With Alexandria Ocasio-Cortez, Americans Finally Have A Politician Who Agrees With Them About Taxes

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Above Photo: Soohee Cho/The Intercept

MUCH OF THE U.S. political system was flummoxed two weeks ago when a brand new 29-year-old congressperson made a seemingly radical proposal on “60 Minutes.”

Here’s what Rep. Alexandria Ocasio-Cortez, D-N.Y., said that wound everyone up: The U.S. should tax income over $10 million per year at a top rate of 60 or 70 percent.

Republicans responded by shamelessly lying about what this meant, pretending that Ocasio-Cortez was advocating a tax rate of 70 percent on all income. Some older Democrats, such as House Majority Leader Steny Hoyer and former Senate Majority Leader Harry Reid, adopted the standard Democratic tactic of cowering in fear before a deceptive Republican onslaught, like abused dogs.

The hullabaloo was understandable: Ocasio-Cortez’s forthright advocacy demonstrated that American politics, against the odds, can sometimes be about what Americans want. After the “60 Minutes” episode aired, The Hill commissioned a poll that found that 59 percent of registered voters support raising the top marginal tax rate to 70 percent. The idea, The Hill wrote, even receives “a surprising amount of support among Republican voters. … 45 percent of GOP voters say they favor it.”

However, the only surprising thing about this Republican support was that The Hill found it surprising. For the past 40 years, polls have uniformly shown that there is essentially no constituency for cutting taxes on the wealthiest Americans or corporations — and a huge constituency for raising them.

Two prominent political scientists, Martin Gilens at the University of California, Los Angeles and Benjamin Page at Northwestern University, have carefully studied the U.S. political system and demonstrated with charts and tables what most of us believe intuitively: If you don’t have money, you don’t matter. Or as Gilens and Page put it, “Not only do ordinary citizens not have uniquely substantial power over policy decisions; they have little or no independent influence on policy at all. By contrast, economic elites are estimated to have a quite substantial, highly significant, independent impact on policy.”

The last 40 years of U.S. tax policy have been the most striking demonstration imaginable of this assertion. Americans have never, in living memory, been averse to higher taxes on the rich. Nonetheless, the top marginal tax rate for the federal income tax plunged during the Reagan administration, from 70 percent to 28 percent, and has since only inched back up to 37 percent.

Chart: Moiz Syed/The Intercept

Republicans, many Democrats, and well-paid television journalists have browbeaten Americans for years with tales of how raising taxes on the wealthy would obliterate the U.S. economy. But the historical fact is that the economy has thrived with top rates of 80 percent or higher. In fact, as tax rates have come down, so has the rate of economic growth.

The top marginal corporate tax rate likewise dropped precipitously under Reagan, from 46 percent to 34 percent. Thanks to Trump’s 2017 tax bill, it’s now down to 21 percent.

Chart: Moiz Syed/The Intercept

These changes were not driven by popular demand. A 1978 Roper Organization survey found that a rousing 7 percent of Americans believed that the federal income taxes were unfair to high-income families. According to that survey, 5 percent felt that the tax rate was unfair to large corporations. And when the survey was repeated in 1986, the numbers were almost exactly the same: 7 percent and 6 percent, respectively, were worried that the rich and corporations were overtaxed.But it did not matter; the top marginal rates continued to fall.

Chart: Gallup

Gallup began regularly polling on this question in the early 1990s. Support for raising taxes on the rich has generally fluctuated between 60 and 70 percent, with around 10 percent wanting to cut them.

An even higher percentage of Americans, usually in the high 60s, have wanted to raise taxes on corporations. Instead, the top corporate marginal rate stayed constant at 35 percent from 1995 onward. Finally in 2017, after years of expensive lobbying, Trump and the GOP did the exact opposite of what Americans wanted, and slashed the top corporate rate almost in half.

All in all, the polling numbers are strikingly constant: Big majorities of Americans have always wanted to make the rich pay more. It’s one of the most popular political positions imaginable, with only teeny-tiny minorities calling for tax cuts for the country’s millionaires.

