Tax the Rich?

By Jesse Crall

Part I

Earlier this week, New York Congresswoman Alexandria Ocasio-Cortez donned an Aurora James-designed dress emblazoned with crimson “Tax the Rich” lettering to the New York Met Gala. Her sartorial choice provoked an array of responses, perhaps best summed up by former Bernie Sanders Communications Director & current Bad Faith host Briahna Joy Gray, who tweeted: “The AOC dress is merely a Rorschach test. If you already hate her bc you’re a conservative, or distrust her bc you’re a leftist who feels she hasn’t maximized her power to fight for working people, you hated it. If you think she’s doing the best she can, you liked it.”

While I certainly don’t hate AOC, I do think her overall worldview and political approach isn’t helpful toward building anything approximating a labor-driven economy. Much of what she said during and after the Met Gala reinforces my conviction.

First, consider her appearance with Aurora James, a well-known designer who launched the Brother Vellies label in 2013. James represents what I believe marks the future of the Democratic Party, one distinct from the technocratic Neoliberalism of the Obama years but well askance from even a loose definition of “socialism.” She’s a black entrepreneur, personally wealthy and ensconced in similarly luxe landscapes. She also offers a Social Justice sheen to her work, one that preaches “equality” but makes little effort to challenge broad structural impediments to working class power.

James recently started the “15 Percent Pledge,” an initiative “calling on major retailers to commit a minimum of  15% of their shelf to Black-owned businesses,” per their website. Such an effort cultivates an improved landscape…for black capitalists. But what about labor at black-owned businesses? A Marxist analysis places the primary economic conflict among workers and owners regardless of race. James, herself a successful capitalist, is engaged in diversifying the upper echelons of the ownership class. Such efforts represent little threat to the existing power brokers in our economy, as major corporate leaders, including Jeff Bezos, regularly offered support to Black Lives Matter and similar organizations. Nordstrom took the 15 Percent Pledge this year. They’ve also used sweatshop labor. Those two realities are not contradictory. Promoting the interests of black-owned companies doesn’t change the labor dynamics within the fashion industry and can, in fact, benefit major retailers since a more diverse selection of products can help cultivate a broader customer base. Which by itself isn’t a bad thing! It just isn’t a challenge to capitalist structures and the exploitation against labor within them.

In addition to AOC, James’ clients include Beyonce, who’s worn Brother Vellies shoes for tour books and whose website published a Q&A with James in 2015. Along with her husband, Jay-Z, Beyonce’s net worth exceeds $1 billion. Would James’ push fiscal policies to the point of alienating her most prominent client? Or can her most prominent client use James’ brand to co-opt certain rhetorical flourishes that fail to challenge her position? None of these points are meant to slam James but rather to expose the ultimate folly in “ethical capitalism” or expecting significant material changes to emerge from some our economic landscape’s most significant beneficiaries. Celebrities have spoken out against “injustice” and for “equity” for a very long time. They also have the money and influence to help shape our political systems. I think the ultimate results speak for themselves.

Now we get to AOC, who made a strange comment during the Met Gala about how she and James are “working-class women of color” while taking care to point out how the latter is an immigrant. James is an immigrant…from Toronto, not exactly an argument worth making in some kind of call for pluralistic social justice. More troubling is AOC’s comment about how she & James represent the working-class. A Congresswoman and a prominent designer who owns her own label are not “workers” and it’s an insult to lump them in with, say, garment factory embroiderers. And neither possesses what I would call a “working class” background; both James and AOC are the daughters of architects. AOC interned for Senator Ted Kennedy in college and started her own business soon after graduating. Their experiences are common among other affluent Millennial professionals, not the majority of Americans their age who didn’t attend college and rely on wages for survival. 

I’m not making a moral judgment here; my background is similar to AOC’s in a variety of ways but I also don’t go around calling myself “working-class” simply because I once worked in retail and can’t afford to buy an NFL team. For all the talk of Neoliberalism undermining the “middle-class,” workers and the poor remain the clearest victims of unjust systems. In 2019, college graduates made roughly twice as much income as Americans with high school degrees. Among Americans aged 35-44, college graduates boasted a net worth almost five times greater than that of high school grads ($217,000 vs $47,000). Conflating label owners and Congresswomen with single mothers working the register at Walmart undermines and potentially alienates the latter; the inability of progressive Democrats to win elections outside districts with a heavy presence of young professionals speaks to this problem. 

