“Tax the other guy!!”

Where is the money and power in America today? National Review’s Reihan Salam thinks he has found it in our upper middle class:


• if there is a social group that has been a barrier to good public policy, one can make a strong case that it isn’t the ultra-rich but the upper middle class, a group . . . earning between $100,000 and $250,000.

• [True,] Americans in the top 0.01% of the income distribution have [great] political influence . . . channeled through campaign donations and . . . charitable giving. . . to nonprofits devoted to shaping the ideological environment. . . the Koch brothers [on one side, and on the other,] the Ford Foundation, Atlantic Philanthropies, the Soros Foundations, elite research universities, and . . . other[s] devoted [to expanding] the welfare state.

• [But] the top 0.01% has less collective political weight than the upper middle class, [because] there are more voters in the upper middle class. These voters [are] active as volunteers and as small donors . . . and . . . heavily concentrated in professions — media, the upper echelons of the public sector, higher education — that further magnify their influence. . . Republicans in heavily Republican states tend to win elections with . . . middle-class and upper-income voters, while Democrats in heavily Democratic states tend to win elections with a coalition [including upper-middle-class] voters.

• Voters in households earning more than $100,000 constituted 26% of the 2008 electorate. [They went for Obama.] In the 2010 House elections, in contrast, voters in over-$200,000 households chose Republicans over Democrats by . . . 64% to 34%, while $100,000 to $200,000 households favored Republicans by . . . 56% to 43%. The president’s political advisers are keenly aware . . . Democrats need to improve their performance with these voters or face defeat in 2012.

• Obama [has elevated] a $250,000 annual household income to an almost mythical status. . . Given that 49 out of 50 households earned less than $250,000 [in 2008], there is no question . . . the cutoff number . . . was politically shrewd. . . only one out of 50 households would pay for all [Obama’s] new spending and for reducing the deficits.

• [Yet] achieving a budget deficit of [“only”] 3% of GDP by 2020 through tax increases on over-$250,000s would require doubling their rates, kicking the top rate to 76.8%. Suffice it to say, marginal tax rates at these levels [won’t work. A better] strategy would involve curbing tax [deductions] for all households, a policy Rep. Paul Ryan has endorsed. But that would cost the upper middle class, and so the president [won’t do it].

• Note. . . that the mortgage-interest deduction, which will cost $637 billion over the next five years, overwhelmingly benefits affluent households at a staggering cost to the Treasury. [Obama] preserve[s] this tax break as a gift for households earning between $100,000 and $250,000, since under-$100,000 households are far less likely to itemize their taxes.

• Rather than persuade voters to embrace . . . higher taxes for more public services, the Obama campaign promise[s] more public services at no cost. . . But if one believes, as the president emphatically believes, that we need to dramatically expand the scope of government, it makes [no] sense to argue that households earning between $100,000 and $250,000 should be completely exempt from tax increases.

• Very bluntly, [Obama doesn’t protect] these upper-middle-class households out of a deep commitment to social justice. Instead, [he’s] protecting . . . a class with outsize political power and interests.