Two Visions Fuel Political Attacks

October 6, 2010

by Chidem Kurdas

Apparently left-liberal pundits are convinced that people oppose government expansion either out of stupidity or cupidity—not, say, out of a sincere belief in freedom. The oft-repeated story is that ignorant and misguided masses are being led by greedy business interests. Paul Krugman’s recent column is one of  many examples in the genre where billionaires intent on ravaging the country provide the bucks while clueless Tea Partiers provide grass roots brawn.

The best insight regarding this type of criticism comes from Thomas Sowell, whose analysis of two distinct visions of human nature puts current attacks into long-term perspective. Jerry O’Driscoll referred to this work in his comment on anti-intellectualism, a charge often levied by the same left-liberal critics.

In A Conflict of Visions: Ideological Origins of Political Struggles (published 1987, new edition 2007), Professor Sowell contrasted two fundamental views that go back several centuries. In one vision, each individual has inherent moral and intellectual limits, hence progress depends on institutions like markets to aggregate the knowledge of many and established morality  to take advantage of the wisdom of past generations. In this tradition belongs Edmund Burke, Adam Smith, Friedrich Hayek and the US Constitution with its many checks and balances.

The other view does not recognize inherent boundaries to human intelligence and morality—the potential is limitless and while most of humanity is well below the maximum, certain individuals are so wise that they know what’s right for society. Jean-Jacques Rousseau, William Godwin, and the French and Russian revolutions exemplify this vision of unconstrained potential.

Ironically, the proponents of the unconstrained vision argue for greater equality yet favor intellectual elites with the requisite wisdom. Mr. Sowell quotes Ronald Dworkin: “a more equal society is a better society even if its citizens prefer inequality.”  The citizens presumably don’t know what makes for a better society because they lack wisdom and virtue. Hence equalizing policies have to be imposed on them whether they like it or not.

This is not a theoretical issue. Notice, for instance, that the new medical entitlement law was passed despite widespread popular resistance. Americans will be obliged to get health insurance regardless of their preference.

By contrast, if you regard individual rationality as a limited tool, the difference between the intellectual elite and ordinary people is small and confined to specialty fields. Mr. Sowell points out that in this view, “there is no such general superiority as to justify one group’s restricting the discretion of others and acting as surrogate decision-makers for them.”

As a member of the elite, Professor Krugman certainly sounds like he’s sure of possessing limitless wisdom. He knows what’s right! So why would anybody take a political position that he dislikes? The unconstrained vision leads straight to the conclusion that opponents have to be dumb or venal.

In A Conflict of Visions Mr. Sowell shows the many ramifications of the two views but does not engage in criticism. He does that in other books, The Vision of the Anointed and The Quest for Cosmic Justice. Just to be clear, he’s not in the unconstrained camp and neither are most ThinkMarkets bloggers.

59 Responses to “Two Visions Fuel Political Attacks”


  1. Yes. Thank you. I agree. _A Conflict of Visions_ is a great book.

  2. Greg Hill Says:

    Chidem,

    A survey of Tea Party self-identifiers revealed that 82% of them believe their taxes will rise if the Bush tax cuts expire for those making over $250,000.

    Either Tea Partiers earn much higher incomes than one might have guessed or they don’t understand the Tax Code. I’m guessing it’s the latter.

    “Mr. Sowell quotes Ronald Dworkin: ‘a more equal society is a better society even if its citizens prefer inequality.'”

    How would Mr. Sowell reply to this: “A society without slavery is a better society even if a majority of its members prefer to retain slavery”?

  3. David Hoopes Says:

    The point of Sowell’s argument is that most people are capable of making decisions about their own lives. So, likening this to slavery is disingenuous.

    My guess is he would point out that the reason there are individual “rights” built into constitutional governments are to protect minorities from majority rule.

    But, again, I think your argument is fallacious. Unless you truly don’t think “the masses” can be trusted.

