Besieged and beleaguered on $200,000 a year; the rich feel too poor to pay more taxes. They’re wrong, and liberals should let them know why

Besieged and beleaguered on $200,000 a year; the rich feel too poor to pay more taxes. They’re wrong, and liberals should let them know why

Charles Peters

by Charles Peters

Hardly a day goes by without a newspaper or magazine article proclaiming that the liberals or the Democrats are in disarray-leaderless, programless, and afraid to take a stand on anything. But I am convinced that there is a way out of the mess. It is a path that goes through some surprising areas usually thought to have little to do with politics and public policy.

The first step is overcoming the fear of taking a stand. It comes from another fear-the one that says avoid ideas that might be unpopular because they might lose elections. But if we advocate what is popular, we are sure to be wrong. The country itself is wrong, still mired in materialism and selfishness. The Me Decade is now in its 21st year. The ostentatious greed of Donald Trump may be on the way out, but there is little sign that social responsibility is on the way in.

The most successful films, even the most charming ones, such as “Big” and “Rainman,” are about personal authenticity and relationships among lovers, friends, and family. Few are about our duty to a larger community. Few have characters like George Bailey in “It’s a Wonderful Life” or Atticus Finch in “To Kill a Mockingbird.”

Sixty percent of our youth say they would be unwilling to volunteer for a year in an organization like the Peace Corps or VISTA. Only 12 percent think good citizenship requires any kind of political activity, even voting. James Fallows reported in a recent issue of The New York Review that this spring 36,000 graduating students applied for jobs at just one mergers and acquisitions house.

These people don’t need a leader who agrees with them. They need a leader who says they are wrong and shows them a better way.

A crucial way the country has gone wrong is that the natural aversion to taxes, especially to those on income, has become an obsession. The result is that even though the top tax rate was 38 percent just three years ago, the highest increase being considered today is from 28 to 33 percent, and even that modest proposal seems unlikely to be adopted by the president and the Congress.

Democrats are abandoning the great liberal goal of transferring enough wealth from the rich to the poor to give everyone a fair chance in life. The New Republic’s Mickey Kaus says: “Redistribution. Forget it.” The New York Times describes the founders of a new liberal magazine as believing that a major reason for the decline of liberalism is “an overemphasis on the concept of redistribution of wealth.” And E. J. Dionne Jr. of The Washington Post says, “The half-century old concept that government has a responsibility to narrow the gap between rich and poor no longer guides the design of American economic policy.”

Dionne goes on to point out that, even when Daniel Patrick Moynihan proposes reducing the Social Security burden on workers, he does not advocate taxing the rich at a higher rate instead.

I do. It is here that I think the battle line must be drawn. Instead of continuing to surrender to the greedy, we must lead a resurgence of the generous spirit that has been at the heart of the great liberal tradition.

Consider, for a moment, the cruel impact of the social security tax on those who deserve our help most-the working poor-and ask yourself how it fits that tradition.

Suppose the young black ghetto male who fathers two children by a teenage girl does not desert her and take up a career as a dope peddler, leaving the girl and the children on welfare, as many of us fear he will. Suppose instead he marries her and takes a job flipping burgers at McDonald’s and manages to make about $8,000 a year. Instead of giving him the medal he deserves, what do we do? We take $612 from his pay in social security taxes.

There is a simple answer to this problem. Have taxes paid only by people who can afford to pay them. Don’t crush those who can’t afford to pay.

The good news is that there are plenty who can afford to pay and pay a lot more than they’re paying now. There are almost three times as many millionaires today as there were just ten years ago.

If the rich can afford to pay, the next question is: Will they pay?

Many conservatives and even liberals like Kaus argue that the wealthy never paid the high rates that prevailed from the 1940s through the 1970s. The lore is that they all hired clever attorneys and accountants who either exploited existing loopholes or persuaded Congress to create new ones to help their clients avoid taxation. Some of this sort of thing did happen, but during almost the entire period most of the affluent did pay much higher rates than they do today. This was overwhelmingly the case with those whose income came from salaries. The shelter business did not become a major industry-and a major factor in tax avoidance-until the latter half of the seventies.

But even if the rich have paid higher rates in the past, will they pay them now, or is the motivation not to pay stronger today than it used to be?

The answer is yes. Two major changes have occurred that make the affluent more resistant to taxation. And if we don’t understand them, a proposal to raise taxes will be political suicide.

One is growing skepticism about government, about the ability of public bureaucracies to spend tax dollars wisely. Consider the public schools.

