Upset with President Bush’s tax cut plan, columnist Molly Ivins warns that America’s more well-to-do taxpayers might go out and doing something unproductive if the government seizes a smaller portion of their incomes.
“There’s no guarantee,” Ivins writes, “that rich people will do anything economically productive with more money.” There’s also, of course, “no guarantee” that the government will do anything “economically productive” with the money if there isn’t a tax cut, and “no guarantee” that anything “economically productive” will happen if the government redistributes the money to those who haven’t earned it.
More fundamentally, since we’re talking about people spending their own incomes, not welfare checks, one could well argue that it’s none of Ms. Ivins’ business if the money is spent on something “economically productive” or on a Greek cruise.
In fact, the rich in America have a long record of spending in a manner that makes all of us more “economically productive.” Simply stated, the annual per capita income in the United States isn’t 150 times higher than yearly earnings in Zaire because we have 150 times more natural resources per capita, or because we work 150 times harder per week, or because we’re 150 times smarter or stronger. More than anything, what correlates to the increase in American productivity and income is the increase in the ratio of capital to labor, the expanded level of capital in plants, equipment and technology that risk-taking individuals have invested per employee.
Sounding like she’s overdosed on the Marxist idea that we’d all be better off without savers, investors and entrepreneurs, Ivins sees red when it comes to Bush’s call to end the double taxation of dividends, a reform, if approved, that would deliver a boost to the stock market and strengthen American competitiveness.
Says Ivins: “One reason dividends should be taxed is because the people who get them don’t work for the money. In the old days, people who lived off their investments were known as ‘coupon clippers’ and generally despised as non-working parasites.” For Marx, the despised bourgeoisie made their money off the labor of the proletariat. Or, as Ivins updates it about those who receive dividends, “They’re making money off other people’s labor.” Left unsaid is the fact that workers are making money, by way of higher productivity, off other people’s risk-taking and investing.
From Stalin’s Gulag to Mao’s Great Leap Forward, from Ho to Fidel to Pol Pot, the big story of the twentieth century is that some weren’t satisfied with merely applying a double tax on those who were “despised as non-working parasites.” For the true-believers, the real haters, a massive genocide was required on the road to a parasite-free dreamland. “The Christian imagines the better future of the human species in the image of heavenly joy,” wrote Moses Hess in his “A Communist Confession of Faith” in 1846. “We, on the other hand, will have this heaven on earth.”
By the time it was over, the purification drive for an egalitarian utopia produced 100 million victims, a slaughter that Martin Malia, Professor of History Emeritus at the University of California, describes as “the most colossal case of political carnage in history.”
In 1995, with Republicans in control of both chambers of Congress for the first time since 1952, a proposal was on the table for a cut in the tax on capital gains.
Wrote Ivins: “You don’t even have to read all the economic studies that show that cutting capital gains doesn’t improve investment — just remember back to the 1980s. What did all the newly rich do with their gelt? They paid for gold-plated bathroom fixtures and then used the rest to buy other companies that then bought other companies that then bought other companies, leaving the whole corporate structure riddled with debt. Billions of dollars were spent, but not one additional widget was produced by anybody.”
Well, she’s way off track. Lots more widgets were produced after the Reagan tax cuts in the 1980s. The unemployment rate, 9.7 percent in 1982, fell to 5.5 percent in 1988, the lowest rate in 16 years. Per capita after-tax income in real terms, i.e., adjusted for inflation, rose by 19 percent in the 1980s — nearly double the rate of the 1970s — and the real income of households in every quintile group increased every year from 1983 through 1990.
The annual level of investment spending, in real dollars, jumped by 76 percent in the 1980s and consumer spending nearly doubled, rising in inflation-adjusted dollars from $1.8 trillion in 1980 to $3.4 trillion in 1988. And it wasn’t all spending by the super-rich on gold-plated faucets. In the bottom fifth of income earners, real household income increased by 12 percent in the 1980s, reversing a 17 percent slide between 1979 and 1983. The nation’s poverty population, after growing by 7 million in the 1970s, dropped by 4 million in the 1980s.
And so, here we go again. We’re not all in this together, say the class warriors. The rich, warns Ivins, can’t be trusted to spend their own money in a way that’s “economically productive.” The record shows she’s wrong.
