11/02/2010 03:05 pm ET | Updated May 25, 2011

What Would it Mean to Turn Back the Clock to 1960? A Tax Hike on the Super-Rich

In the 1980s, wealthy conservatives realized that they could use social issues to persuade lower and middle income Americans to vote against their economic interests, and for a party which consistently favored the ultra-rich. As described in Thomas Frank's What's the Matter with Kansas and many other studies, this is how "Reagan Democrats" were born: blue-collar voters who ordinarily would vote Democratic, but who voted Republican because of church/state issues, abortion, and national security.

Now, with an ultra-conservative fringe about to seize control of the House, it bears noticing that the strategy has changed. Yes, gay marriage still mobilizes the Republican base. But the Tea Party's message is more economic and political than social. They're not talking about gays and abortionists anymore; they're preaching less government, lower taxes, lower spending. Largely funded by a few large industries and individuals (such as the Koch brothers), the Tea Party's pseudo-populism is not the same as the Christian Right's. The culture wars may not be over yet, but it is economics, rather than social policy, that forms the basis of the far right's contemporary rhetoric.

That rhetoric is best described as a strategy of over-generalization. "Lower taxes" -- but for whom? "Less regulation" of whom? Naturally, Tea Party candidates across the country emphasize working families, seniors, and the redoubtable middle class. They say that we have gone astray, and should return to an earlier era, before the Great Society, when government was leaner and taxes lower on working people.

Yet if we did so, the highest federal marginal income tax rate -- applicable only to the top .01 percent of taxpayers -- would be 70 percent. As reflected in this 2007 graph from the New York Times, the last half century has seen a dramatic, even shocking, flattening of income tax rates, even as the wealth gap has soared. In 1960, the highest tax rate was ten times the lowest. In 2004, it was about five times the lowest. The super-rich are now taxed just like everyone else -- at slightly higher marginal rates, but not much higher.

These are not ma-and-pa from the middle class. In 2004, to be in the top .01 percent of wage earners made over $3.6 million. Remember the Luxury Tax in Monopoly? That's what that 70 percent rate was meant to be: a tax on the super-rich to support everyone else.

And the United States was conservative in this regard. Remember the Beatles' song "Taxman"? "One for you -- nineteen for me"? George Harrison wasn't exaggerating; the upper reaches of the British luxury tax exceeded 90%.

Socialism!, We can hear the Tea Party object. But is that really true, historically speaking? In 1960, Dwight Eisenhower had been president for eight years. Was he a socialist too? Maybe he was born in Kenya also.

And of course, none of this counts the lowering of corporate tax rates, the near-elimination of the estate tax (which, contrary to G.O.P. rhetoric, only affects the richest of the rich), the lowering of the capital gains tax rate, the further lowering of top income tax levels (the "Bush tax cuts," now sure to be extended by the incoming Republican House), and, of course, the myriad ways in which the super-rich conceal their income -- ways mere middle-class folks cannot afford to undertake. With all these factors, it's clear that the over-broad rhetoric of "lower taxes" is in fact a way of enriching the super-rich -- on the backs of everyone else.

Drastically lower taxes may also lead to a further enrichment of the super-rich, as less revenue for government means less ability to regulate the ever more ornate methods of aggregating wealth in the hands of the few. Here, too, the strategy of over-generalization works wonders. "Less regulation!" today's libertarians chant. But for whom? The natural implication is a lighter burden for you and me, but the actual beneficiaries are global financial companies, agribusiness, and extractive industry. Here, too, overly broad rhetoric enriches the super-rich.

It is remarkable that the Tea Party has managed to direct anger about the recession, which was caused by deregulation, into calls for even less regulation. In the days of the Moral Majority, this all felt like a shell game; voters were so enraged by welfare queens and homosexuals that they didn't notice the fleecing of the middle class. In today's Tea Party moment, however, it's more like a con of words; "lower taxes" sounds nice, but what it really means is not a return to some past golden age, but an acceleration of an unprecedented wealth grab.

If we were really interested in bringing back the days of Eisenhower, the people paying for the Tea Party's ad blitz would have to pay for roads and bridges instead.