When Barack Obama pulled his proposal to tax so-called 529 plans, which help people save money for their kids' college, commentators were quick to use the episode to show the overwhelming cultural and political power of the "upper middle class."
"The upper-middle-class vote and get on the phone with their Congressperson any time a proposal like Obama's [529 reform] comes up, ready to kill it before it gets started,"went one analysis. "The upper middle class controls the media we consume…. They run our big bureaucracies, our universities, and our hospitals. Their voices drown out those of other people at almost every turn," ran another.
With folks like these calling the shots, critics aver, we'll never be able to raise taxes to cover increased spending or, alternatively, we'll never be able to cut spending to manageable levels. In my most recent Daily Beast column, I argue that vilifying the upper middle class, especially via guilt for their success, is a mug's game and explain a preferable way forward. Instead of focusing on various ways to goose taxes on the wealthy-but-not-fabulously-rich, we need
…to appeal to them—and all Americans—through honest accounting and a serious, adult conversation about what we can and want to afford.
Between 1965 and 2014, federal revenues averaged 17.4 percent of GDP. Occasionally we've pulled in less; occasionally we've pulled in a bit more. That includes periods when the top income tax rate was well over 70 percent and when it was below 30 percent, when capital gains were this and that, corporate taxes were higher and lower, etc. There is simply no reason to believe America will be guilted or gulled into jacking it up much more than that for any length of time. So it represents a pretty good estimate of what Americans are willing to pay for government.
How to bring spending down to that level is the conversation we need to be having, not one about how to squeeze a few more dollars out of the awful upper middle class with their Whole Foods, their artisanal cheeses, and their fancy cars. The trouble with our welfare state isn't that the numbers don't add up. It's not a math problem. It's a vision problem: There's simply no way to be all things to all people.
