Raising the marginal income tax rate on successful middle class people in many areas of the country, a family income of $250,000 hardly qualifies you as “rich” is just the beginning. There are also proposals to limit further the amount of interest you can deduct from your mortgage and the amount you can deduct for charitable contributions. The net effect of those proposals will be 1 to further depress the housing market and 2 to squeeze charities that depend on private contributions. There are other features worthy of note–raising the tax on capital gains, for example, which will discourage investment, and hence slow job growth.
What many critical observers may not sufficiently appreciate, however, is the extent to which the President regards all this as a good thing. Prosperity leads people to think that they have lives and choices apart from the engorged teat of the State. Our new socialists want to discourage that troubling independence. Their ultimate aim to to make everyone a ward of the State. In an earlier post, I drew on Friedrich Hayek to explain this:
The biggest challenge we face now is not to our stock portfolios or 401K accounts now renamed “201K accounts” by one wag but rather the psychological conditions for political liberty, among which a spirit of individual initiative, i.e., taking responsibility for oneself and one’s family, figures prominently. “The most important change which extensive government control produces,” Hayek observes, “is a psychological change, an alteration in the character of a people.” It doesn’t happen all at once. You don’t, in a modern democracy, go to bed free on Friday and wake up in chains on Saturday. It takes, Hayek notes, “perhaps. . . one or two generations.” Where do you suppose we are in the process? The crucial point, Hayek says, is that “the political ideals of a people and its attitude toward authority are as much the effect as the cause of the political institutions under which it lives. This means, among other things, that even a strong tradition of political liberty is no safeguard if the danger is precisely that new institutions and policies will gradually undermine and destroy that spirit.” If you ask where it all tends, what the change or alteration that socialism i.e., “extensive government control” brings about in the character of a people, you need look no further than Hayek’s title: The Road to Serfdom.