Radical Right Reality Check

New study show that if it’s happening in North Carolina, it’s going in the wrong direction  

There’s a persistent myth in a number of circles – particularly on the ideological right – that progressives who call for higher taxes on the wealthy are calling for some kind of crude, socialistic leveling. You know this argument. (Indeed, if you have a progressive streak, a decent sized family and are not careful, there’s a good chance you’ll find yourself debating someone on this topic this coming Thursday.)

The standard version goes something like this:

“Of course we shouldn’t let anyone starve, but it’s ridiculous to make me pay taxes to subsidize the lifestyle of some lazy person that doesn’t want to work. Cousin Joe knows a woman that he went to high school with who has five kids by three different men and has never held a job. She’s got a cell phone and a car. Why should I have to pay for her and her brood? Why do you want to penalize people who’ve worked hard and gotten ahead in life? ”

Sound familiar? It’s basically a warmed-over version of Ronald Reagan’s hoary tale of the Cadillac welfare queen and a time-honored, fallback talking point for right-wingers of all incomes and social status.

To see a somewhat gussied up version of this particular myth, you can visit the front page of the website of the Locke Foundation, where one of the philosophizers-in-residence has authored the latest “Free Market Minute.” In it, she lauds an old book entitled “Eat the Rich” by “humorist” P.J. O’Rourke.

Here are a few “highlights”:

If the rich deserve to be stripped of some part of their accumulated wealth or 'excessive' compensation, O'Rourke argues, we are all in trouble, morally and economically. Here's the argument he invokes on behalf of property rights, freedom in markets, and protection of private ownership…:

"Thou shalt not covet thy neighbor's house, thou shalt not covet thy neighbor's wife, nor his manservant, nor his maidservant, nor his ox, nor his ass, nor anything that is thy neighbor's.”

And then there’s this one:

“…fairness has no place in policy making, precisely because it is entirely subjective and imprecise. It's an ad hoc invention of the policy maker's whim, and the constituents' demands. No wonder it's impossible to define the scope and limit to what must be leveled to achieve a 'fair' outcome in society, somehow defined.”

Here’s the grand finale:

And what of government efforts to even out economic outcomes? Even if we don't wish that the wealthy fall from their economic heights, many endorse a government-managed leveling of some degree. Picking a pattern of wealth that looks more socially acceptable and fair is, as mentioned earlier, much harder than it seems. Inevitably, it requires increasingly extensive control of personal economic decisions, including the fields of study, industries and occupations citizens may pursue. Not good news for property rights, certainly. Not good news for individual liberty, either. And not OK with Commandment Ten, though surely not stated exactly as O'Rourke finally puts it:

"The Tenth Commandment sends a message to socialists, to egalitarians, to people obsessed with fairness, to American presidential candidates in the year [2000]—to everyone who believes that wealth should be redistributed. And the message is clear and concise. Go to h_ll."

Reality check

There are so many holes and blind spots in this brand of thinking that it’s hard to limit one’s response to the space available.

One might go on at length, for instance, about the absurdity of ignoring the vast inequality of opportunity that confronts people from different backgrounds and different segments of society. How and why is it an immutable “given” that some people will be born to vast fortune and comfort and others to grinding poverty and deprivation?

Along these same lines, one might point out the failure of such an argument to account for the enormous role that our societal infrastructure plays in the success of all who succeed. Even the smartest, hardest working, most successful and independent American entrepreneur would not enjoy his or her great wealth without the vast web of publicly funded structures (roads, schools, safe borders, safe air and water) that make society livable and fortunes worth having. Moreover, only a small portion of public spending goes to programs that actually serve the poor. In North Carolina, traditional “welfare” has become essentially non-existent. 

Notwithstanding the Locke staffer’s dismissal of “fairness,” one might even note the obvious fact that some people get rich through less than honorable means. Do we really want a true, dog-eat-dog society in which “unfair” economic transactions of the Bernie Madoff variety are celebrated? If that’s her position, perhaps the author might want to check out a commandment that appears a little earlier in the various versions of the list. It goes something like this: “Thou shall not steal.”

But the most powerful and timely response to the author’s (and your Thanksgiving dinner table partner’s) misguided arguments about “wealth redistribution,” however, comes in the form of a special report that was released this week by the Institute on Taxation & Economic Policy. It’s the latest version the group’s “Who pays?” reports and it spells out exactly what various income groups pay in the way of state and local taxes in all 50 states, plus the District of Columbia.

The central finding: none of the 50 states or D.C. is redistributing wealth – at least not toward the poor. To the contrary, when it comes to state and local taxes, it’s the poor and the middle class who pay more than the rich.

Here is the breakdown by income group in North Carolina:

• Bottom 20% of households (with incomes less than $17,000 per year): Average combined state and local tax rate 9.5%.
• Second 20% ($17,000 to $29,000 in income): 9.4%.
• Middle 20% ($29,000 to $48,000): 9.4%
• Fourth 20% ($48,000 to $79,000): 8.9%
• Next 15% ($79,000 to $165,000):  7.9%
• Next 4% ($165,000 to $398,000): 7.3%
• Top 1% ($398,000 and up): 6.8%

(Details can be found on pages 82 and 83 of the report (pages 88 and 89 of the PDF version)).

In short, the responsibility of paying for all of the state and local public systems and structures that do so much to make North Carolina a place in which people want to live falls much more heavily on the poor and middle class. Those income groups experience a much bigger bite out of their incomes (and feel the effects exponentially more) than do the rich.

In other words, rather than “soaking the rich” to make society “fair,” the ITEP data confirm that North Carolina and its local governments do just the opposite: they redistribute wealth upwards toward the people who are already enjoying the fruits of what 21^st Century American has to offer.  

It should be interesting to hear which of the Ten Commandments the right cites as justification for this state of affairs.    

This entry was posted on Saturday, November 21st, 2009 at 11:32 am and is filed under Radical Right Reality Check. You can follow any responses to this entry through the RSS 2.0 feed.