Attending the Met Ball and boosting the brand of a fashion designer whose label sells $1,500 handbags doesn’t strike me as much of a pitch outside AOC’s existing and ultimately limited audience. Notions of ethical consumption only appeal to Americans with the time and money to make such conscious choices. My hypothetical Walmart checkout lady making $13 an hour does her shopping at Walmart. Brother Vellies, whose heels start at $455 and go up, market to a professional base of women. Buying products made by African workers under conditions deemed “fair” by the United Nations might make them feel warm and fuzzy inside but what does it do for the 40% of the country that doesn’t have $455 for an emergency, let alone red calf leather kitten heels? AOC has a troubling tendency to meld race and class, regularly bringing up “intersectionality” in her commentary. That she sees herself and James, both welcomed at the Met Gala and decked out in expensive pieces, as “working class” speaks to the bankruptcy of this approach. 

Part II

For the second part of this piece, I want to investigate the meaning of “Tax the Rich.” It’s an easy slogan but one that obscures far more than it reveals. Who qualifies as ‘rich’? What kind and degree of taxation are we talking about? And what is the ultimate purpose of these proposed taxes? Answers to these questions vary even among a narrow progressive base and don’t fit so easily on a ball gown.

Who Qualifies as Rich?

In a subsequent livestream, AOC castigated those who define “the rich” as doctors and lawyers, instead taking care to highlight Americans worth hundreds of millions and billions of dollars. But in this regard, we’re talking about less than .01% of the population (in case you’re curious, it takes a net worth of about $10 million to place you in the top 1%). Of course we can and should raise their taxes, but Americans on that level represent a tiny fraction of our population with far less influence than we might imagine. While Charles Koch on the right or Michael Bloomberg on the left can flood elections and think tanks with money, they still require legions of voters, media figures and other professionals to buy into and advance their messaging. And that group has been well-served by the Neoliberal turn, which doesn’t operate solely to serve billionaires. 

Privatization and austerity hurts those who rely on government programs. Elizabeth Warren’s turn away from single-payer occurred soon after a campaign stop where her affluent base expressed dismay at potentially giving up their gold insurance plans. The quality of our public schools doesn’t affect cardiologists who can afford private educations (or live in affluent neighborhoods with well-funded school districts). Housing costs and swelling rents aren’t a problem for corporate attorneys with $300,000 ready and waiting for a down payment on a 3-bedroom home. 

The comfortable end of the American middle-class already pays a lower tax rate than their counterparts in developed European nations. Per the OECD, Americans with no kids making 67% more than the average income pay a 34% tax rate, lower than every country in the European Union. A key difference: Many of these European countries provide significant social benefits enjoyed universally, not just by poor and low-income citizens.

When AOC and Joe Biden talk about tax cuts for the middle class (which Biden inaccurately denotes as those earning below $400,000 a year), they’re describing a group already well-served by our fiscal policy. A 2019 study by the Urban Institute found a direct and significant correlation between income and opposition to single-payer healthcare. As you might expect, the rate of opposition among those with private coverage was more than double that of those with publicly-funded coverage or no health insurance at all. AOC may have found a few ideological allies among the Jet Set, but as a whole, affluent Americans who fall short of the 1% are not a reliable base through which to build progressive reforms even as decades of Neoliberalism erode more vulnerable portions of the population. Whether you want to call them “rich” or not doesn’t change the reality that within the “1% against the 99%” lies a whole range of competing interests that won’t smooth out based on simplistic slogans.

What Kind and Degree of Taxation are we Talking About?

Taxes aren’t all one thing. We have federal, state and local taxes. Taxes on incomes, inheritance, capital gains…Sales taxes. Taxes on property. Corporate taxes. Payroll taxes. Head taxes. Tangible Personal Property taxes. Taxes vary based on whether or not you’re married or have kids…Plus proposed taxes that may not yet exist, such as a Wealth Tax, a Value Added Tax, common throughout the world but not in the U.S., or taxes on specific services, such as Senator Bernie Sanders’ proposal to initiate a 4% tax on income above $29,000 a year as a Medical-for-All pay-for.

Within this non-exhaustive list of taxation types lies a host of contradictions. A wage earning home-owner might support increases on capital gains taxes but not property taxes. A left-leaning capitalist who doesn’t have any rich, long-lost aunts might support increased estate taxes at the same time they champion cuts to corporate taxes.

Biden’s proposals call for very small increases to the top marginal income tax brackets, from 37% to 39.6% along with matching capital gains rates to income. AOC previously called for a 70% top marginal tax rate, in line with U.S. fiscal policy from the early 1960s into the early 1980s. Under Eisenhower, the top marginal rate stood as high as 91% and the corporate tax rate hovered around 50%. Under Obama, the corporate rate sat at 35% before Trump cut it to 21. Biden initially proposed a compromise, at 28%, but details in the ever-shifting Reconciliation Bill suggest a slightly lesser number. At any rate, when it comes to “taxing the rich” among individuals and major corporations, we’re arguing over a narrow set of numbers considerably more regressive than the status quo from WWII until the Neoliberal turn in the late 1970s. 

