‘Tax the Rich’ Mantra Is Rooted in Sociology, Not Economics

Alexandria Ocasio-Cortez’s recent Met Gala dress sparked a renewed conversation on the perceived fairness of “the rich” paying their “fair share” in taxes. This leads to questions about who decides “fairness,” and how much that “fair” amount should be.

Before going further, we need to consult the facts, according to the nonpartisan Congressional Budget Office: “In 2018, households in the highest quintile received 55 percent of income before transfers and taxes and paid 70 percent of federal taxes [emphasis added]. Households in the lowest quintile received 3.8 percent of income before transfers and taxes and paid about 0.01 percent of federal taxes, on net.” The share of federal taxes paid by the highest-earning 20% of Americans has increased from 55% in 1979 to 70% in recent years. Is this too little to be considered fair?

Given these facts, it seems reasonable to ask whether the “tax the rich” mantra has more to do with sociology than with economics. Perhaps the notion that income inequality itself is inherently bad is an example of a “luxury belief.” In a seminal article, Rob Henderson introduced that term, which means “ideas and opinions that confer status on the rich at very little cost, while taking a toll on the lower class.” For example, many affluent people will publicly signal their belief that inequality is inherently bad, including business leaders like Jamie Dimon, billionaires-turned-nonprofit-leaders like Chris Hughes, and even religious leaders like Pope Francis. They are signaling that they care about those at the lower end of the income spectrum and are willing to “tax the rich” to close the gap.

Continue reading at Real Clear Politics.