A colleague recently forwarded a quotation from a 1976 U.S. District Court decision (Freedman v. Barrow, 427 F.Supp. 1129, 1136 (S.D.N.Y. 1976)), which included the following remarkable paragraph (emphasis added):
To understand these incentive programs, their effect and purpose, some general observations may be helpful. The larger, more profitable American corporations which have achieved their success against overwhelming international competition, have done so through the efforts of highly skilled, experienced managerial and executive personnel who generally have little or no ownership of the business and no share in the customary rewards of shareholders. Keeping the high level of motivation of these employees, retaining their loyalty in the future, and protecting their skills, experience and specialized knowledge from raids by competitors or others, is the biggest single responsibility of top management, which naturally is also interested in its own compensation. Vengeful, progressive income taxes directed against the managerial class have made it impractical to motivate and reward solely with large salary payments. Their net effect after taxes soon becomes marginal, costing the corporation more than it brings to the executive. Also, other incentives costing less may be more effective than mere salary, or may be tied in more directly with such matters as corporate earnings, and stock market performance.It should be noted that this is a decision from the Southern District of New York, which decides a large number of Wall Street-related cases. That might explain the anti-tax tilt of the opinion, but it also is surprising that the bias would be so naked. Notably, the case is not even about taxes! It is about the Securities Exchange Act, "short-swing profits" (whatever those are), and other obscure matters. Nevertheless, the court in its wisdom decided to offer "some general observations" about "[v]engeful, progressive income taxes directed against the managerial class." (I return below to the "vengeful" question, but I cannot let pass the claim that progressive taxes are "... directed against the managerial class." Given that progressive taxes also applied at the time to the shareholders that the judge differentiated from the managers, that is a truly odd claim.)
In some ways, however, the most interesting aspect of the angry digression is that it is from 1976. As some analysts have noted, the term "Tea Party" is simply a re-branding of what has always been the core constituency of the Republican Party, making it unsurprising that the judge's statement long pre-dates the panicked reaction on the right to Barack Obama's presidency. And given that this was written by a judge on one of the most prestigious courts in the United States, this is not the work of some "regular guy" who lacks legal training. Claiming that taxes are based on envy and vengeance is one of the most important places where elite and on-the-street opinion meet on the right.
In any event, we have before us a nice, vintage version of a familiar anti-tax argument: It is apparently all about "vengeance." Are we to understand that people in lower tax brackets wish to punish richer people (or again, in this judge's imagination, "the managerial class") for something? What are they punishing them for, exactly? Perhaps for not sharing their bounty with others through public charities, and instead accumulating more and more things, while the less fortunate watch their children die of preventable diseases? Perhaps for having gained their riches through means that are legal only because these same people manipulate the political process to prevent Congress from passing meaningful financial, corporate, and labor laws?
I doubt that that is what people like this federal judge are thinking (even though both of those arguments seem like pretty good reasons to be angry). The fear that he is expressing is apparently a free-floating sense that the masses are trying to exact vengeance against success, punishing society's winners because everyone else is a loser. (Note especially the cable news rant that is credited with birthing the Tea Party movement, discussed here, that pointedly used the word "losers" to describe people who were in danger of losing their houses to foreclosure.) It is not clear, however, why we should assume that the response to others' success would be to take revenge upon them. Why would I think, "Professor Dorf wrote a really good post on Wednesday. ... He must SUFFER!"?
The answer, I think, is that this argument connects "vengeance" to "envy" and "jealousy." The reason that the supposed losers in society take vengeance upon successful people, we are told quite often, is because they are simply envious of their betters. Almost exactly two years ago, and almost exactly two years before that, I wrote posts here on Dorf on Law that noted the conspicuous persistence of the idea on the anti-tax right that redistributionist policies are motivated by jealousy. Similarly, just a few days ago, I happened to see an article (no link available) on a prominent right-wing website that attacked former Labor Secretary Robert Reich for supposedly promoting "the politics of envy."
As I commented in that 2011 post, this is in some ways merely an adult application of the timeless advice from mothers to children: "Don't worry about what the other kids say about you, because they're just jealous." More to the point, if one's worldview is based on the idea that taxes are a form of punishment, then others' envy must surely have been the basis for the vengeful taxes that the losers are imposing upon society's winners. Even framing it that way, however, exposes the defensiveness of the pose: "I didn't do anything wrong! You should stop punishing me." Someone needs to respond: "Dude, we're not doing this because you did something wrong -- or right. It is not about you as a person at all."
What is it about? Volumes have been written about this very question, so my answers here are hardly exhaustive. Even so, it is fair to say that redistributive policies are, and always have been, a matter of trying to undo the extremes of market outcomes. Not because the "winners" did anything wrong (necessarily), but because the consequences of allowing the "losers" to suffer the full weight of the "free" market's consequences ultimately hurts everyone, sometimes even the rich. Notably, when we try to mitigate (partially) the consequences of "luck," it is not a personal statement of envy -- "Oh, you were just lucky!" -- but a recognition that all market outcomes are contingent on matters far beyond the control of any individual.
Even though my explanation in the paragraph immediately above is incomplete (at best), the point is that one need not be envious or vengeful in order to support redistributive policies. Yet the anti-tax right's go-to move, year after year and decade after decade, is to decry "class warfare" and all of the other caricatures of arguments that progressives never actually make. Why the persistence? This group of influential people has nothing of substance to say, so they turn it into a false morality play and scream about the unfairness of supposedly being judged for being bad human beings. That defensiveness is more than a bit revealing.