Saturday, January 17, 1998

Myth of 'favoring tax cuts for the rich'

By WILLIAM A. RUSHER

Newspaper Enterprise Assn.

If there is one Democratic myth that annoys me more than any other, it is the old chestnut that Republicans "favor tax cuts for the rich."

Like most big lies, this one contains an annoying kernel of truth. Because the top 5 percent of income earners pay half of all the income taxes collected by the government, and the bottom 50 percent pay only a 20th of them, any proposal to cut taxes is almost sure to "favor the rich." But the Democrats' implication is that Republicans want to cut taxes because they are instinctively sympathetic toward the rich.

And that is not only false, but tends to prevent people from understanding why tax cuts are important to the health of the nation.

As a recent example of this Democratic myth in operation, look at the last sentence of Jacob Heilbrunn's TRB column in the Jan. 19 issue of the New Republic magazine. Heilbrunn has been bemoaning the fact that the gap between the richest and poorest Americans has widened a bit recently and warns that demagogues can use this to undermine the case for such important Republican values as free trade.

He then concludes, "In their relentless pursuit of further tax breaks for the rich, Republicans could end up destroying the very prosperity they purport to seek."

One could spend this whole column pointing out that (1) if you divide Americans into five numerically equal groups (or "quintiles") based on their income, (2) let the American economy grow as robustly as it has in the last seven years, and (3) simultaneously keep flooding the country with both legal and illegal immigrants willing to work for peanuts, the gap between the top and bottom quintiles is absolutely bound to grow.

But let that pass. What about the Republicans' alleged "relentless pursuit of further tax breaks for the rich"?

I have been a Republican practically all my life. In all that time, I have never been what passes these days for "rich." And it has never crossed my mind to spend my life working to decrease the tax burden on those who are.

For one thing, I can take the rich or leave them alone. I have known a fair number of rich people, including a few who are really rich, and they vary all over the place. Most are about average, or a cut above, as human beings go. A few are really despicable. The richest of them all happens to be a man with one of the sweetest and kindest personalities I have ever encountered. But none of them needs, or will get, my help in lowering their taxes simply because I have some overpowering urge to serve them. I don't.

What I have noticed, however, is that in a free economy rich people play an absolutely indispensable role in providing the capital needed to make the economy hum. It doesn't matter whether they spend every nickel they earn, or invest a large portion of it in stocks or bonds or some enterprise that tickles their fancy, or simply leave it in a bank. Short of burying it in the ground, there is no way they can prevent it from contributing to the nation's prosperity.

Suppose Dick Gephardt and the left wing of the Democratic Party succeeded in confiscating all of the private wealth in the country and taxing away whatever an individual could earn in excess of $50,000 a year. They would effectively have destroyed all of the employers in America. What then, do you suppose, would happen to the employees -- those "working families" they profess to love so much?

The Democrats had better be careful what they ask for -- they might get it.

William A. Rusher is a Distinguished Fellow of the Claremont Institute for the Study of Statesmanship and Political Philosophy.