Loser Liberalism: The Rich Are Paying Their Fair Share
Brad DeLong has a good chart, which shows how the share of taxes paid by the rich compares to that in other developed countries.
As Brad notes, as a percentage of their total income, the rich pay about what we would expect them to pay. By this measure, then, the rich are paying their fair share. The problem, of course, is that inequality has soared, leading to a situation in which the share of overall taxes paid by the rich has gone parabolic.
All of this exposes the “loser liberalism” stance on tax-and-spending policy. Liberals spend all of their time pushing for a more progressive tax system – we must end the Bush tax cuts for the rich! – when, in reality, the tax system is probably progressive enough. A more winning strategy for liberals would be to focus on lessening the disparities in before-tax incomes.
For example, pushing for a heavy speculations tax on Wall Street would go a long way toward reducing incomes for those who make a living by extracting rents in financial markets. In the same vein, ending the patent monopolies that allow pharmaceutical companies to sell drugs priced as high as a thousand percent above marginal cost would put a significant damper on the salaries of managers within pharmaceutical companies.
Think of it this way: Allowing the rich to rig the market and then focusing narrowly on taxing away their gains through higher income taxes is a lot like arguing about a bad pass-interference call after the game has already ended. One would think that a bad call should be protested the moment it’s made, not hours later when the game is already in the books.
In short, if liberals really want to make a difference in the fight for a more-equal world, then they should focus on undoing the rigging, not on redistributing the gains after the game has already ended.