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September 1, 2014

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OTHER VOICES:

A failed experiment in tax rates

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In upper-middle-class suburbs on the East Coast, the newest must-have isn’t a $7,500 Sub-Zero refrigerator. It’s a standby generator that automatically flips on backup power to an entire house when the electrical grid goes out.

In part, that’s a legacy of Hurricane Sandy. Such a system can cost well over $10,000, but many families are fed up with losing power again and again.

(A month ago, I would have written more snarkily about residential generators. But then we lost power for 12 days after Sandy — and that was our third extended power outage in four years. Now I’m feeling less snarky than jealous!)

More broadly, the lust for generators is a reflection of our antiquated electrical grid and failure to address climate change. The American Society of Civil Engineers gave our grid, prone to bottlenecks and blackouts, a grade of D+ in 2009.

So Generac, a Wisconsin company that dominates the generator market, says it is running three shifts to meet surging demand. About 3 percent of stand-alone homes worth more than $100,000 in the country have standby generators installed.

“Demand for generators has been overwhelming, and we are increasing our production levels,” Art Aiello, a spokesman for Generac, told me.

That’s how things often work in America. Half-a-century of tax cuts focused on the wealthiest Americans leave us with third-rate public services, leading the wealthy to develop inefficient private workarounds.

It’s silly (and highly polluting) for every fine home to have a generator. It would make more sense to invest those resources in the electrical grid so that it wouldn’t fail in the first place.

But our political system is dysfunctional: in addressing income inequality, in confronting climate change and in maintaining national infrastructure.

The National Climatic Data Center has just reported that October was the 332nd month in a row of above-average global temperatures. As the environmental website Grist reported, that means that nobody younger than 27 has lived for a single month with colder-than-average global temperatures, yet climate change wasn’t even much of an issue in the 2012 campaign.

Likewise, the World Economic Forum ranks U.S. infrastructure 25th in the world, down from eighth in 2003-04, yet infrastructure is barely mentioned by politicians.

So time and again, we see the decline of public services accompanied by the rise of private workarounds for the wealthy.

Is crime a problem? Well, rather than pay for better policing, move to a gated community with private security guards!

Are public schools failing? Well, superb private schools have spaces for a mere $40,000 per child per year.

Public libraries closing branches and cutting hours? Well, buy your own books and magazines!

Are public parks — even our awesome national parks, dubbed “America’s best idea” and the quintessential “public good” — suffering from budget cuts? Don’t whine. Just buy a weekend home in the country!

Public playgrounds and tennis courts decrepit? Never mind — just join a private tennis club!

I’m used to seeing this mindset in developing countries such as Chad or Pakistan, where the feudal rich make do behind high walls topped with shards of glass; increasingly, I see it in our country. The disregard for public goods was epitomized by Mitt Romney’s call to end financing of public broadcasting.

A wealthy friend of mine notes that we all pay for poverty in the end. The upfront way is to finance early childhood education for at-risk kids. The back-end way is to pay for prisons and private security guards. In cities with high economic inequality, such as New York and Los Angeles, more than 1 percent of all employees work as private security guards, according to census data.

This question of public goods hovers in the backdrop as we confront the “fiscal cliff” and seek to reach a deal based on a mix of higher revenues and reduced benefits. It’s true that we have a problem with rising entitlement spending, especially in health care. But I also wonder whether we’ve reached the end of a failed half-century experiment in ever-lower tax rates for the wealthy.

Since the 1950s, the top federal income tax rate has fallen from 90 percent or more to 35 percent. Capital gains tax rates have been cut by more than half since the late 1970s. Financial tycoons now often pay a lower tax rate than their secretaries.

All this has coincided with the decline of some public services and the emergence of staggering levels of inequality (granted, other factors are also at work) such that the top 1 percent of Americans now have greater collective net worth than the entire bottom 90 percent.

Not even the hum of the most powerful private generator can disguise the failure of that long experiment.

Nicholas Kristof is a columnist for The New York Times.

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  1. Just when I think I heard it all, somebody like this columnist comes up with a doozie that pales the last. Now of all things the wealthy are blamed for acts of nature. Hurricane Sandy is all the fault of the rich. Yeah, right. Those evil rich people who find the ways and means around the shortcomings of their government and the public utilities which are in bed with the government. All the rich people's fault.

    CarmineD