Sunday, February 08, 2009

Some Liberals Piss Me Off

It occurs to me that one of the things that makes Manhattan so much more expensive than Cleveland, or the San Francisco Bay Area so much more expensive than Indianapolis, is our income tax structure.

Don't get me wrong: I think New York and the Bay Area are always going to be more expensive than other places in the country, having to do with more demand existing for housing there due to them being port cities, centers of finance and high tech, etc.

So, of course they are going to be more expensive places to live.

One of the objections to higher marginal tax rates I read here in diary comments on Daily Kos over and over again, is that "a generous salary that will buy a house and car for a family of four in Cleveland, Ohio will barely feed a single person living in a studio apartment in NYC."

Why is that, though? Why is New York that much more expensive than Cleveland? I mean, as I already acknowledged, they are always going to be more expensive, but why is the gap that big?

Under Eisenhower, tax rates were much, much more progressive than they are now: the top marginal rate (paid on the highest proportion of rich people's income)hovered between between 91.5 and 94 percent during his entire presidency. Even considering deductions and tax shelters, it was not worth it for executives to pay themselves obscene salaries and bonuses, since taxes would eat up a huge amount of the excess.

This contributed to what Krugman has called "The Great Compression" - wages were "compressed" meaning there was a much, MUCH smaller gap the country's fattest and leanest paychecks than there had been before the Great Depression, and than there is now. It is worth mentioning that there was no special exemption for residents of the New York, San Francisco or Los Angeles areas.

A consequence was that places like NYC were not as expensive relative to the rest of the country as they are now. Taxes ate up so much of richer peoples' incomes that you couldn't sell 2 bedroom apartments in NYC for the 2008-dollars equivalent of $2 million: the market wouldn't bear it. Not enough people were clearing (after taxes) enough money to pay for them.

Lots of attention has been paid to the gap between the pay of CEOs and their lowest-paid employees; less to none has been paid to the gap between rich states, or regions within states, and poor ones.

Which brings up an awkward situation for many folks who describe their politics as progressive or liberal; they are actually members of an elite. If you are raising a couple kids in relative comfort in Manhattan, Walnut Creek California, or in Suburban Maryland, you are members of an economic elite.

The fact that you are pro-choice, drive a Prius and are a vegan does not change the fact that you are members of an elite. The fact that you agitate for single-payer health care doesn't change the fact that you are members of an elite.

What would change it is to show in your advocacy that you are willing to make sacrifices, and substantial ones, to ensure that America becomes a more just and equitable nation as time goes on. Unions need to be strengthened, the minimum wage needs to be raised, and the tax system needs to become far more progressive than it is now, and the government needs to use those extra tax revenues to provide opportunity to the bottom of the income scale.

You advocate for those things, and (the hard part for elites) you sacrifice some relative economic status in order to live in a more just and equitable, more liberal, more progressive America, and you gain an America that the Democratic Party of Roosevelt, Truman, a million union organizers and my immigrant, welder grandfather would be proud to call their own.

An America of plutocrats and rabble is not a sustainable place - just look at other places in the world where these conditions obtain: revolution, insurrection, assassinations, coups...

I say it again: An America of coastal elites and "flyover" rabble is not sustainable.

No comments:

Post a Comment