In the past couple weeks, there has been quite a bit of discussion about the tax rates of the rich and the super rich. Much of this is of course motivated by the coming expiration of the Bush tax cuts (see Paul Krugman’s column yesterday for example.) James Surowiecki takes this one step further by making a very thought provoking argument in The New Yorker that our current system of progressive tax rates is hopelessly out of date with its top bracket starting at $200,000 a year for individuals and $250,000 a year for households. He adds the memorable observation that Lebron James and his dentist both probably pay the marginal tax rate on additional income. Nate Silver responded to Surowiecki with a discussion of the economic implications of some of Surowiecki’s proposals, concluding that:
Let’s say we go with the plan of taxing marginal income above $1 million at 3 percent, and marginal income above $5 million at an additional 3 percent. That would produce a theoretical $39 billion per year. However, there would be some productivity losses, and perhaps some additional offsets resulting from people finding ways to transfer their income into more tax-advantageous activities, so perhaps revenues on the order of $35 billion per year, or $350 billion per decade, are more realistic.
I think the economic implications of the proposal are interesting as we head into an era when we need to consider all possible sources of tax revenue, but I am even more intrigued by the potential political implications of the tax. With the dominant political narrative these days being how President Obama is having trouble delivering a credible narrative of what he actually stands for, wouldn’t taxing the super rich be a political no brainer for the Democrats in the US? Wouldn’t this be an outstanding question for all Democratic candidates for congress to be able to ask their Republican opponents where they stand on the issue? Think the ground zero mosque in reverse. Commercials could be run saying “my opponent wants to keep taxes lower for millionaires – I want to keep them lower for you.” It seems like such a simple message that it would be perfect for a campaign year where the dominant trend – the state of the economy when you are the incumbent party – is running against you.
So I went looking for some data on this. I unfortunately couldn’t find any public opinion polls about a millionaire’s tax, so I’m hoping readers of the Monkey Cage can help. What I did find was the following, admittedly from last year, over at the Gallup website:
While I’d like to see these data broken down by party, it sure seems like there is plenty of support out there for increasing the tax burden on the right.
So I’m throwing the question out to readers of The Monkey Cage: convince me why it would be a bad idea for the Democrats to double-down on this taxing the rich issue and start pushing proposals for new tax brackets for those making over $1 million a year and those making over $5 million a year? Why couldn’t the Democrats emulate the Republicans 2004 gay marriage strategy? I’m particularly interested in comments from anyone who follows New Jersey politics, where Republican Gov. Chris Christie obviously did not fear vetoing a millionaire’s tax in his state. Are there any surveys of voters’ opinions in the aftermath of his veto out there?
[I just came across this post from Ed Kilgore that makes a very similar point to the one I’ve made here, so I want to be sure to give him an ex-post hat tip….]