This is a great chart. Important too. Why?
There’s an increasingly persistent meme being used to justify another round of massive tax cuts for the super-rich — like those contained in the Ryan Budget plan recently passed by the House. The meme is this: The wealthy are the true “producers.” They’re “job creators” who will take any additional tax windfall and, presto… new manufacturing plants will spring up over night.
There’s also a “moral” component embedded in this meme. The reframe goes like this. For us to expect billionaires and large corporations to pay their fair share of taxes is really about “unjustly punishing” them for their “success.” It’s tantamount to theft.
What we have here is a perfect reflection of the moral universe conceived by Ayn Rand. And now an attempt is being made to enshrine her philosophy of radical individualism as official policy via the plan of Congressman Paul Ryan — a committed Randian.
This is Calvinism on steroids — but absent God (Rand was a militant atheist). Material success and wealth is a sign that you are one of the Elect, and thus favored by
God Ayn. The poor, the weak, the sick? God Life is punishing them for their moral defects.
In this Randian universe, the rest of us are parasites, feeding off of the true genius of these real-life John Galts. It’s surely no accident that the course of last 25 years of U.S. economic policy was, in large part, shaped by Rand’s most famous acolyte, former U.S. Federal Reserve Chairman Alan Greenspan. The Chairman, renowned for his inscrutably opaque and sober pronouncements on Fed policy, positively gushed in his review of her novel, Atlas Shrugged:
“Justice is unrelenting. Creative individuals and undeviating purpose and rationality achieve joy and fulfillment. Parasites who persistently avoid either purpose or reason perish as they should.”
This point certainly was driven home yesterday as we watched the Big Oil company executives giving Senate committee testimony. True to the Randian meme, a pre-hearing press release from industry giant ConocoPhillips declared that ending taxpayer subsidies to Big Oil is “un-American”, i.e. immoral.
Accordingly, as gas prices soar at the pump, the following tax policy is what we are presumably expected to regard as true Americanism:
Over the past two years, ExxonMobil reported $9,910 million in pretax U.S. profits. But it enjoyed so many tax subsidies that its federal income tax bill was only $39 million—a tax rate of only 0.4 percent. (Citizens for Tax Justice)
Where are the jobs?
By any reasonable calculation, one has to go back to the 1920s to find a time when the rich had it so good. Back to the chart.
Produced by the Hamilton Project, it underscores the point expressed by Ezra Klein in his WaPo blog today: “Over the past 30 years, the very rich have seen their real taxes fall sharply even as they’ve seen their incomes rise rapidly.”
With his gift for understatement, Ezra goes on to draw the obvious conclusion:
I think the implication of the orthodox GOP take on taxes would be that the lower rates faced by the most productive members of society should have unlocked some dramatic economic benefits, but I think it’s very hard to detect those benefits in the economy’s performance over this period.
Indeed, despite Speaker Boehner’s protests to the contrary, the formula of tax cuts for the rich equals job creation just has not panned out.
The real beneficiary over the last ten years has been those “geniuses” in the so-called “financial services sector,” aka Wall Street, who took full advantage of the elegantly deregulated financial architecture blessed by Dr. Greenspan.
So the Too Big to Fail (and Go to Jail) Boys, rather than heading for Galt’s Gulch after leveraging everything to the hilt and driving financial markets over the cliff, took the taxpayer-funded TARP bailout and awarded themselves big bonuses for their outstanding “success.”
Times have never been better for these true (Randian) Americans. Last year, the top 25 hedge fund managers made a combined $25 billion in income. That’s $1 billion per person. Real producers.
It’s fair to say that for these types, Rand’s radical individualism is not actually an ethos, rather it’s a convenient ideology for rationalizing highway robbery.
Then there’s New Mexico
And it certainly seems that Governor Susana Martinez is employing this ideology to justify her policies.
While local school districts are reeling from funding cuts leading to layoffs, Martinez is quite content with the state’s current, ridiculously un-progressive income tax system that puts millionaires and billionaires in the same bracket as individuals making $16,000 a year.
Evidently in her world, teachers are parasites.
She also vetoed the Tax Expenditure Budget bill, which would have subjected to strict scrutiny those state offered tax credits and subsidies in order to determine whether these generous corporate “incentives” are actually creating private sector jobs in a numbers justifying assistance from taxpayers. Of course, the aforementioned oil industry is a big beneficiary of state subsidies.
How unsurprising it is then, that our state’s shockingly low income tax rate for the rich failed to counteract the huge job losses visited upon New Mexico’s working people by the global economic meltdown. However, the resulting lost revenue most certainly did contribute mightily to the state’s recent budget shortfalls.
Hasn’t this myth of individualism done enough damage? As a corrective, economist Mark Thoma recommends the thoughts on the subject from his colleague Dani Rodrik in his post, Success requires more than individual initiative.
Well-functioning markets are always embedded within broader mechanisms of collective governance. That is why the world’s wealthier economies, those with the most productive market systems, also have large public sectors. …
Those who are successful within these systems — those who pat themselves on the back and attribute their success to their own merit and then oppose taxes to pay for the institutions needed to have “well-functioning markets” — have a tendency to forget the contribution that society makes to their success.