If AOC’s advancing Biden’s current proposals, she doesn’t represent any real threat to the Met Gala crowd. For all the reactionary screeching about how Obama was ‘doing socialism,’ Wall Street, Silicon Valley and the entertainment industry remain three reliable financial bases for the Democratic Party. 30 different Wall Street executives, including Blackstone billionaires Tony James and Jon Gray, worked as bundlers for the Biden campaign. They’re either on board with Biden’s moderate tax increases or expect that they won’t come to pass. Either way, AOC’s dress carries the effect of gumming the hand that feeds her, and if she represented a significant threat to the attendees’ interests, they wouldn’t have invited her in the first place. 

What is the Ultimate Purpose of These Proposals?

AOC has expressed support for Modern Monetary Theory, an economic argument stating that the U.S. can deficit spend instead of relying on “pay-fors” toward public spending. MMT thought leaders like Stephanie Kelton have argued in favor of progressive tax increases but for the purposes of mitigating inequality, not creating revenues for social programs. In Kelton’s own words:

We don’t need to depend [on billionaires’ taxes] to feed a hungry kid, or fix a crumbling bridge. I don’t like that.  That idea that we can’t move forward without them. We hold hostage the entire progressive agenda or whatever public policy because unless we can tax the rich, we can’t pay for it so we can’t have it. I’m saying no to that.”

Interview: Stephanie Kelton Talks MMT and More, Current Affairs

So what’s AOC goal with her “Tax the Rich” message? Biden’s proposals won’t tax billionaires out of existence. Gains to the 1% accelerated so quickly during COVID that even if all his planned fiscal changes take effect, they won’t meaningfully shift existing class stratification. If AOC supports proposals well beyond Biden’s own, she didn’t foreground them this week, instead opting for a message vague enough that I can write hundreds of words exploring all the weaknesses and contradictions in play. While I support Biden’s fiscal proposals against doing nothing at all, none of them come close to “building socialism” or “challenging capitalism.” They don’t even operate outside the Neoliberal landscape, instead opting to move the dial slightly within it.

Former Bernie Sanders surrogate and present left-podcast fixture Nomiki Konst tweeted: “The uncomfortable truth for some is that just as Bernie went to Liberty U to bring an appealing message to populist right, AOC expands a working class platform to many apolitical, into pop culture & centrist Dems. Smart politicking is knowing who you can pull in and how to do it” on September 14th.

But most Americans already support some kind of progressive increase on taxes. What apolitical and moderate viewers saw from AOC was two highly successful people call themselves “working-class” and then pitch a slogan Joe Biden agrees with. If the overall goal was to get more people on board with the Biden agenda, okay, fine, but that’s a sorry state of affairs for a Progressive movement pitching itself as something contrary to the present Democratic Party.

While running for president in 2008, then-Senator Barack Obama said the following: “At the end of the day, there’s no real separation between Wall Street and Main Street. There’s only the road we’re traveling as Americans. And we will rise and fall on that journey as one nation.”

At the Met Ball, AOC said “When we talk about supporting working families and when we talk about having a fair tax code, oftentimes this conversation is happening among working and middle class people (on) the senate floor…I think it’s time we bring all classes into the conversation.”

Both Obama and AOC advanced an argument willfully ignoring the competing interests among the classes. Obama’s commentary, delivered as global markets were collapsing, obscured the fact that, in actuality, the wealthy were very comfortable rising while the poor and working class fell, and no pseudo-patriotic nods to “unity” can hide that fact. His governance ended up protecting and then advancing the ultimate interests of the investment and executive classes while 6 million Americans lost their homes. AOC seems to think that a just economy can emerge through some nice liberal debate at galas and the Congressional floor. But what is she ultimately hoping to build? Wealthy people may vote for little tax increases but are they going to give up their power? Will they accept an economy driven by the majority, ie, workers?

A nice thing about the 1% is that they only make up…one percent. You’re better off having a conversation without them. Otherwise, you begin to tailor your message to what makes them feel comfortable and what they’re willing to accept. And it won’t prioritize the interests of the working class and poor.

Jesse Crall

A Los Angeles native, Jesse Crall graduated from UCLA’s English Department before working as a copywriter, script reader and project manager for an engineering firm.

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