Can the Majority Vote to Have A Minority Send Them Money?

Barack Obama argues that the last election gave him a mandate to raise taxes on the rich.  Put another way, he is arguing that 52% of the people voted to raise taxes on 2%.  Did they?

Well, they certainly did something like this in California.  Let's take a look at two propositions:

  • Prop 30, which propose to raise taxes on on the rich to help close the deficit (there was a token 0.25% sales tax increase for cover, but everyone knew it to be a tax on the rich).
  • Prop 39, which was a broad-based income tax increase which raised taxes on most everyone (or at least on the 50% or so who pay income taxes).

So, let's look at the results:

  • Raise taxes on only the very rich:  PASS
  • Raise taxes on everyone (including me):  FAIL

The California election was a crystal clear mandate:  People want more taxes as long as they are on somebody else.  By targeting the richest few percent, we can get a lot of money but make sure the people taxed don't have any hope of fighting the increase, even if they vote as a block.

So I think Obama clearly has a mandate to raise taxes on not-me.  The question is, do we think we have, or do we want, a government where this is possible?  Where majority votes can do anything they wish to minorities?

I should hope not.  I will remind you of a famous quote, from a different context, but entirely relevant:

First they came for the communists,
and I didn't speak out because I wasn't a communist.

Then they came for the socialists,
and I didn't speak out because I wasn't a socialist.

Then they came for the trade unionists,
and I didn't speak out because I wasn't a trade unionist.

Then they came for me,
and there was no one left to speak for me.*

 

* there seem to be many variations on this out there, you may have heard other similar versions.

  • norse
  • sabre_springs_mark

    Prop 39 vs Prop 30 isn't really a fair comparison All the Unions,and the Gov wanted prop 30 to pass and they spent some 60 million on that prop alone. They actually threatened the sponsor of prop 39 when she started spending her own money on the campaign - and so she stopped. There really wasn't much push - so the CA electorate voted down the tax increase as they usually do.

    Prop 30 came with threats and promises of its own. We would lose schools, student would pay higher tuition, parks would close etc. And the media went along with this, until about a week after the election. Of course the students were used. I don't know how upset they will be when tuition goes up next year.

  • CTD

    These taxes on "the rich" also nearly always fail to capture the revenues predicted due to static analysis. People assume "the rich" will keep behaving just as they do even after taxes are raised. But the rich are much more flexible in how and when they get paid than we peons. They can afford to defer income, move it into more advantageous forms, or simply earn less. This is why the wild post-war changes to the top income bracket have had no effect whatsoever on how much money the .gov actually manages to collect.

  • HenryBowman419

    We are simply observing the reality that democracy is a flawed concept, and that such systems inevitably fail.

  • obloodyhell

    }}} Where majority votes can do anything they wish to minorities?

    Pure Warm-body Democracy at its unbridled finest.

  • obloodyhell

    No, not "Democracy" -- warm-body Democracy with an uneducated mass electorate with no concept of the responsibility that goes along with the right to Vote.

    The key word is responsibility. The vast majority have been taught they have Rights. They have not been taught that there are Responsibilities to go with those Rights.

  • NormD

    I think you are mixing up Prop 39 with Prop 38. Prop 39 changed the way that multistate businesses report taxes.

  • NormD

    On the Prop 30/38, I think you and many Libertarians are vastly oversimplifying.

    You all defend the "rich" as people who made it to the top by delivering products and services of value to their fellow citizens.

    These "rich" should be lauded and not overtaxed. Hell, maybe they shouldn't be taxed at all.

    But.... The "rich" include:

    1. People who made it to the top by using the legal system to extract monopoly rents. Lawyers, Doctors, Auditors, Consultants, Accountants, Bankers. etc.
    2. People who constantly lobby for more taxes (actors!)
    3. People who get rich by getting the government to grant them tax benefits or loan guarantees.
    4. People who get rich by using questionable techniques (high frequency trading, buying a company by having the company take out loans, CDSs)
    5. People who get rich by exploiting their previous work in government (what does Peter Orzag do for Citigroup?)
    6. People who got rich by inheritance (not that I object, but these people don't evoke respect)

    How is some low level voter in CA supposed to separate the "good" rich from the "bad" rich. They all look the same through the media lens. Hell yes, Paris Hilton can pay a little more tax!

    We need to popularize free-market heroes and differentiate these from people who got rich by gaming the system. People who at great personal risk created businesses that deliver value to our citizens and who got rich in the process.

  • Russ R.

    My proposed solution...

