There is no “First Lady of the Treasury Department,” but if there were, Louise Linton would currently occupy that role. Linton married Treasury Secretary Steve Mnuchin earlier this summer, and the process of settling into her new life in Washington is, shall we say, not going smoothly.
Linton lit up the internet on August 21 when she decided to insult a middle-class woman who had criticized Linton for bragging about wearing expensive clothing items while riding with Mnuchin on a government jet. I will quote Linton’s full tirade below, but suffice it to say for now that she proved that money still cannot buy class.
The response to Linton has been appropriately harsh, including a wonderfully understated column by a fashion columnist who pointed out that—even judging Linton against her own superficial standards—Linton looks like an out-of-touch fashion has-been.
Linton subsequently issued an apology that at least avoided the “if anyone was offended” non-apology that is all too typical in these situations. Still, she managed to make herself look worse by having “the help” handle it, with a publicist circulating a short statement that was most likely written by someone whose job is to protect Linton. (Who knows if Linton even read it, much less actually means what it said?)
When rich people inadvertently say in public what they really think about the commoners, social condemnation is a valuable response. People who were alive in the 1980s still remember Leona Helmsley’s infamous statement that “only little people pay taxes”, even if they know nothing else about her. (She was wrong, and she went to prison for tax fraud.)
Again, there is social value in calling out the cluelessness and entitlement of people like Linton. What caught my attention, however, was that Linton made actual arguments (in addition to punching down by calling her victim’s life “cute” and similar mean-girl attacks). Most importantly, Linton’s arguments are actually the same arguments that Republicans have been making for decades in order to justify reducing taxes for the wealthiest Americans.
Linton happens to be married to a billionaire who in turn just happens to be the Treasury Secretary, and her husband is actively developing and promoting what is shaping up to be a hugely regressive tax plan that Donald Trump and the Republicans in Congress will try to pass off as middle-class-friendly.
Therefore, what looks like a two-day story about one unglued rich woman actually touches directly on a matter of serious policy interest, because her unguarded remarks expose the dishonesty and mindset of the people who believe in trickle-down economics.
Being Born on Third Base and Thinking You Hit a Triple
As soon as I read the first story to hit the wires about Linton’s deplorable behavior, which mentioned that she had been an actress before marrying Mnuchin, I immediately checked her profile on the Internet Movie Database, which provides personal histories and trivia about actors, directors, and so on.
Based on her biography and trivia page, it was immediately obvious that Linton had hit it big in the sperm-and-egg lottery. In fact, she won it twice. Not only was she born into a family that owns a castle in Scotland and that sent her to exclusive private schools, but she was born with the kind of conventionally good looks (helped along, of course, by all of the advantages that wealth can add to enhance the raw material) that get a young woman noticed in an image-obsessed society.
Through no efforts of her own, then, Linton was given advantages that only a tiny fraction of a percentage of the people in the world can even imagine brushing up against. Being blond and pretty and not needing to worry about starving, she decided to try acting.
It turns out that, as brutal as Hollywood can be, it is still something of a genuine meritocracy—a meritocracy that is based on skewed standards, to be sure, but at least it is not rigged. The very short and forgettable list of Linton’s TV and movie roles indicates that her career was at best hanging by a thread, and given that Hollywood hates women who age, the clock was ticking ever louder for the no-longer-twentysomething afterthought.
One of the standard tropes in Hollywood is that older moguls marry younger starlets. Mnuchin, a former Goldman Sachs executive and hedge fund investor, had spent some time over the last few years in Hollywood as a moneyman (also known as an executive producer) behind various blockbusters (some good, some not).
Having already hit the double-lottery at birth, then, Linton soon found herself married to a billionaire just as her career floundered. If it really is true love, then that is great for both of them. Even if it is, however, it does not change the fact that Linton is the world’s least qualified person to lecture other people about the “contributions” that rich people make to the economy and the hard work that got them to the top.
The Republicans’ Theory of Value, In One Snarky Instagram Post
All of which brings us to the point where it matters what Linton actually wrote that brought her such instant infamy. She began the chain of events by posting photos of herself getting off an official government plane in Kentucky, offering a lah-di-dah bragfest about her name-brand fashion purchases.
This was, it turns out, completely consistent with Linton’s previous (but obviously less well known) media appearances, where she has gushed about how much she loves her expensive jewelry and expressed delight that there was actually a DC-based boutique that would pamper her in the manner to which she was accustomed.
One reader was not impressed, and she offered a caustic response to Linton’s Kentucky post: “Glad we could pay for your little getaway. #deplorable.” That is either some “seriously good shade” or mere liberal snark, depending on one’s point of view. But Linton’s response was off-the-charts crazy.
Here is the full screed (leaving out the emojis that littered Linton’s post):
cute! Aw!!! Did you think this was a personal trip?! Adorable! Do you think the US govt paid for our honeymoon or personal travel?! Lololol. Have you given more to the economy than me and my husband? Either as an individual earner in taxes OR in self sacrifice to your country? I’m pretty sure we paid more taxes toward our day ‘trip’ than you did. Pretty sure the amount we sacrifice per year is a lot more than you’d be willing to sacrifice if the choice was yours. You’re adorably out of touch. Your kids look very cute. Your life looks cute. I know you’re mad but deep down you’re really nice and so am I. Sending me passive aggressive Instagram comments isn’t going to make life feel better.