  4. Greg Hill Says:

    @David Hoopes:

    You write: “The point of Sowell’s argument is that most people are capable of making decisions about their own lives. So, likening this to slavery is disingenuous.”

    In criticizing Dworkin’s claim that “a more equal society is a better society even if its citizens prefer inequality,” Sowell is not appealing to the notion that people should be allowed to run their own lives, but to the notion that the social preferences of the masses, not the elites, should rule the day.

    My recourse to the slavery example was an attempt to show that some values (freedom) trump the preferences of the masses (and the elites).

    Finally, the issue I raised in connection with Tea Party opposition to higher taxes is not that Tea Partiers are incapable of “making decisions about their own lives,” but that 82% of Tea Partiers believe that their tax rates will go up if the Bush tax cuts for households making more than $250,000 are allowed to expire.

    Do you think this belief is true for the 82% who hold it? If not, why do you think they believe it?

  5. James Pier Says:

    They think their taxes will go up because they are not fooled by the “soak the rich” rhetoric of the Democrats — they know that it is not only the rich whose taxes are going up. Your suggestion that they are ignorant suggests you belong in Sowell’s “unconstrained” group.

  6. David Hoopes Says:

    The Gallup polling group finds that aside from a decided tilt to the right, those who identify themselves with the Tea Party are very similar to the general U.S. population in terms of age, eduction, and income. http://www.gallup.com/poll/127181/tea-partiers-fairly-mainstream-demographics.aspx

  7. Current Says:

    I’m not an american, but I understood that the Bush tax cuts are in effect at much lower incomes than $250K.

  8. Current Says:

    On Richard Dworkin’s comment I think Greg Hill is correct. Democracy doesn’t mean that we are all obliged to hold the same values as the demos. Democracy would be a self-referential impossibility if it did. If government supporters of Dworkin were to “impose equality”, then that would be anti-democractic. But to claim that something is right morally or right empirically *regardless of what other people think* is exactly what we all do when expressing our opinions, thinkmarkets bloggers definitely included.

  9. Current Says:

    I had a read of the article in the Huffington post:

    http://www.huffingtonpost.com/2010/04/01/tea-party-survey-old-cons_n_522336.html

    The question that was actually asked was “When tax provisions expire next year taxes on people like me will increase”, to which 82% agree. The question doesn’t ask “What if the highest rate tax cut were to expire”, and it doesn’t specify that the person being asked would be affected, it is a “class empathy” question – it asks if “people like me” would be affected.

  10. Greg Hill Says:

    @James Pier,

    I didn’t say anyone is ignorant; I said self-identified Tea Partiers are misinformed about the tax code (see below).

    @David Hoopes,

    If the distribution of income among Tea Partiers is similar to the overall income distribution, as you suggest, then about 2% of Tea Partiers would face higher tax rates if the Bush tax cuts for households earning over $250,000/year are the only tax cuts that are allowed to expire. Yet, 82% of Tea Partiers think their taxes would go up under this scenario. I think this supports my point rather than yours.

    @Current,

    You’re right, the Bush cuts did reduce taxes for households earing less than $250,000, but the question posed to Tea Partiers concerned only this high-income tax bracket.


  11. Greg Hill’s take is myopic, and the Tea Party movement understands you can’t balance the budget on the rich. At present levels of spending, taxes will go up for the middle class as well.

  12. Greg Hill Says:

    @Current,

    Granted, the survey question you point to leaves room for different interpretations of the response. But in the same survey, 64% of Tea Party self-identifiers said that President Obama had increased taxes for most Americans. This is not just false, it’s preposterous.

    @Jerry,

    You write, “Greg Hill’s take is myopic, and the Tea Party movement understands you can’t balance the budget on the rich.”

    I’m not sure what your aim is in writing this sentence. Is there an argument here? I didn’t say the budget could be balanceced “on the rich,” whatever that means.

    I gather that you share the Tea Party view about “big government.” Do you also believe, with the majority of Tea Partiers, that President Obama raised taxes on most Americans? Does it matter to you that they believe such a thing?

