REWARDING THE FORTUNATE….Mickey Kaus comments today on David Cay Johnston’s New York Times story about low tax rates on the rich, but I think he misses the point. Here’s Kaus on the skyrocketing incomes of the already rich:
What [Johnston] doesn’t answer is the important question…namely how much richer would they have gotten if they hadn’t gotten the tax cuts? … When I looked at this question in the early 90s, the answer was pretty clear: the rich were growing richer due to changes in the underlying economy (e.g. greater rewards for skills) that affected their pretax income, not changes in the tax code that affected how much of that income they got to keep.
….But Johnston doesn’t even try to give us the answer. … He seems to assume we’ll be so outraged that the “hyper-rich” are getting tax cuts at all that we won’t ask if denying them the tax cuts would actually be enough to stop them from getting richer.
This is a red herring. Johnston understands perfectly well why the rich have done so well in recent years:
The hyper-rich have emerged in the last three decades as the biggest winners in a remarkable transformation of the American economy characterized by, among other things, the creation of a more global marketplace, new technology and investment spurred partly by tax cuts. The stock market soared; so did pay in the highest ranks of business.
I think Kaus and Johnston are both correct: a big part of the reason the rich have gotten richer since 1980 is related to fundamental changes in society. CEO’s aren’t being paid five times what they were paid in the 60s because they’re more talented than CEOs of the 60s, they’re being paid more because of the happy chance that they’ve come of age in a time and place that rewards run-of-the-mill CEOs in bizarrely extraordinary ways.
But if that’s the case, here’s the real question: given that society has transformed in ways that happen to enormously benefit the rich already, why would you further reward them for their good fortune by slashing their tax rates? Here’s what Republicans have done for the mega-rich donor class over the past quarter century:
It’s not a question of whether “denying them the tax cuts would actually be enough to stop them from getting richer,” it’s a question of why Republicans are deliberately building a tax code that converts merely skyrocketing income growth among the rich into mind-bogglingly astronomical growth. I think all of us, Mickey included, know the answer to that.