Though she’s only been a member of Congress for a few days, Alexandria Ocasio-Cortez has a true knack for ginning up controversy.
Last week, the newly minted congresswoman went on CBS’s “60 Minutes” and floated the idea of doubling the marginal tax rate to 70 percent for those making more than $10 million a year. She wants to use the money raised to fund her idea for a Green New Deal to address climate change.
However, her reputation, notwithstanding, this proposal should not be controversial. It’s both good policy and, if played correctly, very good politics for Democrats.
A 70 percent marginal tax rate might seem outlandish, but it’s really not. Throughout the 1950s, ’60s, and ’70s, tax rates were even higher — and that was a period of economic prosperity, with strong, broad-based economic growth, high rates of productivity, consistent wage increases, and low unemployment. The gradual decline in marginal tax rates, which began in the 1980s, has seen a very different economic reality — a decline in economic fortunes for the middle class and a stunning rise in income inequality. Today, the nation’s 160,000 richest families own 90 percent of the nation’s wealth.
Increasing the marginal tax rate to 70 percent on those making more than $10 million would affect a fraction of these people — just 16,000 Americans, or 0.05 percent of the population, make that much. What’s more, they would be taxed at that rate just for their income above $10 million. By some estimates, a tax hike of this size would raise more than $700 billion over 10 years.
America could build a lot of schools, pay teachers more money, invest in much-needed infrastructure, lower health care costs for millions of Americans, and prepare the country for the potential impact of climate change. Increasing the marginal tax rate and reinvesting the money in public spending would spur economic growth and begin the long overdue process of minimizing America’s growing inequality gap.
Or we could keep letting about 16,000 very rich people be even richer.
From a policy perspective, this isn’t even a close call.
The obvious rejoinder to Ocasio-Cortez’s call for massive tax hike is that it’s politically unpalatable.
Many Democrats seem to share this view, since few have raised the issue of repealing the GOP’s massive and deeply unpopular tax cut, passed in 2017. Senator Elizabeth Warren, is one notable exception. She has floated the idea of repealing the estate tax and raising rates to pay for new affordable housing.
In failing to take on the issue, Democrats are not only ignoring a giant kitty of money with which to pay for their progressive priorities, but they are walking away from a potentially dynamite political issue.
The fact is, Americans are OK with raising taxes on super-rich Americans.
For years polling has shown that Americans think the rich pay too little in taxes and should be required to pay more. A CBS poll from fall 2017 shows 58 percent of Americans support increased taxes on “wealthy Americans” and 56 percent support them going up on corporations. Going back to the early 1990s, Americans have consistently said that they think “upper-income people” pay “too little” in taxes.
When Republicans passed their tax bill in 2017, Americans across the board saw it for what it was – a gift to the rich and well-connected that did little for them.
The polls may even be underestimating the potential popularity of a tax increase on the richest Americans. Generally pollsters ask about higher taxes in the abstract. But what if those tax hikes were connected to expanding benefits for them? Would a call for higher taxes — and for using the savings to subsidize cheaper health care or child care, forgive student debt, increase Social Security or Medicare benefits, or generate new investments in infrastructure and green technology — resonate with the public? It’s not hard to imagine that it would, particularly when you consider the deep unpopularity of the GOP tax bill.
Republicans will of course respond that Democrats are engaging in class warfare — and they’re right. There’s no reason for Democrats to deny it. For decades now, the richest Americans have waged class warfare against the poor and middle class. Aided and abetted by the Republican Party, they’ve used tax cuts and arcane tax breaks and shelters to plunder the national treasury of trillions of dollars and left peanuts for the rest of us.
Democrats should no longer be afraid to demand that the rest of us take back what we deserve.Michael A. Cohen’s column appears regularly in the Globe. Follow him on Twitter @speechboy71.