Our current national argument over taxes, debt and the fiscal cliff is nominally about balancing spreadsheets and the arcana of economic formulas, but it’s actually about race. And the fact that those on either side of the budget conversation—both Democrats and Republicans—will not acknowledge as much prevents us from having an honest conversation about what’s at stake.
After the election, President Obama reiterated his call for the top 2 percent of income earners—those making more than $200,000 a year—to pay more. Doing so, he argues, will help ease the country’s current budgetary strain.
Obama couches his case in terms of simple economic fairness, stating that “billionaires and millionaires can afford to pay a little more.” But we’re actually engaged in a bigger debate about racial inequity.
The truth of the matter is that for the past three decades we’ve constructed a tax policy that is responsible for the lowest level of black and brown wealth on record and a dramatic concentration of wealth amongst the overwhelmingly white economic elite. If that’s to change, we need real talk on race in a way that’s absent from the current debate.
According to the Federal Reserve, more than 9 out of 10 of the wealthiest Americans is white. Excluding defense and social security, a disproportionate number of Americans who benefit from government investments in health, education and economic opportunity programs—6 out of 10 federal dollars spent—are people of color.
Clearly, race is at the center of the debate over taxes, whether or not either party will admit it. Moreover, it has been so since the United States’ earliest days.
Silence Equals Inequity
Democrats and Republicans alike are today silent on this link between race and taxes, but for different reasons.
Since the 1980’s, Republicans have effectively won the debate over tax rates by successfully racializing it. They aimed to cleave working class whites away from the Democratic Party by stereotyping it as a defender of the undeserving. Ronald Reagan was the first winning Republican presidential candidate to make this assertion stick. He blamed high tax rates on government support for the poor, and absurdly claimed that black “welfare queens” lived off $150,000 a year. Most Americans bought it and the cliche lives on to this day.
Once in office, Reagan used his bogus racial archetypes to justify tax cuts for the rich.
The tax rate that the wealthiest Americans paid was 20 percent lower by the time he left office. More dangerous was the fact that taxes on money made from investments were far lower than money earned from actual work. This has the impact of moving the U.S. towards a caste system in which those born into wealth enlarge their holdings and those struggling to climb into the American dream—especially people of color—find it much harder to do so.
As Reagan’s tax policies were informed by race, they would come to have disastrous racial consequences.
Reagan’s policies have been adhered to and amped up by both Democratic and Republican presidents since Reagan left office 24 years ago, and they have created the dangerous imbalance that wiped out a generation of black and Latino wealth.
Black and brown wealth is the lowest ever measured, and another generation will pass before net worth in these communities comes back in any recognizable form. Both parties are complicit in this destruction.
This is where Obama’s muteness on race and taxes comes into play. It reflects the fact that Democrats conceded the ground on Reagan’s arguments long ago.
Republicans have stopped making the link between race and taxes as explicitly as Reagan, because the concept has wedged itself so effectively in the public mind that they no longer need to do so. Democrats worry that that political cost of attempting to dislodge it would be too high. To underscore the point, a Democratic president, Bill Clinton ended welfare and further reduced taxes on money earned from investments.
This all brings us to an important but hard truth: Even if Obama succeeds in raising rates on the wealthiest Americans, people of color will still be stuck on the losing end. Rates will only go back for the rich to where they were under Clinton, and these were within striking distance of Reagan’s.
Past is Prologue
Reagan’s direct philosophical descendants are arrayed against Obama in the latest tax debate. His views on race reverberate through their actions.
Grover Norquist, founder of the right-wing Americans for Tax Reform, is the most important figure in Washington after Obama on the tax debate. Norquist literally rode into Washington on Reagan’s bandwagon. Reagan’s White House sealed the affiliation when they asked him to create a nonprofit group to help fight for their tax views. Ever since then Norquist has been one of the most powerful lobbyists in the country. Almost all congressional Republicans have signed his pledge against raising taxes under any circumstances.
Norquist’s true leverage comes from the fact that he speaks for the secretive billionaire Koch Brothers, who are propping up large parts of the GOP with immense sums of dark money.
As Lee Fang reports in The Nation, close to 70 percent of Norquist’s funding comes from the Koch Brothers and their advocacy groups. “He’s just a proxy for the powerful groups that finance him,” Fang writes.
The Koch Brothers themselves are associated with racially controversial views. They are adherents of Ayn Rand. Rand believed that black and brown “tribal” values were sapping the power of heroic millionaires, and undermining society. Disturbingly, she argued that Native Americans should be forcibly removed from their land because they’d failed to create a capitalistic society for over a thousand years on their own.
Before he was chosen as the Republican VP running mate, the Koch Brothers gave more money to Paul Ryan than any other member of Congress. Ryan is also a Rand adherent. Ryan himself argues that America’s push for racial and economic fairness was the country at its worst. Both he and the Koch Brothers find common cause in combatting a “culture of dependency” that they argue was nurtured by the New Deal and the Great Society.
Certainly for these titans of the Republican party, taxes and race go hand-in-hand.
The fact that America won’t acknowledge the debate over taxes is a proxy for one over race is not a surprise. That’s been true since before its founding, before there were such things as Democrats and Republicans. Northern colonies had asked to leave the British Empire for years over the issue of taxes; the South would have none of it, until an English court ruling threatened slavery. Since the beginning, America’s quest for independence was declared to be about taxes, but it was animated by race.
Until the country is able to tell itself the truth about taxes and race, it will continue to repeat the mistakes of the past. The current debate is not about who should pay and who should benefit. It is actually a simple one about justice. Unless we can admit as much, Americans will continue to be lost in sorting out economic rights from economic wrongs.