  13. Bogdan Says:

    There’s too much banal politics involved in or masquarading as science and scholarship, this is the fundamental problem, and it’s true for the left but also for the right broadely conceived.

  14. Niko Says:

    @Current:
    “But to claim that something is right morally or right empirically *regardless of what other people think* is exactly what we all do when expressing our opinions, thinkmarkets bloggers definitely included.”

    So debating on utilitarian or moral grounds is a never ending exercise, but economics claims to be a science … What a joke.

  15. Troy Camplin Says:

    My wife, who is a teacher, saw her taxes go up. Are facts preposterous? My guess is that people who saw their taxes go down with the Bush tax cuts rightly expect their taxes to go up when they expire.

  16. Bob Layson Says:

    Some forms of slavery have ownership only of a proportion of the income stream of slaves who work independently of their owner. This is the present situation as regards citizen and government in all advanced states.

    Slavery more often means the owner setting the diet, lodging conditions and work requirements of those who are prevented by physical barriers and threats from living and working elsewhere. This, in effect, given the racial profile of many prisoners imprisoned for crimes without victims, makes President Obama the greatest master of black slaves in American history.

  17. Dan Biemer Says:

    I think you have the political assignment of these two visions backwards.

    “Do limited individuals need institutions like markets [and governments] to aggregate the knowledge of many?” sounds exactly like President Obama.

    “Or can humans unlimited in both intelligence and morality decide what’s best for society?” sounds exactly like the wall street folks who brought the economy down.

    I wish everyone on the right would have enough faith in their own ideas to present them without relentlessly lying, distorting, and twisting someone else’s.

  18. chidemkurdas Says:

    Greg Hill & Current:
    The quote from Ronald Dworkin — “a more equal society is a better society even if its citizens prefer inequality.” — has to be understood in the context of politics and policy making, where it justifies compulsion. Like the new medical law requiring people to buy insurance whether or not they want to. The stated purpose is to make society (or, in my specific example, medical service consumption) more equal, but the process is highly unequal, in that some groups dictate to others.

  19. chidemkurdas Says:

    Current:
    Re “Democracy doesn’t mean that we are all obliged to hold the same values as the demos.”
    Absolutely. But by the same token, we have the right to object to other people imposing their values on us by government mandate.

  20. chidemkurdas Says:

    Current: Re “Democracy doesn’t mean that we are all obliged to hold the same values as the demos.”
    Absolutely. But by the same token, we have the right to object to other people imposing their values on us by government mandate.

  21. chidemkurdas Says:

    Greg Hill: Re your reply to Jerry– The point that federal spending is out of control & higher taxes on the rich alone won’t cover it. Given deficits in the trillions of dollars, it follows that more broadly based higher taxes will come unless the spending goes down a lot.

    In fact, the new medical entitlement is a type of tax imposed on the entire population–the Obama administration itself now argues that this is a tax. In the case brought by states challenging the law, that is the defense, that the federal government has the legal standing because the law’s mandates are just an additional tax.

  22. Greg Hill Says:

    @Chidem,

    Regarding Dworkin’s claim about equality, why not take as the appropriate context Dworkin’s own writings on the subject? To get started thinking about equality, you could ask yourself why everyone should be treated equally before the law.

    Once you’ve figured this out, you might ask whether the justification of “equal treatment before the law” points toward other principles, policies, etc.

    Regarding mandated health insurance, you argue that “the stated purpose is to make society (or, in my specific example, medical service consumption) more equal . .” No, that’s not the purpose, stated or otherwise. If health insurance firms must cover pre-existing conditions (I realize you may not approve of this), then, without a mandate, people could wait to get sick before getting insurance.

    @Bob Layson,

    What’s it like getting up in the morning and believing you’re a slave? For your own piece of mind, you might want to draw a distinction between paying taxes and picking cotton under the master’s whip.