EVEN MORE REMARKABLY, as Gilens determined in a recent book, even the well-to-do at the 90th percentile of household income – currently, that’s about $175,000 per year — strongly support higher taxes on the rich. Are there any Americans who don’t like the idea?

Yes.

It’s notoriously difficult to poll the super-wealthy. There aren’t many, by definition. They’re tough to find. And they’re generally not interested in divulging their political views to pollsters.

There have only been a handful of successful attempts in U.S. history. A recent one is the Survey of Economically Successful Americans, which questioned over 100 Chicagoans with a net worth of $10 million or higher. As Gilens and Page describe in another book, these multimillionaires are far more economically conservative than the general public, including on taxes. For instance, 52 percent of ordinary Americans told pollsters that the government should “reduce inequality by heavy taxes on the rich.” The Chicago study found that just 17 percent of the rich liked the sound of that.

Source: Democracy in America?: What Has Gone Wrong and What We Can Do About It

This is what raw power looks like. The rich get what they want, or at least can stop policies they don’t want — even if everyone else in America badly desires them.By contrast, taxes can be raised, repeatedly and significantly — as long as they fall hardest on the poor. The tax on gas went up during the 1980s and early 1990s, from 4 cents a gallon in 1981 to 18 cents in 1993, or about 200 percent in constant dollars. Gilens points out that this was a rare tax policy strongly opposed by low-income Americans but viewed with equanimity by the more affluent.

So yes, people are still allowed to vote every two years or so. But money votes, too, far more voluminously, and via lobbying and campaign contributions, it votes every day. For decades, everyday Americans have had little influence on how their country is run.

But this hasn’t always been true in U.S. history, and no rule of nature says it has to stay this way forever. The ferocious pushback against Ocasio-Cortez demonstrates the fear at the top that one day many other politicians will decide it’s in their interest to side with the vast majority of Americans.

 

  • Max Mastellone

    What AOC knows, but unfortunately does not articulate, is that most Americans favor raising taxes on the rich for the wrong reason. They still believe the govt lie that federal taxes fund federal spending. It does not.
    Taxes should be raised on the rich to reduce the wealthy gap, for sure.

  • TRipp

    Hope “they” don’t get to her, it’s a change worthwhile for us all…cept those 5%

  • chetdude

    OR AOC knows but realizes that it’s too hard to explain…

  • mwildfire

    What are you talking about? What DOES fund federal spending, then?

  • mwildfire

    What I found interesting is the bit within the poll of multimillionaires in Chicago, on expanding Social Security. They were dead set against it, by higher margins than almost everything else–yet opposed to paying more for (other people’s) Social Security by only a small margin.I would expect it to be the other way around that they would be in favor of retired people making more than the tiny fraction of their own wealth that people on SS get, yet balk at paying more.

  • Max Mastellone

    I urge you and all Americans to bone up on Modern Monetary Theory, a school of economics that breaks with the obsolete conventional economic notions that support the status quo. Here is a teaser, but you will find many relevant videos on YouTube, as well as scholarly and popular articles online. https://medium.com/@markfabian/we-the-people-do-not-finance-the-us-government-1be7d944357d

    Essentially,our federal govt is self-funding. As a monetarily sovereign nation, the dollar is a legally established unit of account that is created at the instigation of Congress. Congress passes legislation authorizing the spending of X dollars for Y purpose. In the act of paying that obligation, the Fed and the Treasury collaborate and new money is created for the purpose. No tax dollars or borrowing is involved. Taxes are levied as a means of siphoning off some of the federal dollars spent into the economy for the purpose of regulating the money supply and avoiding inflation. To recycle tax dollars while continuing to spend new money into the private economy would eventually overfill the money supply, with the consequent problems.
    Money is there to fund the social programs people desire and need. What prevents that from happening is not the shortage of cash, but the policy preferences of Congress, who would rather direct our public money to the 1% than to the American people.

