David Brooks Repeats False GOP Talking Points on Obama’s Tax Policy

Yesterday’s column by David Brooks illustrates why I both like and dislike his work. His column starts out making points similar to a recent post I wrote on the realignment between the parties, with an increasing number of educated and affluent voters now voting Democratic.  Brooks writes:

Political analysts now notice a gap between professionals and managers. Professionals, like lawyers and media types, tend to vote and give Democratic. Corporate managers tend to vote and give Republican. The former get their values from competitive universities and the media world; the latter get theirs from churches, management seminars and the country club.

The trends are pretty clear: rising economic sectors tend to favor Democrats while declining economic sectors are more likely to favor Republicans. The Democratic Party (not just Obama) has huge fund-raising advantages among people who work in electronics, communications, law and the catchall category of finance, insurance and real estate. Republicans have the advantage in agribusiness, oil and gas and transportation. Which set of sectors do you think are going to grow most quickly in this century’s service economy?

Initially I found some interesting material in his column, but he really goes downhill in the next paragraph:

Amazingly, Democrats have cultivated this donor base while trending populist on trade by forsaking much of the Clinton Third Way approach and by vowing to raise taxes on capital gains and the wealthy. If Obama’s tax plans go through, those affluent donors could wind up giving over 50 percent of their income to the federal government.

In terms of populism, it is notable that of the three major candidates this year, the two who ran populist campaigns, Clinton and Edwards lost while the candidate who is most market-oriented and influenced by Chicago school economists did win. Obama’s victory was a clear sign of the direction the Democratic Party has been moving for the last several years.

Even worse is the mischaracterization of Obama’s tax policies. Such scare tactics on his tax policies represent typical Republican attacks, similar to their old claims that Democrats will take away people’s guns and bibles. I didn’t bother to respond to this column yesterday as I’ve discussed Obama’s tax policies  recently (here and here). Obama’s tax policies are most likely designed to avoid scaring away the affluent new Democratic voters who Brooks discusses. Obama has been saying that those making up to $250,000 will not see an increase in taxes, including income taxes, capital gains taxes, and Social Security payroll taxes. It is primarily those in the top one tenth of one percent who will see an increase, primarily as they benefited the most from Bush’s tax cuts.

Jared Bernstein has commented further on this column:

According to the non-partisan Tax Policy Center’s analysis of Obama’s tax plan, the correct share for the richest 1 percent of households–those with income above $600,000–is 36 percent; for the for the richest 0.1 percent, above $2.9 million, the rate would be 39 percent. Note also that since these estimates include taxes remitted by corporations, the actual tax returns that these households fill out would find them paying less than 30 percent of their income in taxes. Even with Senator Obama’s proposal to raise Social Security taxes on those with earnings above $250,000, a proposal for which he has yet to specify a rate, tax liabilities of the affluent would still be far below 50 percent of their income.

It’s also worth noting that these tax rates for those at the top of the scale are about the same as those that prevailed under Bill Clinton’s presidency (average for the top 1 percent, 1993-2000: 35 percent), a period of strong and broadly shared economic growth.

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