  23. Bill Stepp Says:

    @Greg Hill,

    Let’s assume that the Tea Partiers are clueless about the tax code. So what?
    Many non-accountants outside the Tea Party are too.
    Jerry O’Driscoll is right that they know that the budget can’t be balanced on the backs of the rich.
    And you should understand (if you don’t) that most people who work in the public sector don’t pay taxes even if their government-issued paychecks show taxes being withheld, and even if they file tax returns April 15 and otherwise pretend to pay taxes.
    I say most because a few high earners with enough private sector income who happen to “work” in government “jobs” pay more in taxes on the privately-earned income than they pilfer from the taxpayers (net of the “taxes” they “pay” on their stolen income). A former vice president comes to mind, and come to think of it, the current occupant of the Oval Office might too, what with his seven-figure royalties.
    Having said that, he probably wouldn’t have written his books and earned those royalties if he had always been a private sector worker instead of a politician.

  24. chidemkurdas Says:

    RE Greg Hill “To get started thinking about equality, you could ask yourself why everyone should be treated equally before the law.” I think F. A. Hayek has the best explanation of why everyone should be treated equally before the law. You might take a look at it. It’s such a shame that the principle is not in practice observed. But I’m not sure what you’re getting at.

  25. Current Says:

    Niko,

    > So debating on utilitarian or moral grounds is a never ending
    > exercise,

    Debating about morals is certainly a never ending exercise. Whatever moral code you, or I hold others will not necessarily agree with. So, debate is inevitably never ending.

    > but economics claims to be a science … What a joke.

    Whether economics is a science or not is a completely different question. I would say that it certainly is. It should not be confused with moral questions about societal ends, those aren’t a science and never can be.

  26. Current Says:

    Chidem

    I’m certainly not going to defend much of the rest of what Greg Hill has written, but I still think he’s right about Dworkin’s comments.

    Chidem wrote:

    > Absolutely. But by the same token, we have the
    > right to object to other people imposing their
    > values on us by government mandate

    Some degree of that is inevitable. The law is the imposition of a set of moral values on the citizens of a country.

    I agree though with the spirit of what you’ve said here.

    > The quote from Ronald Dworkin — “a more equal
    > society is a better society even if its citizens
    > prefer inequality.” — has to be understood in the
    > context of politics and policy making, where it
    > justifies compulsion. Like the new medical law
    > requiring people to buy insurance whether or not
    > they want to. The stated purpose is to make
    > society (or, in my specific example, medical
    > service consumption) more equal, but the process
    > is highly unequal, in that some groups dictate
    > to others.

    I don’t know exactly what Dworkin said or really who he is, I don’t know the context. But, he could be saying one of two things. The first is “no matter what the masses think, equality is best for them, so if we have the power we should impose it”. If that’s what he’s saying then he’s being anti-democratic and supporting a form of Socialist extremism akin to Communism. Secondly though he could simply be pointing out that mass approval doesn’t make a socio-economic idea correct. We all agree with that, in fact it’s a foundational principle of democracy that we may all have different views about how the world should work.

  27. Greg Hill Says:

    @Chidem,

    Re: “I think F. A. Hayek has the best explanation of why everyone should be treated equally before the law.”

    What is Hayeke’s explanation?

  28. Current Says:

    > What is Hayeke’s explanation?

    It would be interesting to know what your explanation is too.

  29. liberty Says:

    Greg Hill:

    You are taking Obama’s words at face value about his tax policy. Your numbers are entirely incorrect, many more than just the upper-income will face tax increases.

    See, for example, http://blog.heritage.org/2010/10/06/the-obama-tax-hike-would-slam-seniors/

    I do have a few qualms about the original post though:

    You say, “Paul Krugman’s recent column is one of many examples in the genre where billionaires intent on ravaging the country provide the bucks while clueless Tea Partiers provide grass roots brawn.”

    But isn’t this the usual Bootleggers and Baptists, ignorant/irrational voter story? Why should this be hard to believe, or rely on the unconstrained vision?