  • Max Mastellone

    Not hard to explain at all. I do it everyday online. And AOC supposedly has an economics background.

  • kevinzeese

    I support Modern Monetary Theory but at this stage it is a minority viewpoint, and a small minority, so politicians still talk in terms of traditional economics.

  • Max Mastellone

    MMT is not a “viewpoint”. It is how federal money operations are currently, and have long been carried out. Politicians still talk in terms of traditional economics because they are invested in perpetuating the lie they have been telling the public forever. It provides them with cover for their devious, and so far successful efforts to direct public money to the 1%, while crying poor when we demand new and expanded social programs.
    What you characterize as a small “minority viewpoint” is really enforced public ignorance. It our job to spead the truth that MMT has revealed, and expose the govt lies.

  • kevinzeese

    As I said, I support and understand MMT. But key in on the last word as to how advocates describe themselves “theory.” At this point it is a theory not accepted by the vast majority of economists and certainly not by the Congressional Budget Office. But, it has made a lot of progress in getting understood in the last five years and I would not be surprised to see it become accepted in the next decade.

  • Max Mastellone

    The term “Theory” was an unfortunate choice of words. Any MMT economist will tell you their work is not theoretical at all, rather it is descriptive of how money actually operates at the federal level. They will also tell you that Congress generally understands these money operations and exploits them to carry out their pro-1% policies and activities. Politicians work hard to keep the truth from the people because as long as we believe their deficit and debt bullshit we won’t push our demands for new and expanded social programs with much enthusiasm. MMT economists will also tell you that the CBO was created by Congress precisely to give credence to their anti-public spending policies.
    MMT Prof. Stephanie Kelton was Bernie Sanders economic advisor during his campaign. Bernie knows MMT for sure, yet he chooses to perpetuate the usual lies that we have to find ways to pay for things like IMfA. Go figure.
    This is real Kevin. I urge you to get in touch with Steve Grumbine at Real Progressives (Web and FB). You should also reach out to Stephanie Kelton @ SUNY Stoney Brook. She has emerged as the media face of MMT and appears to be quite approachable.
    I apologize if I came off snarky earlier. I only realized who I was talking to at the beginning of this comment. I truly admire the work that you and Margaret Flowers do and promote it regularly on my FB Page, US Progressive Activists Update, which you follow.

  • kevinzeese

    Stephanie Kelton is an interesting economist and if Sanders wins the presidency she could play an important role in the next government. I have been in touch with Grumbine, ask him about me. As I told you (I think twice already) I understand and believe in MMT but I do not think it is close to being accepted by mainstream economists. I agree that members of Congress do not worry about deficit spending when it comes to war or tax cuts for the rich but use the argument when they want to stop a social safety net and spending on human needs or protection of the planet.

  • Max Mastellone

    Not to belabor this, but isn’t it regular people that we need to educate about MMT? Mainstream economists are irrelevant to this movement. Congress and politicians lead on this issue. I believe only popular pressure will turn Congress, so it’s the public we must address.
    Strikes me that PR could add measurably to the effort simply by pivoting away from the taxpayer dollars theme.

  • kevinzeese

    We need to educate grassroots, economists and politicians. That is why someone like Stephanie Kelton could be very important if she gets a larger role. We have done some on MMT, and will do more. See, e.g., https://popularresistance.org/jail-the-bankers-and-take-back-control-over-money/.

    But, at the same time we will report on those who want to tax the rich because even if MMT were the reality the wealth divide is damaging and 50 years of trickle down economic theft needs to be confronted.

  • kevinzeese
  • Max Mastellone

    Who exactly are “grassroots economists” and what professional can be educated in their field by a layperson? You have the Union of Radical Political Economists whom I, as a socialist for 50 years, expected would have eagerly picked up the MMT banner, but for whatever reason have not. No, the best bet for MMT is to reach a critical mass of public opinion that will express to Congress the outrage of having been seriously and consistently lied to.
    You may understand MMT, but by your hesitancy it sure does not sound like you accept or believe it. I see it as an invaluable tool for progressives to use as an entre to grassroots organizing and raising public consciousness.
    PR shouldn’t stop talking about taxing the rich, but they should stop conveying the false taxpayer money narrative. It is counter-progressive. It only makes it harder for progressives to make the case for increased public purpose spending.