A recent headline in The New York Times read:

“New Jersey Voters in Revolt Against Soaring School Taxes”

That more than stinginess is involved in this rebellion is suggested by an article that appeared in last month’s Money magazine. It compares the schools of Delran, New Jersey, with those of Geneva, Illinois. The latter spends less money but produces clearly better educational results.

It doesn’t take much common sense to realize that spending more money on across-the-board increases of teachers’ salaries is going to encourage the bad teachers to stay. What we need are salary increases that reward only the good teachers.

Perhaps the most persuasive argument against thinking that money will solve* the problem of the public schools comes from scrutinizing their administrative staffs. Although parochial schools in Chicago need only 32 administrators to oversee 200,000 students, the Chicago public schools require 3,000, about a hundred times more, to administer 400,000, or just twice as many, students. And if that shocks you, ponder the District of Columbia schools, which have 80,000 students, or one-fifth as many as Chicago, yet employ 400 more administrators. And the 3,400 D.C. administrators count only those that are not directly involved in school support activity ! This means that much of the money needed to reward and attract good teachers can be found by slashing administrative budgets. In the District of Columbia, for example, 36 cents of every school dollar goes to the bureaucrats.

Note, however, that I said “much of the money.” Some is going to have to come from higher taxes. Head Start teachers are making only 12,000, which is way too low to attract good people. And we are far short of funding Head Start for all the children who need it. This is an undeniably good program, not a bureaucratic boondoggle. We should spend more money on it.

The point is that while we can and should save many billions of dollars by the surgical removal of fat at all levels of government, we also must face the fact that more money is going to have to be spent to give the nation the roads and schools and health care it wants, not to mention cleaning up the environment and funding a new Marshall Plan to help the emerging democracies get on their feet.

There is another and much more powerful factor than the declining faith in government in the increasing resistance to taxes. People today want lower taxes because they feel they need more money. Why do they feel that way? Why do the rich want to be so rich? Why did money get to mean so much in our society? How did nice guys come, in the seventies and eighties, to behave in increasingly selfish and greedy ways? The story begins with two developments of the period following World War II:

First was the education that the GI Bill made available to an entire generation of young men. The fact that higher education was readily available to all devalued the college degree. It was no longer an automatic ticket to the upper middle class.

Second, many of the veterans moved to the suburbs, partly to get better housing and partly because they no longer wanted to be identified with their old neighborhoods. This was only the first of many physical changes of place that eroded the sense of belonging to a community. The most powerful of these was that in the postwar era corporate America routinely transferred its employees from one location to another every few years. This meant as you moved from place to place you had to quickly establish your identity. Just having a college degree was no longer enough. It became important to have other distinctions-having a degree from an Ivy League institution or a graduate degree-or, and this was to be the key to most of the subsequent problems-by demonstrating taste.

If you wore the right clothes, read the right books and knew who was in and out in the world of art and literatures-the ins included Picasso, Kafka, Henry James, and The Partisan Review, the clearest out was Victorian architecture-you were accepted in the club. I have long suspected that the major reason for “My Fair Lady”‘s popularity was its message that you can learn how to move up in class: acquire the right accent, wear the right clothes, know the latest small talk and you will be accepted.

While taste could be acquired through a thorough knowledge of art and literature, that involved a lot of work. It was easier to demonstrate taste by buying the right things, from the right tonic water to the right shirt-and to rely on someone knowledgeable to tell you what to buy.*

The Henry Higgins of America’s emerging elite was The New Yorker. Its ads told you that the right tonic water was Schweppes and the right shirt was Hathaway. Its critics told you what to admire in the theater, art, music, dance, and literature. During the fifties, as advertisers realized The New Yorker’s power, it swelled with ads that told people what to buy and with columns that told them what to like in the arts. Its cartoons and “The Talk of the Town” even supplied them with the right small talk. Anyone who lived through the fifties must recall acquaintances whose entire conversational repertoire could be predicted from the contents of The New Yorker’s recent issues.

Then came the Kennedys. Upwardly mobile themselves, they instinctively knew how to exploit similar aspirations among the voters. Their influence, although in many other respects admirable, had the unfortunate effect of producing explosive growth in the taste-class industry. The women who adopted Jacqueline Kennedy’s hair style began to want her designer clothes as well.

The demand for guidance in what to buy quickly became more than The New Yorker could satisfy. City magazines like New York and The Washingtonian sprang up across the country, each dedicated to furnishing even more explicit guidance than The New Yorker provided on such matters as the right wines or the right places to eat.

