Read Carefully

Alexandria Ocasio-Cortez (AOC) proposed a 70% marginal tax rate, on income over $10 million dollars. And for an incredibly small, but incredibly powerful and influential segment of American political life, it is as if the sky is falling. Michael Bloomberg compared the proposal to Venezuelan Socialism, Howard Schultz credited it with his decision to subject the American people to his already failed candidacy, and billionaires at Davos scoffed, while simultaneously stressing together over the state of the world and their potentially precarious position in the years to come.

These reactions are telling. AOC’s proposal, to raise taxes on income earned over $10 million dollars, and that alone, drew seriously sensational criticism. Bloomberg’s critique likens AOC’s modest proposal and other Democratic welfare state building policies to Venezuelan nationalization and the mismanagement problems therein. Which is a totally bad faith critique and Bloomberg knows it. Schultz claimed a 70% marginal tax rate would never happen in the United States, despite rates being much higher prior to the 1980’s. And billionaires at Davos objected to estate tax and wealth tax plans because they feel entitled to the billions they funnel into vanity project foundations which they feel benefit the planet more than collectively funded programs or projects raising their taxes would enable.

All the while, in the background, Amazon, other large multinational corporations, and their founders/executives are making money hand over fist. In fact, Amazon recently made news because they will pay no income tax on $11 BILLION dollars in income. If you weren’t paying any taxes on $11 BILLION you would probably scoff derisively at the prospect as well. However, that reaction, the reaction of the Bloomberg’s, the Schultz’s, and anyone rich enough to attend Davos, is exactly why we need a significant tax hike and the social expenditures they enable. A proposal like AOC’s isn’t radical at all, it’s simply returning to pre-Reagan tax levels on an incredibly small portion of the population.

They know it doesn’t stop there though, especially given the proposals even moderate Democrats are supporting now-a-days. Specifically Medicare-For-All and the Green New Deal. The leftward shift in the Democratic party is going to take significant tax revenue. It’s going to take tax hikes on every income bracket, not just those making over $10 million. This one proposal might not impact very many people, but the small subsect that it does is incredibly powerful and knows this is one of the first steps in dismantling the corporate state Reagan helped create and almost every president since has furthered.

In previous eras in American history taxes were much higher and this tax base enabled bold welfare state projects. Whether it’s the slew of New Deal programs, or LBJ’s Great Society which created Medicare and Medicaid, tax and spend used to be the standard. And with policy proposals with hefty price tags like Medicare-For-All and a Green New Deal becoming standard, that tax part of the tax and spend is going to come back in vogue. Which is bad if you’re a billionaire who likes to watch your wealth grow.

At some point though, something has to give. Under Ronald Reagan the top marginal tax rate was cut from 70% to 50% and then again from 50% to 28%. In the 1950’s and early 1960’s the top marginal rate bounced between 91% and 92%. In 1964, that rate was slashed to 71% however even then, there was enough money to fund the war in Vietnam and programs like Medicare/Medicaid. People characterize AOC’s proposal as radical. Bloomberg calls it Venezuelan, Schultz cries never before in America, Davos attendees say never again in America, but this is simply a return to the PRE-RONALD REAGAN STATUS QUO.

However, it should be noted that the top marginal rate before the Reagan cuts was FOR ALL INCOME OVER $200,000. Not just all income over $10 million. AOC’s proposal isn’t radical when you look at the rate itself and it’s not radical when looking at who pays that rate. It should also be noted that corporate tax rates have seen similar cuts. They peaked at 52% in 1968 and now sit at 21%. Another policy change that would hurt the wealthiest and most powerful interests in the company to the benefit of the rest of us.

These proposals are only radical if you’re a billionaire who has had record low taxes for almost 40 years. If you’re one of those, an out of touch billionaire, then AOC and her proposals probably does look pretty radical. Because it shows people are waking up, they want a government that actually does something tangible in their lives, and the first step is raising taxes on the people who have benefitted the most from government inaction. The Amazon’s of the world, the Bloomberg’s, Schultz’s, and Davos attendees, and anyone else with an obscene fortune built off the back of American workers.