Say “No” to Conservative Class Warfare

by Sal on November 21, 2008

in Economy,Politics

There is a movement of “reformers” within the Conservative movement who want to target Conservative policies to the middle-class.  Ramesh Ponnuru at National Review is one of them.  I don’t have a problem with coming up with ideas that benefit the middle class, but it should not turn into class warfare.  Ponnuru, I feel, is taking the class warfare route, and narrowly defining the middle class.

In a post over at The Corner, he criticizes a plan put forth by Newt Gingrich and Peter Ferrara, which aims to reduce the 25% tax bracket to 15%, so that the tax bracket up to $131,000 / yr. would be 15%.  Only after $131,000 would there be a huge jump to 28%.

I personally think that is a great idea.  Even though it targets the middle class, it also affects ALL taxpaying Americans who make more than $61,000 / year, as the tax brackets are progressive (i.e. everyone pays 10% on their first $16,000 of income, then 15% on income earned from $16,001 to $61,000, etc.)

Ponnuru attacks the tax plan because of this, because it would give a tax break to the wealthy.  In criticizing the plan, Ponnuru states:

First of all, the vast majority of tax filers don’t hit the 25 percent tax bracket, so this proposal is upper-middle-class tax relief at best.

Second, keep in mind that it is not just the middle class that pays the 25 percent rate. Under our tax code, a couple is in the top tax bracket, for example, pays 10 percent on its income up to $16,000, 15 percent on the next chunk of income up to $65,000, 25 percent on income up to $131,000, and so on. What this means is that most of the money that the 25 percent tax rate raises for the federal government is not taxed at the margin. Cutting that rate will lower tax payments for many affluent people without changing their incentives at all. For them, the tax-rate cut has the same effect as giving them a tax credit. The federal government would lose a lot of revenue without much reducing the tax code’s distortion of American life.

I wholeheartedly disagree with this logic, and am offended by some of its assumptions.  To say that any family making $80 or $90,000 in the northeast is “upper-middle class” is a distortion of the reality of New England/New York life, and completely untrue.  Geography and cost-of-living plays a part in what socio-economic status one finds oneself in.  The price of real estate alone makes Ponnuru’s claim absurd on its face.

Second, Ponnuru sounds a lot like liberals engaged in class warfare.  To propose a child tax credit alone, without regard to other people’s burdens, sounds an awful lot like Obama’s plan.  While I am not opposed to any tax cut on its face, to use the class-warfare arguments of the left, as well as defining normal, middle-class Americans as “upper-middle class” engages in rhetoric that is the antithesis of what the Conservative movement stands for — equal opportunity for all Americans.  Ponnuru misses this point, and ignores the plight of us middle-class New Englanders who are soaked with high taxes and a high cost of living, and would like a bit of a tax break too.

UPDATE: Welcome NRO Corner readers.  To respond briefly to Ramesh’s rebuttal to my post, the Census Bureau does not take into account geographical differences in cost-of-living.  What may be middle-class in Nebraska is not the same as middle-class in Massachusetts, New York, or California.  Ramesh just happened to hit on a pet-peeve of mine, the throwing around of the term upper-middle class to describe those in more urban areas of the country who make decent yet by no means affluent wages.  I take the idea of middle-class to be much broader than what Ramesh states it is, and even the Census bureau itself says that they have no official definition of the middle-class.  Appealing to the middle-class is important as is appealing to all income brackets, but I think Conservatives need to avoid identity-politics, and this is bordering on that.

While Ramesh may be right in what he has said in the past has been against class warfare, his arguments above do seem like class warfare, intentional or not.  I don’t think his rebuttal argument holds water, but then, what do others think?  I’d love to hear other opinions.

{ 10 comments… read them below or add one }

Keith L. November 21, 2008 at 4:47 pm

Well said. People should research the price of a two-bedroom apartment in New York City before declaring an income of $65,000 a year “upper-middle class.”

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Dai Alanye November 21, 2008 at 6:23 pm

Regret to say you’re being a goober. Designing tax cuts to hit the largest number of people obviously makes good electoral sense, and that should be our major concern at present. What who earns where shouldn’t be part of the equation. Further, regardless of whether you have children, you once were a child, and the tax credit is partly designed to help children and the parents who raise them. Is this a bad thing? I think not.