    Just like a corporate shareholder's vote is proportional to the number of shares held (i.e. capital contributed), I'd simply multiply each individual's election vote by the voter's tax dollars paid to that level of government since the last election. That way taxation = representation.

    FWIW, I'd only apply this model to the House of Representative (where revenue bills must originate), but I'd expand Rep. voting eligibility to all adult taxpayers, not just those with citizenship. I wouldn't apply any of the above to either the Senate or Presidency.

  • mahtso

    A flaw in the President's logic (as the blogger presents that logic): he cannot raise taxes regardless of how many votes he received b/c Congress must act to do that. Speaker Boehner asserted that the votes that gave the Republicans a majority in the House show a mandate not to raise taxes.

  • sabre_springs_mark

    I mixed them up too in my comment. But prop 39 passed too, forcing companies to evaluate their in state business taxes one way, which will result in a billion dollars in increased taxes from business. The Dem super-majority is also planning to change Prop 13 to stop businesses from getting a prop 13 tax benefit on the business land/buildings they own. This week we started cap and trade. CA is going down the tubes.

  • sabre_springs_mark

    As noted above, it is prop 38 vs prop 30.

  • sabre_springs_mark

    I think your list of "bad" rich is grossly exaggerated. And the alleged grievances cause by these alleged evil rich are not widespread at all. How can you extract a monopoly rent, for instance, when folks can simply move to another apartment complex. I just had trust done up by a lawyer, and I think the service was very reasonable. I paid my last doctor 45 bucks for the appointment and thought it was so low, I actually felt bad about it. My banker got me a reasonable loan for my house, otherwise I would have to live in one of those monopoly apartments. Item 4 is just completely bogus.

    Whatcha talkin about Willis? Most of these rich are just trying to keep a business going and hire a few people to get the job done.

  • Brian McNary
  • mesocyclone

    The fact that bad rich exist does not justify a social policy of taxing "the rich." Taxes are to raise revenue, not satisfy envy or regenge.

  • mesocyclone

    You comment that Obama has a mandate. He does not. He has a small majority in the presidential election, and a majority in the senate. The majority in the senate would be significantly different had libertarians voted for Republicans in stead of Libertarians - two races would have been won by Republicans instead of Dems.

  • Zachriel

    Coyote Blog: I will remind you of a famous quote, from a different context, but entirely relevant ...

    Raising the top tax rate to 12.3% on the wealthiest Californians is hardly equivalent to rounding up political opponents for elimination.

    In any case, while it is conceivable that the poor majority could run democratic roughshod over the rich minority, that is rarely the case. Historically, the rich have disproportionate power. Also, emigration acts as a check.

  • Daublin

    First they locked out foreigners, but I am native born...
    Then they went after the CEOs, but I'm not one...
    Then they went after the oil industry, but I'm not in it...
    Then they locked down electronics, but I never void warranties...

    It goes on and on. The best counter I can think of is to shrink the budget of this monster. With a sub-trillion dollar budget, what D.C. does wouldn't matter so much.

    A second best counter is to try and develop a wide-spread sensibility about special case rules for minority parts of the economy. There should be a robust sense that if one is not personally affected by an issue, then one shouldn't be involved in it. Rules for an industry should be set within the industry, not by a general legislative body.

  • NormD

    Examples:
    1. Gov passes SOX. Auditors show up at my company charging $500+/hr to comply
    2. Gov passes patent laws and allows them to be applied broadly to nonsense. Patent lawyer shows up at my company and offers to get/defend/enforce patents for $500+/hr
    3. Gov passes banking regulations that are so convoluted only large banks can comply. These costs are passed on. Small banks are driven out of business.
    4. Costco offers DTaP shots for my kids for $50, but, if I buy them there I pay full cost. If I go to my Health Care provider they are "free" but they bill my health plan $300 to give shot. Health plan pays $160. CEO makes $4M.
    5. SEC outlaws people "offering securities" unless they are registered, so Warren could not offer me a chance to invest in his company unless he wanted to go to prison.
    6. Near me people wanted to get local gov to open gate so kids to bike to school. Project costs goes from $20K to $40K to $90K to ... final cost $360K. Someone is making money.
    7. Gov passes election laws that are so complex a group of neighbors needs to hire a lawyer before starting a campaign.
    8. Why do I need to go to a doctor for a simple checkup? PA anyone?
    9. Gov passes regs and when my catalytic converters fails I have to buy CA version for $2K while 49-state version sells for $150.
    10. Gov supports building California Valley Solar Ranch which yields a guaranteed 29% return to "investors" due to tax preferences and guaranteed buys.
    11. Gov creates massively complex tax code and corporate legal structure that require that a business hire many people who specialize in obscure laws in order to keep CEO out of jail.
    12. Gov imposes 25% tariff on imported pickup trucks. GM makes lots of money selling pickup trucks. Big bonuses and pay for everyone.
    13. How many companies are making big money pushing transit projects?
    14. Local gov passes complex environmental reg. Author quits and hires himself out at exorbitant rates to help companies comply.