    Furthermore, although Krugman and some other leftists *may* believe that experts can resolve everything and force their vision upon the public, many leftists are hard-core democrats. While “conservatives” and many libertarians believe that the constitution (arguably written by an elite group – some of the richest and most well-educated men in the world at the time) should constrain government and determine the bounds of policy, many on the left think that voters should be able to vote in whatever policy they want. Social contract, vote to redistribute, vote to enforce e.g., smoking bans, etc. Majority rule.

  30. liberty Says:

    “64% of Tea Party self-identifiers said that President Obama had increased taxes for most Americans. This is not just false, it’s preposterous.”

    Its only preposterous if you think that a mandate to spend $8000 on something you don’t want is somehow not an $8000 tax increase; and if you ignore all the other somewhat-hidden taxes in the health care bill. See, e.g.,

    http://blog.heritage.org/2010/04/15/obamacare-taxes-deep-impact/

  31. Greg Hill Says:

    @Liberty writes,

    “You’re taking Obama’s words at face value about his tax policy, your numbers are entirely incorrect, many more than just the upper-income will face tax increases,” and then you cite a Heritage study.

    Unfortunately, the Heritage study only looks at the effects of tax changes on capital gains and dividends. The table at

    http://www.taxpolicycenter.org/numbers/displayatab.cfm?DocID=2627

    shows the effects of *all* the major individual and corporate tax changes proposed in Obama’s FY 2011 Budget. And, as you can see for yourself, the results match Obama’s words precisely.

    By the way, did you know that Hayek believed that “the security of a minimum income” could be guaranteed to all “without endangering general freedom.” And he goes on to claim that there’s a “very strong” case for “the state’s helping to organize a comprehensive system of social insurance,” giving as an example, insurance against sickness and injury (Road to Serfdom, p. 148).

    @Current,

    If Chidem will wrote down Hayek’s justification for equality before the law, I’ll gladly write down mine.

  32. liberty Says:

    Greg – well the study did focus on cap gains and dividends filers, along with business filers, more than anything else because those are the units that will be hit worst. Still, it shows that plenty of people below 200k/250k will face a tax increase (including many seniors and small businesses) — that is why those with cg & div income are broken out by income quintile: to show that it is not just the rich.

    Why does it matter which type of income gets the tax increase? Still, plenty of households in lower income brackets will face a tax increase.

    As for the TPC link – what do you mean it supports Obama’s claim??? It explicitly lists the percent of filers by income category who will see a tax increase, and it is a large percentage for many income categories below 200k/250k. In fact it makes my point better than my Heritage paper does.

    At income levels (admittedly, cash income not AGI) $75-100k it is 30% that will see a tax increase, and at 100-200k it is 50%. True, the average tax change for the category may be negative (a tax cut on average) but this will be split between those who will see a tax increase and those who will see a tax cut. So it very distinctly makes the case that Obama’s claim that NOBODY with income below $200/250k will see a tax hike is FALSE.

  33. Greg Hill Says:

    @Liberty,

    The figures in the TPC table compared the Obama proposals with “current policy” (my mistake). Check the table below, which compares them with “current law.”

    http://www.taxpolicycenter.org/numbers/displayatab.cfm?DocID=2627

    The percentage of “tax units” with cash income between $75K and $200K which would get a tax increase under Obama’s proposal is [drum roll] less than 1%.

  34. liberty Says:

    Um… that’s because Current Law is the repeal of ALL the Bush tax cuts.

    Current Policy is what we have now (the tax cuts in place).

    So, yeah, there won’t be tax increases on people with a policy repealing part of the Bush tax cuts (Obama’s plan) compared to repealing all of the tax cuts (current law). But that isn’t what we were discussing was it?

    The relevant comparison is with current policy (i.e., what we have today).

  35. Current Says:

    > But isn’t this the usual Bootleggers and
    > Baptists, ignorant/irrational voter story? Why
    > should this be hard to believe, or rely on the
    > unconstrained vision?

