The GOP calls it 'class warfare,' but the president’s proposal to raise taxes on millionaires is actually a move toward fairness and fiscal sanity, says Michael Tomasky. The biggest problem in our politics for the last 30 years has been . . . what? Fill in the blank. Too much spending? Debt to future generations?
Cultural politics? None of those. Plain and simple: taxes. The anti-tax revolt that started in 1978 in California (Proposition 13) has destroyed this country. Our taxophobia has made the rich vastly richer and reduced the amount of money for the public benefits the rest of us depend on, and a hundred other horrible things besides. If
I’ve written one sentence over the years more than any other, it’s the sentence that goes something like, “Democrats will never move the country in their direction again until they can change the debate around taxes.” Well—the moment has arrived.
Barack Obama
has proposed a higher tax on households in which $1 million or more per year is earned. That’s considerably less than the top 1 percent of U.S. households, which starts at around $388,000 per annum. We don’t yet know what the new rate will be, or how much it will raise. I suppose we can presume that, since it will be known as “the Buffett Rule” after the
suggestions of Warren Buffett, the plan will include taxing capital gains and carried interest at the same rate (for millionaires only, that is, not for middle-income Wall Street dice-rollers) as regular income. Regular income at that high level is now taxed at 35 percent, while capital gains are currently taxed at 15 percent, but a comprehensive package would probably settle both rates somewhere in the middle. So in other words, when it all comes out of the wash, taxes will go up by not all that much on less than one half of 1 percent of the population.
It’s a smart move politically (finally!). Another sentence I’ve written a lot over the years is the one where I complain that the Democrats have fallen into a GOP trap by agreeing even to have the debate on taxes be about households at $250,000 a year or more. That’s just 2 percent of the population, or maybe 3, but it’s still a tougher argument. In nearly any major city in America, a high-school principal married to police sergeant, both with enough years’ seniority, easily make $250,000 together. So a lot of people who still think of themselves as middle class think: “Me? Why penalize me?” But a million? No principals are making that. Not many small business people are making that—you know, the folks the Republicans say they’re watching out for, a line they could also kinda-sorta get away with when we were talking $250,000. But a million a year: That’s truly the rich.
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This tax fight will be the great test of the Obama presidency. All else—stimulus, bailouts, financial reform, even health care—was prelude. The tax debate is the money shot. If he wins this one, all the failures, even the calamitous debt-ceiling agreement, can be forgiven. Mr. President: Show us the money.
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