NCPA - National Center for Policy Analysis

Why Class Warfare Isn't Selling This Year

October 28, 2002

Going into this election cycle, Democrats thought that corporate financial scandals would reinvigorate the debate over the differing effects of government policies on income classes, called class warfare by those critical of what they perceive as attempts to divide American voters by class rhetoric. But it hasn't worked out that way. New data from the Internal Revenue Service and the Securities Industry Association help explain why.

  • Despite Democratic claims to the contrary, in the 1980s every income group was better off -- so rising income for the wealthy didn't come at anyone's expense.
  • To the extent the middle class was shrinking, it was because they were joining the ranks of the rich.
  • The trend reversed a little under Bill Clinton but not much -- since Clinton ran on a middle-class tax cut in 1992, and when he raised taxes in 1993 only raised the top rate to 40 percent.
  • Even rhetorically, Clinton wasn't much of a class warrior, and in fact tied himself to a balanced budget -- as a consequence, the Democrats got out of practice with the class warfare issue.

Other factors still continue to make it difficult. Despite the $7 trillion decline in the stock market, stock ownership continues to rise. The number of households owning stock rose from 49.2 million in 1999 to 52.7 million this year. The number of individual investors rose 5.6 million to 84.3 million.

And new Internal Revenue Service data also make it difficult for Democrats to claim the rich aren't paying their share. As of 2000, the top 1 percent of taxpayers, ranked by income, paid 37.4 percent of all federal income taxes. The bottom 50 percent pay just 3.9 percent of all federal income taxes (see Figure).

Thus Democrats are finding that their class warfare message has little impact since it resonates mainly with non-voters, while the Republican tax cut message hits home with taxpayers.

Source: Bruce Bartlett, senior fellow, National Center for Policy Analysis, October 28, 2002.


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