    This is a very good point. Tim Worstall once made it by discussing privatisation. Let’s suppose, for example, that privatisation in Britain bad for the common people. That isn’t true, but for the sake of this argument let’s assume that it was. Electorates voted for privatisation at three (or four) general elections.

    If the rationality of electorates is great, as democratic socialists suppose, then this should not have happened. This example demonstrates the fallacy that democratic socialists base their views on. If electorates don’t have the knowledge to determine if selling a state-owned business is to their advantage or not, then they don’t have the knowledge to determine who should run that state-owned business.

    A consistent Classical Liberal point of view accepts Classical Liberals can’t always be right. If we claim that they were we would be denying one of our own major claims. People (definitely including us here) may be very

  36. Current Says:

    I clicked on submit before finishing…

    People (definitely including us here) may be very wrong about the effects of specific government policy. That’s inevitable, we can’t all be experts.

  37. Greg Hill Says:

    @Liberty,

    Let’s accept “current policy,” rather than “current law,” as the baseline for comparison.

    The percentage of tax units in the bottom four quintiles that would get tax increases under the Obama proposal is shown below:

    % getting tax increase
    bottom 20% 0.5%
    next 20% 1.2%
    middle 20% 0.4%
    next to top 20% 0.1%

    So, less than 1% of total tax units in the bottom four income quintiles would get a tax increase under the Obama proposal.

    Now, let’s break out the top quintile:

    % getting tax increase
    80-90% 0.3%
    90-95% 1.8%
    95-99% 52.1%

    The 90% to 95% group includes incomes from $178,00 to $249,000 (2009 dollars). So, 1.8% of tax units with cash income between $178k and $249k would get tax increases under the Obama proposal relative to “current policy.”

    http://taxpolicycenter.org/numbers/displayatab.cfm?DocID=2636&topic2ID=40&topic3ID=92&DocTypeID=2

  38. Greg Hill Says:

    @Liberty,

    Perhaps I should have added: . . . um, gosh, it looks like a *very* small percentage of tax units earning less than $250k will pay higher taxes under Obama’s proposal.

  39. Troy Camplin Says:

    My wife makes about $50,000 a year. Her taxes have ALREADY gone up. Hmmm.

  40. liberty Says:

    Greg Hill:

    Are you not concerned about the difference between those two links you gave me from TPC concerning percent with a tax increase between current policy and Obama’s policy? The first one showed a large percentage with a tax increase. The major difference I see is that the first one is 2012 and the second one is 2017. Assuming that is the major difference it might be that by 2017 the Obama tax hike either fades due to lack of CPI indexing, or sunsets, or something. But look back at your first link – it isn’t 1% in 2012 that see a tax hike, its 30-50%.

  41. Greg Hill Says:

    @Liberty,

    I’ll look into it for you (seriously). In the meantime, you might look for your estranged sisters, Equality and Fraternity.

  42. chidemkurdas Says:

    Liberty,
    RE “But isn’t this the usual Bootleggers and Baptists, ignorant/irrational voter story? Why should this be hard to believe, or rely on the unconstrained vision?”

    Good question. The point is, the unconstrained vision is one of unlimited potential for rational decision making, therefore voter ignorance is something that can be overcome. That explains what you observe: “Furthermore, … many on the left think that voters should be able to vote in whatever policy they want.” If you believe voters are potentially well informed about anything, it follows that they should be able to vote on whatever.

    But then left-liberals look around and notice what votes or popular attitudes are not what they should be according to left-liberal reasoning. By implication some people have not developed their potential and are ignorant–it follows that the intellectual elite knows best while Tea Partiers are clueless.

    By contrast, human rationality is in general limited in the constrained vision. There is no sharp difference between different groups. All people can learn and process only so much information. It’s a general human condition. Hence we need to respect the US Constitution, embodying the wisdom of many generations.

