Why class warfare has no future.
Two years before Occupy Wall Street’s band of radical grad students set up their tents and cardboard signs in Zuccotti Park, Mayor Bloomberg warned the City Council against frivolous tax hikes. "One percent of the households that file in this city pay something like 50% of the taxes. In the city, that's something like 40,000 people. If a handful left, any raise would make it revenue neutral."
And then the 1 percent became the target of the left’s answer to the Tea Party. It wasn’t unusual to see bus riders wearing “We Are the 99%” buttons the way they had once carried I Heart New York bags.
New York City now has a radical leftist in Gracie Mansion, Bill de Blasio, a radical leftist City Council speaker, Melissa Mark-Viverito, and a radical leftist public advocate, Letitia James. The city is now run by the Working Families Party/ACORN and tax hikes will be used to finance generous payoffs to unions.
But the unions who rigged this election may never see those payoffs. New York City’s unfunded pensions are estimated as being as high as $136 billion. The crash may only be four years away.
The top 1 percent pay half the income taxes in the city and the top 10 percent pay 71 percent. Drive them away with tax hikes for municipal union goodies and the unions will have as much trouble collecting even basic benefits from New York as they do from Detroit.
On the other coast, the situation is even worse.
That 1 percent pays 41 percent of California’s income taxes while half the state pays no income taxes at all. That’s an even worse ratio than New York State where only 39 percent pay no state income tax.
California’s unfunded liabilities are estimated at $640 billion and the state is trying to dig its way out with taxes and spending sprees. Governor Jerry Brown is hoping to finance his $68 billion toy train with nearly a billion in carbon “credits” which companies must buy in order to do business in California.
Meanwhile the 1 percent and the 10 percent are unaccountably fleeing California. “Go West young man,” Horace Greeley advised. “Washington is not a place to live in. The rents are high, the food is bad, the dust is disgusting and the morals are deplorable.”
These days California is a lot like Washington and the arrow of opportunity has flipped around from west to east as those young men with a future and the companies they work for are fleeing the state.
California lost 5.2 percent of its businesses in 2012. A San Francisco Chronicle story describes an emergency row on a flight crowded with emigrants from California and Texas neighborhoods filled with cars with California license plates.
Brown and the liberal elites have insisted that the wealthy won’t leave because taxes go up, but it’s the wealthy that have the means to leave. Or as a Californian quoted in the article said about taking a loss on his new $2 million home, “I can make half of it back in one year of tax savings.”
California is experiencing an exodus of the wealthy and the working poor who have the most mobility. It’s the middle class that can’t afford to walk away from homes and businesses and is tied down and crushed by the left’s escalating war on the middle class.
The wealthy will weather Bill de Blasio and Jerry Brown or they will depart and take the tax base with them, leaving only the middle class to be squeezed dry to fund all the social workers, prisons, hospitals, schools and community centers of the welfare class.
Targeting the 1 percent kills the goose that lays the golden tax revenues and states and cities that are already close to the edge can’t afford to drive away their tax base. The welfare class is taught to blame the rich, but without the rich its lifestyle implodes, its social dysfunction increases and in the final phase of urban collapse, the middle class abandon their homes block by block and retreat to the suburbs as the city collapses.
There is no better demonstration of that than Detroit.
Detroit has the highest property taxes of the 50 largest cities in the country. Its property taxes are twice as high as the national average and barely half of property owners even bother paying property taxes. Five of the wealthier neighborhoods paid 15 percent of the city’s property taxes. Another 19 percent came from a handful of companies, including casinos and Motor City’s shaky automobile industry.
The population fled, the tax base shrank and the city raised property taxes which drove away more property owners leaving a shrinking tax base that had to be compensated for with higher taxes. The cycle left a bankrupt ghost town filled with abandoned properties and outlaw property owners.
To make up the difference, Detroit began borrowing more money. Under Mayor Kwame Kilpatrick, who was convicted of everything from racketeering to extortion, debt hit $9 billion while revenues plunged to nearly $1 billion. Income taxes fell from $378 million in 2000 to $245 million in 2010. At the same time, Detroit lost nearly 200,000 people; the worst implosion of an American city in the last decade.
One out of three people in Detroit is poor. Three of the top five employers in Detroit are the city government and the national government. Whatever middle class it has left consists of government employees and they are a net loss. They can never pay as much into the system as they take out of it.
The only liberal solution to the Detroit disaster is to expand its boundaries into the suburbs and tax the ones who got away. Similar regionalization proposals are being flirted with on a national level but they are nothing more than wealth redistribution schemes that only encourage the tax base to flee farther, destroying the city as a business center by transforming it into a regional financial plague instead.
In all its economic experiments, the left has refused to accept that there is no substitute for income generation and that when you kill the golden goose, you don’t get an unlimited supply of golden eggs.
Drive away the rich, destroy the middle class and all you’re left with is Detroit. 8 million New Yorkers depend on 40,000 millionaires and billionaires. The same California voters who supported Proposition 30 depend on the taxes of the very people they are taxing into leaving.
Wealth is not a crime and it is not redistributable. Money can be taken and put into a common pot, but the ability to perpetuate it through wealth cannot. That is a skill like any other and the practitioners of that skill are the only reason that the Jerry Browns and the Bill de Blasios have any money to play with.
The only thing separating Bill de Blasio from Detroit’s former mayor Dave Bing are those 40,000 of the 1 percent and if he kills the golden goose, the only egg will be on his face.
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