Maybe Rich People Don't Like Obama Because He Wants To Raise Their Taxes Substantially

Moneybox
A blog about business and economics.
May 22 2012 8:14 AM

Maybe Rich People Don't Like Obama Because He Wants To Raise Their Taxes Substantially

1337688844739

Every once in a while I read a new round of speculation about the psychological underpinnings of rich finance types' strong turn against Barack Obama. Many of these articles include some insight, but I think they tend to dance too quickly past the baseline hypothesis that people don't like to pay higher taxes and thus these people don't like Obama because he's asking them to pay substantially higher taxes. Some of that goes back to a fairly widespread progressive misperception that the president is merely proposing to return to the income tax rates that prevailed during the Clinton administration when he is in fact proposing somewhat higher taxes than that.

Above you'll find the Tax Policy Center's October numbers. EGGTRA is the acronym for the Bush tax cuts. So relatively to the pre-EGGTRA rates, the Obama proposed tax code would increase the burden on the top 0.1 percent by 2.8 percentage points and on the top 1 percent by 1.9 percentage points. Those aren't gargantuan increases, but 2.8 percent of an income that runs into the millions of dollars means tens of thousands of dollars. Yes of course you can say that these guys are rich enough that they won't really miss the money in a practical sense. But still, if a millionaire's BMW gets totaled by the valet or the dry cleaner shreds his best suit he's going to be pissed off. Ultimate in life we'd all be happier if we could learn to adopt more of a zen attitude toward mishaps that don't put ourselves or our families in objective financial distress, but realistically people would rather keep that money.

Advertisement

A key point, I think, is that the president's proposals are clearly undertaken with a view to the idea that people don't want to pay more taxes. Relative to the pre-Bush rates, Obama will cut taxes not just for the bottom twenty percent or the bottom fifty percent or the bottom eighty percent but for the entire bottom 99 percent of the income distribution. That's a perfectly plausible response to the evolution of income inequality trends, but I don't think it's surprising that very high income people dislike it. Obama is proposing a substantially more redistributive tax code than Clinton and in exchange he's getting somewhat more blowback from the folks who'd lose out.

Matthew Yglesias is the executive editor of Vox and author of The Rent Is Too Damn High.

TODAY IN SLATE

Justice Ginsburg’s Crucial Dissent in the Texas Voter ID Case

The Jarring Experience of Watching White Americans Speak Frankly About Race

Here’s Just How Far a Southern Woman May Have to Drive to Get an Abortion

The Most Ingenious Teaching Device Ever Invented

Marvel’s Civil War Is a Far-Right Paranoid Fantasy

It’s also a mess. Can the movies do better?

Behold

Sprawl, Decadence, and Environmental Ruin in Nevada

Space: The Next Generation

An All-Female Mission to Mars

As a NASA guinea pig, I verified that women would be cheaper to launch than men.

Watching Netflix in Bed. Hanging Bananas. Is There Anything These Hooks Can’t Solve?

The 2014 Kansas City Royals Show the Value of Building a Mediocre Baseball Team

  News & Politics
The World
Oct. 20 2014 1:13 PM Obama’s Post-Congressional Foreign Policy
  Business
Moneybox
Oct. 20 2014 12:37 PM The Fed Will Probably Stop Injecting Huge Sums of Money Into the Economy This Month
  Life
The Eye
Oct. 20 2014 1:20 PM The Berlin Wall Resurrected, 25 Years After Its Fall
  Double X
The XX Factor
Oct. 20 2014 1:10 PM Women Are Still Losing Jobs for Getting Pregnant
  Slate Plus
Tv Club
Oct. 20 2014 7:15 AM The Slate Doctor Who Podcast: Episode 9 A spoiler-filled discussion of "Flatline."
  Arts
Brow Beat
Oct. 20 2014 1:26 PM This $248 Denim Jumpsuit Is the Latest Example of a Horrible Fashion Tradition
  Technology
Future Tense
Oct. 20 2014 12:54 PM The Earth Just Had Its Warmest “Year” on Record
  Health & Science
Medical Examiner
Oct. 20 2014 11:46 AM Is Anybody Watching My Do-Gooding? The difference between being a hero and being an altruist.
  Sports
Sports Nut
Oct. 20 2014 10:23 AM Where I Was Wrong About the Royals I underestimated the value of building a team that’s just barely better than mediocre.