  43. Chris Decker Says:

    I can’t speak for everyone, of course, but I know that my personal disdain for the “anti-government” “pro-liberty” types is based on a variety of things which, for the sake of diplomacy, I’ll call “troubling internal inconsistencies.”

    – They tend to support criminalizing abortion. Accepting the reality that accidental pregnancy happens, this ends up with the government forcing women to bear children.

    – They tend to support coercive modern anti-terror policies like torture, rendition, and indefinite detention.

    – They tend to think Reagan shrank government and the deficit, and that Republicans always do so and Democrats always grow it. The Tea Partiers are a little skeptical, but they either go with Republicans who pander to them, or choose candidates like Sharron Angle and Christine O’Donnell, who, uh…yeah.

    – I’ve yet to hear Tea Partiers clamor about cutting the extremely large defense budget.

    – I would wager that a majority of people who label themselves “anti-government” are against the building of mosques in the U.S., and in favor of anti-sodomy laws regulating individuals’ sex lives.

    – All the anti-government people I’ve read or spoken to seem to earnestly believe that not only do progressives want larger government, but that larger government *is the goal*. Nothing to do with human well-being or social justice. In fact, most of us would be really happy with a smaller government that actually focused on helping its people.

    I’ll give the benefit of the doubt and assume the “Get Your Government Hands Off My Medicare” people are rare (though there is usually a shocking ignorance of the productive roles government does play, in the lives of both businesses and individuals). Even so, I have a terrible time respecting a group that so grotesquely mischaracterizes the other side, can’t engage in dialogue, and pushes so many views (often in violent language) fundamentally contradictory to their stated ideals.

  44. Jayson Virissimo Says:

    “But in the same survey, 64% of Tea Party self-identifiers said that President Obama had increased taxes for most Americans. This is not just false, it’s preposterous.”

    Greg Hill, if government spending increases, then taxes must increase. Where else do the resources come from if not from taxes? Whether or not the top marginal tax rate next year will be higher than this year does not matter. This is why the “Bush tax cuts” were not really reductions in taxes, but simply a postponement of paying them.

  45. liberty Says:

    By the way, Greg, I just had to look into this for work so I have an answer to the discrepancy we found above:

    Extending the full Bush tax cuts vs. current law – Number with a tax cut compared to current law (which means a tax hike if the tax cuts are repealed) is 71.1% 0r 101 million filers:

    http://www.taxpolicycenter.org/numbers/displayatab.cfm?Docid=2662&DocTypeID=2

    Their numbers for the “upper income provisions” are much smaller, citing only 1.9% (under 3 million) however their simulation did not include the full capital gains and dividends policy.

    http://www.taxpolicycenter.org/numbers/displayatab.cfm?Docid=2650&DocTypeID=2

    The full policy treats dividends as regular income so most dividends filers would have some sort of tax increase. There are 36 million filers that report dividends, most of these filers would see a tax increase.

    Also see this table from our recent paper on capital gains and dividend filers in each income bracket affected:

    http://www.heritage.org/research/reports/2010/09/~/media/Images/Reports/2010/cda1007/cda1007_table2_750px.ashx

  46. Dan Biemer Says:

    @Jayson Virissimo: By your definition of “tax increase” then, President Bush is responsible for tax increases orders of magnitude higher than President Obama, because under him we went from a budget surplus to borrowing two entire wars as well as those “tax cuts” and “bailouts.” (I like that definition, by the way, but I don’t think it’s widely enough accepted to accuse anyone of lying because they use a different definition.) I think a lot of us are asking where that tea party outrage was during the Bush administration and why it is now being heaped upon the guy a majority of us elected to clean up that mess whose every effort to do so has been blocked in Congress as a matter of national republican party strategy.

  47. Greg Hill Says:

    @Liberty,

    Thanks for doing the homework on the Tax Center data.

    Although there seem to be a significant number of taxpayers in the bottom two quintiles who receive *some* dividends or capital gains, the bottom 40% of the U.S. income distribution only owns 0.3% of total U.S. wealth.

