Yesterday I wrote that a politics of raising taxes on lower earners and cutting taxes on higher earners was, in the minds of many of its supporters, a politics of solidarity. Low earners have a responsibility to show more solidarity with the job creating high earners by paying more taxes and consuming less government. The resulting burden shift away from high earners will allow the job creators to do what is needed to lift all boats.
One argument against such a politics is that it political suicide, and leaves the field open for the left to govern as the right is seen as merely a high earner interest group. There is some truth to that, but it isn’t enough. We need a positive alternative version of conservative solidarity politics that integrates the interests of people across the income distribution (very much including high earners.) For advice on how to start, let us turn to Mitt Romney (who contains multitudes.) Romney said ‘The Rich Will Do Just Fine Whether I’m Elected or Not.” That should be the starting point. As Charles Murray pointed out, the higher earning fraction of the American population have more stable families, lower levels of social pathology and are more attached to the labor market, while those indicators for low earners have turned sharply south. The declining social indicators for lower earners have persisted and in some ways even worsened in the context of generally declining marginal income tax rates. Further cuts in the marginal income rates of high earners won’t be the biggest part of any policy solution. Tax increases on low earners that reduce the returns on low wage labor are worse than doing nothing as a matter of policy.
So if we look at a center-right politics of solidarity as one of integrating the interests of lower and higher earners under the social circumstances that Murray describes, what is the basis of that integration and what policies should be championed? One basis for this integration is to craft a politics of dignified working and raising families across the income distribution. That has some policy implications. We should reform the tax code in a more growth-friendly direction. But that won’t be enough by itself. We should also improve the returns to work (even low wage work), to the extent possible. We should encourage marriage and family formation at every level of the income distribution and especially among those facing the greatest rates of family disruption and who have the weakest labor force attachment.
We have a policy proposal that does some of that. Family-friendly tax reform lowers taxes on investment, substantially increase the child tax credit and encourage marriage. It would raise taxes on high earners without children, but the income tax rate would be thirty-five percent instead of the current highest marginal tax rate of 39.9%.
That is just one policy and there are limits to the good that any policy or set of policies will do, but it gets us thinking in the right direction. So does this book.