    It goes on and on...

    Of course there are huge numbers of hard working rich people who deliver truly useful products and services. I salute these people.

    But in the argument about raising taxes we do not do our side any favors buy defending all rich people.

    Are you really defending Al Gore, John Edwards and Paris Hilton? Do you want to hold them forth as examples? You will lose.

  • sabre_springs_mark

    We don't lock out foreigners by any stretch of the imagination. Even folks from Mexico can fairly easily legally immigrate. What the debate is about is having people randomly run over the border. I personally don't mind if people immigrate, but I do mind that we have no control of our border for a variety of reasons.

  • sabre_springs_mark

    Anyway seems like higher taxes is working out for Californians. The claim is that 45K new jobs were added last month yay!

    Heard an interesting story about how dairy farmers are leaving CA in droves. Apparently a law was passed last year not allowing dairy farmers to sell their milk over state lines - to protect the California cheese industry. That has to be a good thing right? More milk for Californians - at least for awhile.

  • sabre_springs_mark

    Looks like a lot of your complaints are with the government and not the rich evil business folk after all. Seems like your second post contradicts the first.

  • None

    You highlight a problem with democracy - is it really moral that a majority can vote to disproportionately extract money from a minority ?

    I'd say no. I propose a replacement to democracy called spendocracy. The majority vote wins, but can only spend money previously pledged by its supporters (plus any subsequent additional voluntary donations, from one and all), plus a relatively low across the board boundary level taxation, lets say 10% of income.

    It's also not right that politicians can indebt future generations by borrowing to spend now - an extremely undemocratic model where the income of people born now is being spent without any representation from them. Totally ott, but it really almost is a kind of slavery. They find themselves slaving away in the future to pay for something they maybe would never have voted for, and maybe never benefited from.

  • http://twitter.com/aidianz Aidian Holder

    Actually prop 30 also raised sales taxes on everyone.... a regressive tax hike that will hit the working stiff like me harder than the income tax hike will hit the super rich.

  • Brotio

    Do what you suggest, and repeal the Sixteenth and Seventeenth Amendments, and help our friend Vidyohs in his crusade to fix the "each House shall determine its own rules" clause, and we just might be able to control Leviathan for another hundred years, or so.

  • http://devilish-details.blogspot.com/ mesaeconoguy

    To communist community organizers, taxes are a weapon.

  • http://devilish-details.blogspot.com/ mesaeconoguy

    The correct conclusion is people who live in CA are stupid, because they live in (bankrupt) CA.

  • John

    Warm Body? That's not the Chicago Way!

    Old joke,

    My Aunt lived in Chicago. For the first fifteen years she voted Republican, for the next fifteen years she voted Democratic.

    What happened after the first fifteen years?

    She died.

    How about a Constitutional Amendment, "Anyone who receives more than 50% of their income from State or Federal assistance, can not vote." Yes, that would exclude the US military, but Obama does that now..

    http://onthenorthriver.com/2012/10/27/messing-with-the-wrong-homeboys-this-time/

  • epobirs

    The only mandate here is for the wealthy of CA to pack up and leave, telling those left behind to go screw themselves.

  • Fifty Ville

    If the rich had disproportionate power, Prop. 30 would have failed.

  • Dan Knowles

    Not at all. He's pointing out that there are rich who are risible, so be careful when defending "the rich". Those crony capitalists in Norm's second post are indeed getting rich off gov't and provide a glaring example, I think, of where we need to focus, or divert attention to, as opposed to vilifying the catch-all term "the rich". Big gov't doesn't solve "problems" or promote "equality", it peddles influence and amasses power. For the sake of power. Our problems will not be solved by voting. The level of fraud in the last election proves it, even without acknowledging the fact that there are many issues which should never be allowed to be voted on, specifically how much of someone's money fellow citizens get to demand from each other. As soon as people figgered out they could vote for OPM, and were encouraged to do so by domestic enemies, we were finished as a free and prosperous nation. It's just a matter of time before it all either comes apart at the seams or we end up a hollow shell of a nation like teh former USSR. And I would venture a guess that most here know how folks got wealthy in that place.