Class warfare again

I rarely read Matthew Yglesias but his name popped up as an “updated weblog” so I clicked on over to see what was poppin’ fresh. Unfortunately, it was more same ol’ same ol’. Apparently some poor soul (Steve) wrote to Matt saying that the government needs to cut spending. Matt responds with the slovenly logic of a Hobson’s Choice:

The last proposal was to cut Department of Education funding. I don't really know the specifics here so maybe there are things that should be cut (again, e-mail me the line item proposals and I'll look into it) but ask yourself this question:

The primary problem facing America today is:
A: The schools are bad.
B: Rich people don't have enough money

My answer is "A" and I'd be very interested to here Steve justify "B."

Way to set up an argument in your favor, Matt. You could put pretty much any societal problem in for “A” and essentially demand the “rich” pay for it with “B”. For good measure, he insists: "We need to raise taxes.” [Emphasis in original]

In one of P.J. O’Rourke’s books (I have to find this quote), he said that the sum total of the Democrats philosophy is “give me a dollar.” The liberal mindset doesn’t care how you came about that dollar, whether through stock dividends or hard work – they just want it. The Democrats from have used this cudgel of class warfare to appeal to the worst emotions in people, most notably covetousness. “Why should they have so much while you have so little?”

Well, since fairness is all the vogue nowadays, let’s look at the idle rich. As Daniel Drezner notes in this post, they’re not so idle.

One statistic best sums up the changes that have taken place: in 1929, 70 percent of the income of the top .01 percent of income earners in the United States came from holding of capital -- income such as dividends, interest, and rents. The rich were truly the idle rich. In 1998, wages and entrepreneurial income made up 80 percent of the income of the top .01 percent of income earners in the United States, and only 20 percent came from capital. Seen another way, in the 1890s the richest 10 percent of the population worked fewer hours than the poorest 10 percent. Today, the reverse is true. The idle rich have become the working rich!

And as Tony Snow noted on Fox News Sunday this past weekend (to Senator Joe Biden), they’re the people next door trying to run a business:

SNOW: All right, Senator, you probably haven't talked to guys who run 7-11 or a gas station or a dry cleaner because, guess what, they also qualify as the rich.
Here's a question other people would have...
BIDEN: By the way, that's not true, Tony. You've got to make $365,000 a year to get into my game here. Now, if they're making $365,000 a year running a 7-11, God love them, and they should pay.
SNOW: Well, as you know, businesses are taxed as individuals, and therefore they come under the plan that you're outlining.

And the “rich” pay an inordinate amount of taxes already:

• The top 10% of returns ($88,000 and up) paid 66% of all taxes, yet made only 45% of all income.
• The other 90% of all returns (below $88,000) paid only 33% of all taxes, yet made 55% of all income.
• And 48% of all returns required no payment of tax at all, or received a tax credit.

But the Kerrys and Kennedys and Yglesias of the world don’t really care for people like Bill Gates. Bill Gates dropped out of college, took a risk on computers, started a company that today provides employment to thousands of Americans, and has used his well-earned wealth to support many notable charities. Let’s punish him.

Why not just take it all? Economist Milton Friedman answered that question in an interview with John Hawkins:

John Hawkins: Fast forward to today and there are a lot of Democrats & people on the left out there who say, "Why don't we just have exorbitant taxes on the rich and minimal taxes on everyone else"? What would that do to the economy?
Milton Friedman: That would eliminate the rich.
John Hawkins: Right. Would it have a negative effect on economy overall?
Milton Friedman: Well, who would provide the funds, the capital, and the entrepreneurship for the new industries? In a world in which there were no rich people, how would you have ever gotten the capital to produce steel mills or automobile plants? You can do it through the state, but the world tried that with the Soviet Union.
It's an interesting thing. If you ask yourself, "what tax system would be best for the low income group," it's the opposite of what they're saying there. It would be a system with a maximum amount of taxation rather than a minimum. If you look at the taxation system in China for example, which is now doing very, very, well, that's exactly what it is. In Russia you now have a 20% flat tax which is having the effect of increasing revenues rapidly and also stimulating production. You cannot help the poor by destroying the rich.

Ah, but class warfare feels SO good, right Matt?