The most important political contribution of Ronald Reagan to the American political dialogue was his ability to move the issue of taxes from its economic populist cast into a populist, blue-collar issue. But under Bush, the issue switched back to one of class warfare, as an increasing number of Americans paid no taxes at all and the rates on those who did pay them were lowered. Now a chance encounter with Joe the Plumber has afforded the Republicans the chance to use taxes as a blue-collar issue.
The opening Joe provided, as McCain skillfully exploited in the third presidential debate, gives the Republican ticket its first shot at victory since its candidate punted on the bailout bill -- the terrible, pork-laden corporate giveaway that Congress passed and Bush signed. Now McCain finally has an issue. Obama's tax plans and spending programs have emerged as the key point of difference between the campaigns. And the Democrat's comment to Joe that he saw his tax policy as a "way to spread the wealth around" underscores the motive behind his program: to redistribute income. Obama might as well have told Joe, "I want to take the hard-earned money you make fixing pipes and give it to other people."
If the Republican Party concentrates its fire on the tax issue and the redistributive impulse behind Obama's plans, it can close the Democratic lead point by point, day by day, until the election. McCain's campaign must resist the temptation to take random shots on a million other issues and zero in on the tax-and-spend issue, emphasizing how taxes penalize those who work hard and live right.
In fact, the rich are paying vastly more in taxes than they ever have. According to the excellent book "Reality Check" by Dennis Keegan and David West, the percentage of income tax revenues paid by the top 1 percent of the population has almost doubled in the past 20 years. Now they pay 40 percent of all income tax revenues. (The bottom half in income pays less than 3 percent.) Despite the lower rates, the rich are paying more and more in taxes because they are earning more and more. In the past eight years, real, after-inflation income growth for the top 10 percent of the population has been more than 45 percent.
Essentially, the tax debate comes down to economic populism vs. social populism. The Democratic economic populists rail against the rich and demand that they pay more in taxes. The Republican social populists decry the notion of income redistribution as rewarding failure and penalizing hard work. Until Joe, the economic populist polarity dominated the presidential race, to the detriment of the Republicans. But now Joe has brought the social populist argument back to life.
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