The New York Times's Nobel laureate, Paul Krugman, has a new column under the headline, "The Angry Rich and Taxes." Mr. Krugman writes, "among the undeniably rich, a belligerent sense of entitlement has taken hold: it's their money, and they have the right to keep it." This isn't a belligerent sense of entitlement; it's the basic concept of property rights; it is their money.
Mr. Krugman goes on: "'Taxes are what we pay for civilized society,' said Oliver Wendell Holmes — but that was a long time ago." Indeed, Mr. Holmes said this in 1927, when the top federal individual income tax rate was 25%, which applied to families earning more than $100,000 a year in 1927 dollars. Why should the cost of "civilized society" have nearly doubled? If you adjust for inflation, the federal tax rate that applied to the $250,000-a-year earners whose taxes Mr. Krugman (and President Obama) wants to increase, was, back in 1927, 11%. Why should the cost of "civilized society" society have quadrupled? (The Tax Foundation has data on the history of the individual income tax).
No one is seriously proposing getting rid of all taxes. The issue is what is the appropriate rate. Even Mr. Krugman (if not Barack Obama Sr.) would probably acknowledge that a 100% tax rate isn't particularly civilized.
Mr. Krugman goes on: "The spectacle of high-income Americans, the world's luckiest people, wallowing in self-pity and self-righteousness would be funny, except for one thing: they may well get their way." The word "luckiest" really goes to the core of Mr. Krugman's view of the situation. He really thinks that high income is the result of luck. Now, luck may certainly play a role in the case of some high-income individuals, such as those who win government-sponsored lotteries. But even those lucky enough to be born with genetic gifts that make them beautiful models or all-star basketball players have to work hard to make a lot of money. Most high-income Americans worked really hard at some point, most of them took risks, and most of them were not rich from the beginning. Now, lower-income Americans work hard, too, and when high-income Americans talk about hard work, it doesn't usually take long before someone throws the example of a miner or a construction worker back at them.
Anyway, the whole column is an example of how President Obama's plan to extend the Bush tax cuts for those earning under $250,000 a year while increasing taxes on those earning more than $250,000 is divisive. If the "rich" are angry, so are their liberal critics such as Mr. Krugman. Rather than uniting Americans, Mr. Obama has divided them along class lines, pitting group against group.