    Of course, on average, they think they own more than 10 times this amount, which, has important political implications.

  48. liberty Says:

    Well, as I said I had to do it for work – so no problem :)

    Anyway, although they may not own a large proportion of total wealth, check the numbers in that table — compared to their own total income, they will see not-insignificant tax increases under the Obama plan.

  49. Greg Hill Says:

    @Liberty,

    The Heritage table does indeed show modest tax increases for households in the bottom four quintiles that have dividends and/or capital gains.

    But it’s my understanding that, under Pres. Obama’s proposal, increased tax rates on dividends and capital gains do not apply to families with incomes below $250,000 (see the website below). If so, the Heritage tables are erroneous. However, since Heritage has lots of paid staff, I’m probably the one in error.

    http://www.heritage.org/research/reports/2010/09/~/media/Images/Reports/2010/cda1007/cda1007_table2_750px.ashx

    http://www.whitehouse.gov/sites/default/files/omb/assets/documents/S-6.pdf

  50. liberty Says:

    The Heritage paper assumes that the dividends rate will expire – Obama has not made it clear whether or not he will do this, and Congress has made it clear that they want to. Of course, if the political dynamic is different by the time the bill comes to the floor, maybe dividends holders will get a break.

  51. Greg Hill Says:

    @Liberty,

    Pres. Obama’s 2011 Budget Proposal assumes no increase in tax rates on dividends and capital gains for couples making less than $250,000. CBO’s analysis of the President’s 2011 Budget Proposal assumes the same thing. This example illustrates why the Heritage Foundation is not the ideal source of tax information.

  52. liberty Says:

    Greg – all the independent groups that model policy model things other than what is in the budget proposals when they believe something else is more likely: TPC, Heritage, Global Insight, Tax Foundation, CBPP, etc etc.

    In this case TPC went with just the upper income – but they frequently assume that what is discussed in Congress and not what is written in a proposal will occur. Heritage tends actually to still to the bills and proposals *much more* than those other groups – but in this case it is not clear at all that “only those over $250k” will see increases on their dividends. So, Heritage went with the more likely scenario, which is to return dividends to their previous status being taxed as regular income.

  53. Greg Hill Says:

    @Liberty,

    I don’t mean to be churlish, but you wrote, “You are taking Obama’s words at face value about his tax policy. Your numbers are entirely incorrect, many more than just the upper-income will face tax increases.”

    Now it doesn’t seem cricket to cite the Heritage study in support of these claims when Heritage didn’t really analyze Obama’s own proposal, but rather what Heritage believed to be “the more likely scenario.”

  54. liberty Says:

    Fair point – many more will face tax increases if the more likely policy is passed. It was my mistake, as I did not recall that his actual proposal did not include the dividend rate repeal.


  55. Greg rather naively believes what politicians tell him (or, at least, those politicians with whom he agrees). Liberty would rather go with what his historically been a more accurate source of information about what politicians will do and what the outcomes of those policies will be.

    I’ll go with the more accurate source of information — which is to say, NOT the politician nor any of his cronies nor his propaganda.

  56. Seth Says:

    Sorry if I missed it if this already been addressed in the comments.

    Early on Greg Hill writes: “Sowell is not appealing to the notion that people should be allowed to run their own lives, but to the notion that the social preferences of the masses, not the elites, should rule the day.”

    Is there any evidence to support “but to the notion that the social preferences of the masses should rule the day”?

    I think Hill is using “masses” in place of “individual” and it changes the meaning. Sowell’s work that I’m familiar with supports protecting the rights of individuals, not subjecting individuals to the the preferences of the masses. But, I could be convinced otherwise if there’s evidence to support it.

  57. chidemkurdas Says:

    Seth–
    Re “Sowell’s work that I’m familiar with supports protecting the rights of individuals, not subjecting individuals to the the preferences of the masses.” I agree, that is what I get from reading his books.


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