Why the wealthy don’t object to Obama’s “class warfare”

By David Callahan
September 22, 2011
By David Callahan
The opinions expressed are his own. 

Here in the egalitarian paradise of the United States, there is apparently nothing worse than “class warfare” – which is why Republicans are trying to affix this damning label to President Obama’s new plan to raise taxes on the rich. One hitch, though, is that the billionaire Warren Buffett is not alone in his willingness to pay higher taxes. Many other wealthy Americans are also ready to see their taxes go up. The battle over taxes, its turns out, is not just between the rich and everyone else; the upper class itself is divided on this issue. That is good news for Obama, who’ll need all the help he can get to enact deficit reduction that balances spending cuts with new revenue.

Various wealthy Americans have praised the President’s tax plan since it was unveiled Monday. “It’s time for millionaires – like me and the ones in Congress – to step up to the plate and start paying their fair share,” said Guy Saperstein, a wealthy lawyer who is part of a group called Patriotic Millionaires for Fiscal Strength. Dallas Mavericks owner Mark Cuban, not exactly known for his noblesse oblige, chimed in, writing on his blog right after Obama’s speech that paying taxes is the most “patriotic thing you can do.”

Obama’s call for higher taxes on the rich is not new. He pledged repeatedly to raise taxes on high earners during his 2008 run for President – and won the vote of these same Americans, those making over $200,000, by a comfortable margin.

Polls show that the wealthy remain more fiscally conservative than other groups, just like you might think. But a large slice of the well-heeled rejects the anti-government zealotry of today’s GOP and sees the public sector as crucial to fixing the economy. As Mark Cuban wrote on his blog, supporting stimulus efforts, “the government plays a big role in an effort to help lead us out this Great Recession. That’s reality.”

Another reality, in the view of many economic winners, is that people only get rich because they live in a society that helps them make their bundle. Andrew Carnegie famously argued that wealth creation was a collective enterprise in his essay “Gospel of Wealth,” which called for an estate tax. Warren Buffett – who says he was deeply influenced by “Gospel Wealth” – is just one of many wealthy Americans who attribute their success to such public goods as universities, infrastructure, and government-funded scientific research. “If you stick me down in the middle of Bangladesh or Peru,” Buffett has said, “you’ll find out how much this talent is going to produce in the wrong kind of soil.”

The divide among the rich over taxes has sharpened as America has moved into the Information Age. Entrepreneurs who work in a complex knowledge economy are more likely to view wealth creation in collective terms and, as a practical matter, depend more on public structures. It makes sense to them to pay higher taxes to bolster these systems.

For instance, while Silicon Valley still has plenty of libertarians, tech leaders like Reed Hastings of Netflix and the venture capitalist John Doerr have backed efforts in California to weaken the anti-tax rules of Proposition 13 and raise more revenues for public schools. In Washington State, Bill Gates has supported several ballot initiatives that would increase funding for education. Other business leaders support major new government spending on infrastructure, scientific research, and clean energy.

Meanwhile, it’s easier to buy the libertarian myth of the triumphant individual if you’ve struck it rich in the old economy – say, as a successful car dealer or retailer. These business leaders also rely on public structures to create wealth, but to a lesser degree. While no customers could get to a typical Wal-Mart without public roads, for instance, these stores – the modern equivalent of sweatshops – don’t rely on college-educated workers or capitalize on breakthroughs made in government-funded laboratories.

If you think you got rich all your own, paying taxes can seem unfair, and today’s Republican Party does a brilliant job of channeling this egotistical delusion. While any sane business leader has to be unnerved by GOP leaders who are willing to blow up the economy to block any tax increases, as we saw this summer, many others are clearly cheering such extremism, judging by all the money flowing into GOP campaign coffers. By and large, though, these people live far away from elite universities and high-tech corridors. They are the most affluent members of a Republican base that is increasingly concentrated in rural heartland states. They’re more likely to live in “retro” – not “metro” – America.

President Obama may no longer be the darling of moneyed coastal elites – that romance ended long ago – but don’t expect his new push for higher taxes to cost him further support among this crowd. To many of these elites it seems obvious that, to paraphrase Justice Holmes, taxes are the price we pay for prosperity.

David Callahan is the author of Fortunes of Change: The Rise of the Liberal Rich and the Remaking of America (Wiley).


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