solution to Occupy Wall Street