Of course the best and widest application of a tax cut would be corporate taxes, since everyone buys goods the prices of which include taxes on the manufacturer, distributor, and retailer.

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Sick of Ponnuru November 21, 2008 at 9:27 pm

Bravo! Rather than standing “athwart history yelling STOP!”, under Rich “milquetoast” Lowry and with Ponnuru, National Review more often seems to be standing aside saying “OK, as long as it helps ‘middle class families’.” Conservatives want to reduce the tax burden. Ponnuru wants to follow the Dems and slice and dice by demographics and only dole out tax breaks to those who behave in a certain way. I’m a single woman with no children and I resent that Ponnuru seems to think i have no family. I have parents, siblings, nieces and nephews. I want to help with my parents’ healthcare, contribute to my nieces’ and nephews’ college funds. But rather than honor the conservative notion of letting people keep more of their own money to do with what they will, Ponnuru wants to have the government take from the childless and give it to other people’s families. Sorry Ramesh, but I don’t want to pay for your kids’ college. He says that families are subsidizing others (e.g., social security, medicare.) well…my taxes are too! so I should contribute more than Ramesh because I haven’t had children? and let me tell you, my use of government services is far lighter than ANY family. there’s an argument to be made that the single, childless who care for themselves deserve to pay less…but it’s an argument i won’t make because i think the principle is ‘low taxation’, not “let’s use government to spread the wealth around.’

i’ve let my national review subscription lapse, but visit The Corner for the guest contributors.

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Don Meaker November 21, 2008 at 11:24 pm

Barry Goldwater suggested that an equal share of income had a better claim to being fair than confiscatory taxes on higher incomes.

Cut taxes until the economy grows. Then cut taxes further so that the government is a positive force on the economy.

Cut government until it performs only the constitutionally granted powers. End federal government intervention in agriculture, education and intrastate commerce.

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Knemon November 22, 2008 at 11:59 am

If you’ve got a higher income than 85% of the country, you’re upper middle-class.

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Sal November 22, 2008 at 12:04 pm

Originally Posted By KnemonIf you’ve got a higher income than 85% of the country, you’re upper middle-class.

I’m sorry, but a household with an $80,000 income is NOT upper-middle class. It is also not higher than 85% of the country.

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Stew November 22, 2008 at 3:52 pm

I don’t see the class warfare angle. He seems focused on those excluded not included.
Seems like this is the issue:
Ramesh just happened to hit on a pet-peeve of mine,… I take the idea of middle-class to be much broader than what Ramesh states it is…

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Arkady November 23, 2008 at 12:39 am

So this entire debate is just a matter of defining middle-class? Seems like a lot to do about nothing?
I live in MA and I agree that our cost of living is much higher than the rest of the nation. To put in another way, average income is 45k per family. However 45k/per family in MA is probably close to poverty and it would be a very VERY tough life.

Still, can we truly expect regionally based tax policies?

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Sal November 23, 2008 at 10:21 pm

I think some of you are missing the point of my disagreement with Ramesh. He is specifically discounting a plan put forth by Newt Gingrich because:

Cutting that rate will lower tax payments for many affluent people without changing their incentives at all. For them, the tax-rate cut has the same effect as giving them a tax credit. The federal government would lose a lot of revenue without much reducing the tax code’s distortion of American life.

Ramesh is basically saying that Newt’s plan is not good because it gives tax breaks to the affluent “upper-middle” class.

During this past presidential election, that was one of the arguments that bothered me about Obama. Separating Americans like that into different groups only serves to promote the liberal idea of class warfare. I have nothing against Ramesh, and he may not even have intended to engage in the class warfare argument, although I think he did, possibly unintentionally. The marginal tax rats need to be cut also as a way of promoting economic growth, and tax credits such as the one Ramesh is proposing have shown to do little in that regard.

If we are to look at a solution that will affect all Americans, I’d propose the following:

Drop the 15% bracket to 10%, the 25% bracket to 20%, the 32% to 28%, and the 35% to 33%. Of course, that is a pipe dream in an Obama administration.

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No More Class Warfare Please March 15, 2009 at 12:05 pm

Please read this article on the Individual Income Tax system and Class Warfare for an interesting fact based analysis of the fairness in the U.S. Individual Income tax system:

NoMoreClassWarfare.com

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