Should we have trillionaires? Should we even have billionaires? According to at least one recent analysis, the economy is on track to mint its first trillionaire — that is one thousand billion — within a decade. Such staggering accumulations of wealth are made possible in large part by the fact that America’s federal tax burden is so comparatively light. After a long period of seeming to venerate the 1 percent, or the 1 percent of 1 percent of 1 percent, American sentiment is swinging hard against this imbalance.
Now Joe Biden, behind in many polls and presiding over an economy that is objectively strong but politically unpopular, is hoping to boost his re-election bid with a policy idea that would once have been almost unthinkable: For this portion of the population, at least, he is vowing — almost gleefully — to raise taxes.
Even for a popular president, this would seem like a huge risk. For a Democrat with low job approval ratings and precarious poll numbers on his handling of the economy, it’s a shocking rebuke to conventional wisdom — and practically an invitation to critics to call him a tax-and-spend liberal. But on the politics as well as the policy, Mr. Biden is making the right call. Economic ideas that were once dead on arrival are now gaining traction on both the left and the right. The moment has arrived for changes in the tax code — and maybe beyond.
For at least the last half-century, raising taxes has been the third rail of American politics. Ronald Reagan rode the wave of the late-1970s “tax revolt” into the Oval Office. I was a kid in California then, and I remember how fierce the anti-tax sentiment was. Howard Jarvis and his followers, mostly older white property owners, pushed for the ballot initiative known as Proposition 13 because they were, in their own words, “mad as hell” that their rising taxes would help educate immigrant families. The anti-taxers won by a nearly two-to-one ratio.
Time magazine put Mr. Jarvis on its cover and called Prop. 13 the “most radical slash in property taxes since Depression days.” The movement devastated schools and social services. But it was political gold and spread nationwide.
During his first year as president, Mr. Reagan cut the highest personal income tax rate from 70 percent to 50 percent. He cut taxes for low-income Americans, too, decreased the maximum capital gains rate from 28 percent to 20 percent and cut corporate taxes. These tax cuts caused such deficits that Mr. Reagan had to reverse some of them throughout the rest of his time in office, but that is not how history remembers his presidency. By the end of his second term, the top individual rate was only 33 percent.