  • chetdude

    It’s not that easy — you may try to explain it on-line every day but I suspect that few who read it, get it.

    And AOC’s economics background means she may understand it but as someone who has to communicate and energize a constituency who does not and thanks to years of USAmerican capitalist propaganda cannot, would find it just as difficult as you or I do to communicate the concepts and just trying to do so would deflect from essential Populist messaging that works…

  • Max Mastellone

    What exactly is the “essential Populist messaging that works”? I know of none. Nothing has worked for the 99% for decades. You seem to be advocating voluntary censorship. It’s pretty obvious to me if one wants to get critical information out to the public, you need to start talking about it. By doing that for the last several years myself and other MMT advocates have succeeded in creating a buzz and a lot of interest, to the point that now even main stream media is talking about it. If people don’t know about something, they can’t learn about it. As it is, MMT is a very valuable tool that progressive organizers can use to promote the progressive agenda popularized by Bernie, and which most Americans want. When I talk about MMT online, as here, some people ask for more info and they potentially become advocates themselves. Thats a very good thing.

  • chetdude

    Please, it’s NOT an either/or — I’m just trying to patiently explain to you why AOC may understand MMT but shouldn’t use it as a leading talking point…

    ‘What exactly is the “essential Populist messaging that works”?’

    The talking points are Expanded and Improved Medicare for All, College without Crippling Debt, End the Wars, Tax the Rich Again (to pay for the wars that increased their wealth), a Decent Living Wage and/or Guaranteed Annual Income, etc.

    Those messages are working…

    Reject the meme and corporate-sponsored/media impediment of “How are you going to pay for it!” How Donald was going to pay for his new Fascist State was irrelevant to his “election”…

    We must take over, put the policies in place and THEN can utilize MMT to “pay for it all”…

  • kevinzeese

    Yes, raising MMT at the beginning just confuses things. It is a MINORITY viewpoint in economics, not accepted by the Congressional Research Service. Bringing it up in the beginning gets you into a debate about MMT and not Medicare for all or other popular issues. MMT advocates will like it, but it will be a hurdle added to the debate, not helping it.

  • Max Mastellone

    I do not require condescending “patient” explanations. I require valid explanations. To sideline introducing a perfectly frank and true explanation of how the govt can readily provide them, when talking about achieving new and expanded social programs has no valid justification. Everytime someone with a huge megaphone like Bernie or AOC fails to weave MMT into their remarks, they have missed an incredible opportunity to move the progressive agenda forward. “We” are not going to take over anything from the oligarchs through current duopoly controlled electoral politics. But if we educate the public on MMT, we can build a force that can make Congress an offer they cannot refuse when it comes to delivering social programs.

  • chetdude

    Again, my comment was NOT directed at YOUR posting about MMT just your suggestion that sounded like AOC should lead with that instead of more understandable policy proposals.

    MMT is a possible METHOD to finance what we need but we’ll never get there if we don’t get a critical mass demanding the Programs and Policies that will need that financing.

    Of course, other than Health Care (and Expanded and Improved Medicare for All will save money overall) everything else we need could be financed by ending the wars.

  • chetdude

    MMT is a description of how water is created/obtained but doesn’t say anything about who gets clean water and who doesn’t.

    See what I mean — it’s a (slightly arcane) description of the process of creation but NOT relevant to how and where what’s created is distributed or used.

  • chetdude

    I’d say our task is much more elemental.

    For instance, a recent article indicated that the vast majority of USAmericans who want “Medicare for All” still don’t know what it is and what it means…are entirely ignorant about the details and therefore the support is still paper thin and can easily be dissuaded by the corporate media machine.

    I’d concentrate on getting the People’s Agenda in place and then stop the wars to “pay for it”…