In the seventies and eighties, these magazines were joined by dozens of other publications, like Spy and the revived Vanity Fair, and by greatly expanded lifestyle sections in newspapers, all designed to help the upwardly mobile ascend the ladder.

At first, this trend was relatively harmless. Back in the forties and fifties, keeping up with The New Yorker didn’t have to involve spending a lot of money. I remember buying a cotton suit in 1946 at Brooks Brothers for $20. In the 1950s, just a couple of dollars more would pay for the correct cotton raincoat at Abercrombie’s. A frugal two months in Europe was possible for less than a thousand dollars-and Europe ranked second only to The New Yorker as the Henry Higgins of the era. Balcony seats for the ballet, the opera, and the theater could be had for a couple of dollars. And the tonic water The New Yorker told you was the right one-Schweppes-cost just pennies more than the other brands. Great taste, less fulfilling

Then as people began to compete in the expression of good taste, money began to matter. Knowing the difference between red and white wine, which made you sophisticated in the fifties, was no longer enough. Now you had to learn to distinguish a Burgundy from a Bordeaux, then vintages, then vineyards. By this time you were into a bottle that cost 10 or 20 times what you were paying in the fifties. The same happened as the MG, the “in” foreign car of the fifties, which could be bought for $2,500 or so, became a Maserati in the eighties. At the same time, Jackie’s designer labels were escalating the cost of clothing-and a host of other items. The monthly credit card statements were beginning to get depressing.

It was as people struggled to pay their bills for the fancy cars and the vacation homes at Aspen and in the Hamptons, that we began to see the sense of beleagueredness, of being alone with one’s back against the wall, that is so characteristic of the present time.

This is what led to the explosion of rules-bending that occurred in the eighties, not just on Wall Street but also in savings and loans all over America. When I was a member of the West Virginia legislature in 1960, 1 thought the place was crooked because about 10 percent of the legislators could be bought for cash. In the eighties the state’s entire legislative leadership was convicted of corruption. In the federal government, where corruption had not been a major problem, we saw major scandals at HUD and at the Pentagon. Even the spies, such as the members of the Walker family, instead of being dedicated communists, had their hands out for cash.

People justified this kind of corruption because they were desperate to get more money. And here again another important factor was that loss of sense of community.* If you don’t feel part of a community, you’re not obligated to others. You don’t worry about cheating people you don’t know. If, for example, you evade taxes that would go to pay for the education of poor children, it doesn’t bother you because your and your friends’ children go to private school.

So not being part of a community led to the need to establish one’s identity by proving taste, which led to the need for more and more money, which led to corruption, which was justified because you weren’t part of the community.

What can we do to interrupt this mindless cycle?

Of course, the best solution is to put an end to snobbery. But we’re not going to do that soon. I recommend Cheap Chic as a quick way to get us started back to the right path.

To start with, tastemakers like Tina Brown should glorify a sneaker so inexpensive that practically everyone can afford it. This would have the additional benefit of eliminating ghetto homicides over a pair of Nikes.

The most perfect example of Cheap Chic I have known is the book Europe on $5 a Day, which was immensely popular in the fifties and sixties. It made a great game out of figuring out how to do the grand tour at absurdly low prices.

The people who need Cheap Chic the most are the couples making $100,000 to $250,000. Many of the most influential couples in the media and the government fall in this group. They have the power to prevent a tax increase, and they are the ones who feel most beleaguered by the cost of the BMW and the Volvo, the Georgetown house and the condo at Vail, and the two kids at Harvard. Many really do have a hard time affording all that.

Instead of that BMW and Volvo, they should consider a Taurus and an Escort.* Instead of having a vacation home, why not just take a vacation like regular people used to do? Instead of sending the kids to Harvard, why not send them to a good state university like California or Michigan? Or do the parents have so little faith in the kids’ ability that they think they must pay a premium price to give them a leg-up among the elite? And instead of sending them to Exeter or St. Paul’s, why not work to reform their local public schools where the tuition is zero?

What we most need now is a Spy magazine that frees itself from trying to be part of an exclusive club and instead is totally devoted to ridiculing the idea that money proves taste and that taste proves class, or that class is even important.

Then we can go to work eliminating all the other things that divide us, from the adversarial legal system, which is becoming more and more poisonous and wasteful of talent as more and more of our brightest people seek their fortunes in the practice of law, to the racial hostility that is increasingly fueled by class antagonisms, to the political action committees, which are the embodiment of the politics of selfishness. But make no mistake, excessive regard for money is Public Enemy Number One.

COPYRIGHT 1990 Washington Monthly Company

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