The New Republic’s Noam Scheiber is worried that Hillary Clinton hasn’t gotten the memo. It’s not enough for Scheiber that the likely Democratic presidential nominee will almost certainly make inequality a core theme of her 2016 campaign. One can expect calls for universal preschool, a higher minimum wage, and more infrastructure investment among other policies to boost living standards at the middle and bottom. But Scheiber is worried that she won’t take the next step and express a clear desire to sock it to the 1% with a big, fat tax hike:
There’s the problem of economic stagnation for lower- and middle-income workers. And there’s the problem of the ultra-rich capturing more and more of the country’s income and wealth. And fixing one does not mean fixing the other. If you’re as concerned about the escalating power of the one percent as you are about the declining economic fortunes of folks at the bottom, then merely boosting the middle class will not suffice. … if you’re really serious about reducing inequality, at some point you have to target the rich directly—through tax increases or other policies.
Now Scheiber doesn’t offer much evidence for his concerns, other than Clinton hasn’t called for higher taxes on the rich when she has talked about inequality. But then again, how could she not have already, right? It’s like the case of the dog that didn’t bark. Suspicious. After all, top left-wing economists like Thomas Piketty and Emanuel Saez argue higher taxes – top rates of 70% or higher on income and/or wealth — are necessary to prevent inequality from worsening further. The need for higher taxes on the rich is now a basic element of the Democratic economic agenda, as Scheiber sees it. Why won’t Team Hillary get with the program?
But maybe Clinton knows that while Americans are generally in favor of more wealth redistribution, that number hasn’t changed in 30 years. (Recall that even her husband once conceded that he probably raised taxes too much.) Or maybe she just has a better grasp of the research than Scheiber does. Perhaps Clinton is aware of that high-end inequality doesn’t seem to have reduced social mobility or economic growth. Maybe she is even aware that Piketty and Saez are not the final word on income inequality. Scott Winship of the Manhattan Institute:
Even when it comes to income concentration at the top, there are good reasons to believe that the increase has been overstated, especially since the 1980s. The oft-cited estimates of Thomas Piketty and Emmanuel Saez and of the Congressional Budget Office are problematic for a number of reasons. Earnings concentration estimates from another paper by Saez are less so and show that the top one percent’s share rose only from 11 percent to 13 percent between 1989 and 2004 (versus 14 to 20 percent in the Piketty-Saez data). A careful recent paper coauthored by economist Richard Burkhauser found that household income concentration at the top fell between 1989 and 2007.
Not only has income inequality not grown as much as many suggest, but intergenerational mobility has probably not declined much—if at all—in the past three decades. To be clear, no research shows a sizable increase in mobility since the mid-twentieth century, but the most common finding is a change so modest (up or down) as to be statistically indistinguishable from no change at all. In my own forthcoming research, I find that today’s thirty year olds have experienced no less mobility than did thirty year olds in the mid-1970s.
Given all that, raising more taxes on top of the Obama tax hikes might seem a little off point right now, more the pursuit of an ideological agenda rather than an effort to solve actual problems in a slow-growth economy.