Obama’s sanctimony shows who the real Scrooge is

As

right as Dickens. That’s what President Barack Obama suggested about his tax plan when he recently used “A Christmas Carol” by Charles Dickens to frame his case for rate increases.

A “Scrooge Christmas” is what the country will get if lawmakers won’t go along with the Obama plan to raise rates on topmost earners, Obama warned. The urgent reference was to the stinginess of Ebenezer Scrooge, who at first didn’t realize the need to share with those who were poorer or less advantaged around him.

The theme of “A Christmas Carol” is that economic redistribution, sharing more of your shillings, is the only move for a rich man to make.

Obama admonished Republicans for not joining him, telling the public that all he needed was “a few” House Republicans to get his law passed. Working the “Christmas Carol” theme for all it’s worth, Obama talked about how the general automatic tax increase that would result from Republicans’ refusal to go along with his plan would result in a dark Christmas, where Santa handed out a “lump of coal” to individuals. The president even traveled to the closest thing the U.S. offers to a Victorian Christmas stage set, a toy factory, to make his rate-increase case.

What stood out about Obama’s argument was his claim of moral unanimity. Obama treated those who endorse a flat tax as a solution to current tax woes as so out of touch with the zeitgeist that they don’t warrant mention. The president assumed that Americans love economic redistribution as much as they love the greats of literature. That is not what the evidence suggests.

The ambiguity starts with that essential tool for such redistribution, the progressive rate structure. Under a progressive structure, tax rates rise steeply. The first dollar earned is subject to the lower rates, the last dollar to the top rate to which they are subject.

From 1913, when the code was introduced, tax scholars assumed people endorsed progressivity. Studies showed that many said they did.

Early on, however, scholars also found something disconcerting: Many Americans who endorsed progressive taxation couldn’t define it. “A popular error under our personal income tax is to confuse the marginal rate on the last increment of income and the effective rate on the total income and to conclude for example that a taxpayer who reaches the 70 percent bracket is taxed at 70 percent on his total taxable

Kathleen Parker

David Brooks

Ross Douthat

Ramesh Ponnuru income,” as authors Harry Kalven Jr. and Walter Blum reported in 1953.

If people mixed up the average rate with the marginal, they were showing automatic attraction for the flat tax, where the two are the same. And if people can’t understand a tax, they can’t quite be said to endorse it.

A study from 2007 found that some 59 percent of those polled approved of progressivity as a concept. As the authors Ruben Durante and Louis Putterman reported, 41 percent of those surveyed held a different view. The minority thought either that “people who make more money should pay a smaller percent in income in taxes,” or that there should be no correlation between rates and income levels at all.

An additional finding surprised Durante and Putterman. The assumption in “A Christmas Carol” is that the most vulnerable members of society want Scrooge to cough up a little extra. It turned out that less-educated Americans endorsed progressivity less often than more educated Americans.

What the economists Durante and Putterman found clashed directly with the anti-plutocrat “Christmas Carol” ethos: Educated or less educated, Democrat or Republican, Americans overwhelmingly opposed the taxing of bequests. The poorer the respondents were, the more they supported estatetax abolition.

What this material tells you is that when it comes to taxes, there is no moral unanimity. The president may be correct when he claims that a majority of voters seem to want redistribution. Yet he oversteps in suggesting that all do and in claiming moral high ground.

Obama’s sanctimony seems especially out of place given the ungentlemanly fashion in which he is pressuring the Republicans on Capitol Hill. He would force Republicans to take the blame for all tax increases if they refuse to join his progressivity crusade. In his preacherly insistence on taking tax reform and indeed the international capital markets hostage, the president himself prevents consensus.

This is typical of the self-righteous character, as a writer once noted: “Some people likened him to a direction-post, which is always telling the way to a place, and never goes there.”

The the author who described the moralizer? Charles Dickens.

Amity Shlaes Charles Krauthammer

George Will