Maybe they shouldn’t have nominated the vulture capitalist
by David Atkins
As Republicans face up to the reality that they have little leverage going into the “fiscal cliff,” they’re doing their best to shore up support for keeping taxes on the wealthy as low as possible on a variety of fronts. One of those fronts is capital gains income: namely, money made by sitting on one’s behind and watching stock returns come in. Money that is taxed at an abysmally low 15% rate, as opposed to the much higher rate paid by people who actually work for a living.
Raising that rate a little won’t cause a drop in investment: after all, unless the ROI is very low, a good investment is a still a good investment, whether the returns are taxed at 15% or 30%. There may be a few investment decisions on the margins of profitability that might be affected, but if we’re going to be in the business of cutting deficits, the negative impact of those decisions wouldn’t come close to the negative impact of taking money out of the hands of poor and middle-class consumers who spend their money directly back into the economy.
But these arguments are a distraction, anyway. Republicans aren’t concerned about the health of the economy so much as about the offshore bank accounts of their wealthy donors. Those wealthy donors have been skating by politically on the fact that Americans vastly underestimate income inequality and don’t understand the degree to which all the wealth has been concentrated at the very top. Most Americans don’t know that capital gains investments are taxed at much lower rates than labor. If they knew and internalized that information, it would cause a political earthquake.
So maybe Republicans shouldn’t have nominated a vulture capitalist who would ensure that the capital gains rate became a big campaign issue:
Clint Stretch, a former staffer at the Joint Committee on Taxation, said capital gains and dividends could play a role in a fiscal-cliff compromise, given that Republicans are saying they are open to revenue but not individual rate increases.
“Clearly, folks are motoring around, trying to find a way to raise taxes on high-income individuals without raising the top individual rate,” Stretch, most recently at Deloitte Tax, told The Hill. “There seems to be some softness on the treatment of capital gains.”
During the presidential campaign, Romney’s low tax rate received front-page coverage. The GOP nominee paid tax rates of roughly 14 percent on millions of dollars in income in recent years, in large part because of the preferential rate on capital gains.
“Mitt Romney’s personal situation didn’t do capital gains any favors,” Stretch said.
“The message that came across during the campaign became one of, ‘It’s not fair for somebody to make that much money and only pay that much tax,’ ” McCrery said.
The wealthy elite in America aren’t really all that smart. They live in a social bubble that is largely disconnected from the real world. Most of them got fantastically lucky through social connections, having one bright idea once and the social capital to leverage it, or just being in the right place at the right time. And like everyone, they want desperately to be loved. More so, actually, since their wealth tends to give them an insecurity complex. Most of them know deep down that they don’t really deserve to lead lives of palatial privilege compared to the rest of America. For many, that leads to a sense of noblesse oblige that understands the necessity to give back to the society that enabled their success. But for many others, a psychological retreat to Objectivism begins to self-justify and protect themselves from guilt.
Part of that process involved the attempt to send one of their own to the White House, a vulture capitalist who would receive an affirmative majority of the vote, proving that the American people would gladly accept the superiority of their social class.
They were wrong. The American people took a look at Mitt Romney, his preferential tax rates and his condescending attitude and said, “no thanks.” And now those preferential tax rates may be in trouble.
Such is life, and such is the peril of hubris.
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