Liberals recognize that as long as the poor and the middle-class believe in upward mobility they will never sign on to their soak-the-rich, big government agenda. Consequently, the tax-the-rich crowd has a vested interest in convincing Americans that the American Dream is a fraud.¹
My tax blogging colleagues Linda Beale and James Maule are among many on the left who wax incredulous when the poor and the middle-class oppose tax increases on the rich. Because Beale and Maule cannot comprehend that people might have good and patriotic reasons not to act in their own temporary and narrow best-interests, they must assume that those who do not are dupes of the rich and powerful. And by assuming that, they insult the intelligence of the very people they say they want to help.
Paul Caron has published an important excerpt of an article from The Economist titled Don’t Look Down: The Poor Like Taxing the Rich Less Than You Would Think:
[There are] longstanding differences between Americans’ attitudes to taxation and those in much of the rest of the rich world. America is far less inclined than many of its rich-world peers to use taxation and redistribution to reduce inequality. …
The differences in attitude towards redistributive taxes are not just between countries but also within them, and economists have several explanations as to why.
When it comes to differences between countries, social cohesion plays a major role. Broadly speaking, countries that are more ethnically or racially homogeneous are more comfortable with the state seeking to mitigate inequality by transferring some resources from richer to poorer people through the fiscal system [Group Loyalty and the taste for Redistribution].
This may explain why Swedes complain less about high taxes than the inhabitants of a country of immigrants such as America. But it also suggests that even societies with a tradition of high taxes (such as those in Scandinavia) might find that their citizens would become less willing to finance generous welfare programmes were immigrants to make up a greater share of their populations.
Immigration can also subtly alter the overall attitude towards such matters in another way. A 2008 study by economists at Harvard [Culture, Context and the Taste for Redistribution] found evidence that immigrants’ attitudes towards taxation and redistribution were rooted in the places they had left.
Social divisions also play a role in determining who within a society prefers greater redistributive taxation. In America blacks—who are more likely to benefit from welfare programmes than richer whites—are much more favourably disposed towards redistribution through the fiscal system than white people are. …
Paradoxically, as the share of the population that receives benefits in a given area rises, support for welfare in the area falls. A new NBER paper finds evidence for an even more intriguing and provocative hypothesis [Last Place Aversion: Evidence and Redistributive Implications]. Its authors note that those near but not at the bottom of the income distribution are often deeply ambivalent about greater redistribution.
Economists have usually explained poor people’s counter-intuitive disdain for something that might make them better off by invoking income mobility.
Joe the Plumber might not be making enough to be affected by proposed hikes in tax rates on those making more than $250,000 a year, they argue, but he hopes some day to be one of them. This theory explains some cross-country differences, but it would also predict increased support for redistribution as income inequality widens. Yet the opposite has happened in America, Britain and other rich countries where inequality has risen over the past 30 years.
Instead of opposing redistribution because people expect to make it to the top of the economic ladder, the authors of the new paper argue that people don’t like to be at the bottom.
One paradoxical consequence of this “last-place aversion” is that some poor people may be vociferously opposed to the kinds of policies that would actually raise their own income a bit but that might also push those who are poorer than them into comparable or higher positions. …
Poverty may be miserable. But being able to feel a bit better-off than someone else makes it a bit more bearable.
What The Economist is really saying is that self-reliant, confident, ambitious people don’t want handouts. They want to do it themselves.
One of Paul Caron’s more astute readers, Yo Gabba Gabba, had this insightful oberservation:
Its a weird thing that people diagnose as afflicted the poor who elevate beliefs over naked self-interest; do not some poor have morals, sense of fair-play, political views, economic views that are more important than confiscating others money to “raise their own income a bit”?
Let’s aim this method at people I disagree with: Progressives who want to pay more taxes.
First place aversion arises from progressives’ moral view that requires them to help everyone– you can never reduce carbon emissions enough, donate to the poor enough, elevate support minorities enough, etc– and holding themselves accountable for failing their moral obligations. And they fail all the time because progressives like nice, expensive cars, clothes, food, yoga studios, Martha’s Vineyard, etc, much too much to abide their moral world view. That moral deficiency causes them to,
- Appoint others who force [others to pay taxes] and contribute to ending every harm; forgiven and made worthy, they ignore that their appointees often harm the poor and force others not afflicted by First Place Aversion to pay; and
- Steal and sully the poor’s lack of culpability for all the wrongs that rich progressive’s can’t fix by paying them off with other people’s money.
¹ The left, in order to convince the majority of Americans that its redistributive, big government policies are the right ones for America, must first convince Americans that they have no chance of succeeding without the help of a bloated government. The left’s rhetoric is designed to brainwash the masses – they call them the unwashed masses – into buying into their cynical delusion that the rich and successful have cheated the poor out of what is rightfully theirs and that only forced, confiscatory taxation will ever set it right.