To Have and Have Not
kUDLOW MONEY POLITIC$
Class warfare doesn’t work. Middle income voters do not sit around throwing darts at the faces of rich people. Nor do they necessarily vote for higher taxes on rich people.
The Sunday New York Times printed a valuable demographic breakout of the presidential voting results. It turns out that the $50,000 to $75,000 income group, which comprised 23 percent of the electorate, went for Bush by a whopping 56 percent to 43 percent. Just below that group is the $30,000 to $50,000 income earners, comprising 22 percent of the electorate, and their results were basically a push: 50 percent Kerry, 49 percent Bush. The bottom two categories comprising less than $30,000 income earners did go for Kerry. But they don’t pay any taxes. The earned income tax credit is refundable and it covers payroll taxes and then some. Basically no one at $30,000 or less pays any income taxes anymore. In broader brush, $50,000 and above, making up 55 percent of the electorate, went for Bush 56 percent to 43 percent. That group includes $100,000 earners, who are 18 percent of the electorate, and went for Bush 58 percent to 41 percent. It also includes the much-attacked $200,000 and over group, which comprised 3 percent of the voters, and went for Bush 63 percent to 35 percent.
Democrats keep flogging the class warfare issue, and they keep losing on it. It has become a Democratic pathology; a veritable addiction that requires rigorous 12-step work if they are to be weaned off of this obsession/compulsion. That $50,000 to $75,000 category that went for Bush by 13 percentage points knows several important things about tax policy. They know that Democrats pledging to raise high income taxes are likely to raise middle income taxes also in order to finance big government social welfarism. They also know that rich people, so-called, have the investment resources to employ them. Or to provide the investment funding seed corn to start a new business or to hire a middle income worker as an independent contractor or consultant.
The political moral of this story should be clear by now, but in all likelihood Dems will be right back with this nonsense in 2008. But the economic principle is even more important: you can’t have capitalism without capital. You can’t have jobs without businesses. You can’t have businesses without investment funding. Therefore, connecting the dots, investment capital from rich people creates the wherewithal for middle income consumption.
Folks in America who work, pay taxes, and vote know this full well. For them, the challenge is to climb the ladder of economic mobility, not destroy the upper rungs of the ladder itself. Over the next few years the trick for economic policy is to convert income into wealth for the middle class. Removing tax barriers all along the way should be policy priority number one. Flatter tax-rates, more tax free savings accounts, greater ownership, and an expansion of the investor class, will promote wealth for everyone, especially the non-rich who wish to become rich. If the Democrats ever figure this out, they will once again become a formidable political party. |