Setting aside my professional detachment for a moment, all I can say is: Yikes! No apology is going to wipe that bile off of Linton’s ledger when she tries to walk through the pearly gates. Anyone who suspected that rich people are different from the rest of us just found a new poster child. If ever there was visible demonstration of “all mink and no manners,” this is it.
Others have written about Linton’s sarcastic “adorable” and “cute” put-downs, which certainly capture the sense of superiority that Linton oozes. But as a policy wonk, it is the underlying economic argument that I find so interesting.
Linton, of course, has no apparent expertise in tax law or economics, but that did not stop her from opining about the fair distribution of taxes and economic rewards. And as I noted above, it is here that her argument looks so depressingly familiar.
Here, we have a person who was born with everything who lectures a middle-class person about just deserts and social value. Even if everything else that Linton wrote were true (to which I will turn momentarily), she would have the world believe that because she was born with a lot of money and was forced to give up some of that wealth in the form of taxes, she is more important (to the economy, not just the fashion world) than someone who was not born with a silver spoon in her mouth.
But in asking, “Have you given more to the economy than me and my husband?” maybe Linton is setting aside her own upbringing and speaking as one member of a couple. Perhaps she is saying that her husband’s (and therefore her own current level of) wealth is “earned” and thus that people should bow down to him/them.
If that is what Linton believes (no matter whether she is able to articulate it in a civilized fashion), however, then there is a bigger problem. Linton says that she and her husband pay a lot in taxes and that they have “given more to the economy” than mere mortals. Those two arguments together constitute the Republican case against progressive taxation.
The idea is that people who have more income and wealth than everyone else are being justly rewarded for their hard work, talents, and sacrifice. We all would like to believe that this is true, but it simply is not. What people have is not only (or sometimes at all) a function of virtuous behavior.
Conservative economists love to talk about how the market tells us how much things are worth, which means that we supposedly can never second-guess the market when it makes someone like Eric Trump rich(er). But there is nothing God-given about the rewards of the market, and any change in the law—most definitely including those changes that Republicans espouse—is going to change those rewards. Being a billionaire is not proof of just deserts or social value.
But because Republicans accept without question the idea that these outsized rewards are the result of valuable work, talents, and sacrifice, any effort to tax large incomes or wealth is (in this conservative worldview) both morally problematic and economically harmful. Why? Because, to put it in layman’s terms, one must not kill the goose that lays the golden eggs.
That suggests that if we were to increases taxes for someone like Mnuchin on his wealth, he would engage in fewer wealth-producing activities. Supposedly, he would say something like this: “I will stop producing Hollywood blockbusters, because I don’t like having to have somewhat lower take-home pay.” That, in a nutshell, is the message of trickle-down economics.
Paying those taxes is the supposed “sacrifice” that Linton mentions several times in her rant. She and her husband have to sacrifice some of the net worth that they could have accumulated if they had not had to pay those pesky taxes. They have to sacrifice in order to allow middle-class people to contribute less to pay for government planes.
In his role as Treasury Secretary, Mnuchin is currently working on a tax plan that will massively benefit wealthy people, and he will justify that regressive redistribution by saying that middle-class and poor people will benefit from the excitement of rich people who will rain riches down upon all of us.
Whether or not that is real sacrifice (and of course it isn’t), the problem is that the economic evidence simply does not support these conclusions.
The supply-side fantasy—even without the nonsensical idea that tax cuts will more than pay for themselves—is that cutting taxes and regulations for rich people and businesses will stimulate the economy. It will not, as even some prominent conservative economists now readily admit. This is reverse-Robin Hood policy in a vain search for a reality-based justification.
The Policy Implications: Tax Income and Wealth More Progressively
What Linton has done, then, is to provide a brief opening into the world of the superrich. At her wedding, she reportedly wore a “gown befitting a princess” and “heaps of diamonds.” She started out wealthy and became wealthier, and it is truly difficult to believe that taxes were a barrier to her happiness—except perhaps that without them she could have bought even more jewelry.
When Republicans started trying to repeal the estate tax back in the 1990s, they were worried that the exemption for large estates would be pushed above one million dollars before they were able to push for repeal. They knew that it would be a hard political sell to get rid of a “millionaires’ tax.”
As it turned out, even many Democrats have since then made peace with an exemption to the estate tax that now tops ten million dollars for a married couple. But the public-relations problem is still there, and progressives who want to increase (or at least not decrease) taxes on the wealthiest Americans have an easier job when someone like Linton comes along.
It is unlikely that Linton’s momentary infamy will become a big enough deal for Democrats to use her as political shorthand in the way that they could once talk about the estate tax as the “Paris Hilton tax.”
Even so, we would do well to remember that one coddled woman’s poor judgment allowed us to see what is truly at stake in the upcoming tax debates. People who are already swimming in money are using some of their wealth to buy politicians who will shift even more money in their direction.
Once we strip away the standard intellectual pretenses behind trickle-down economics, what we are really asking ourselves is whether people like Louise Linton have already “sacrificed” enough and whether the economy will collapse if she and her husband have to pay more in taxes. To borrow Linton’s term, that argument is simply adorable.
OK, OK, it’s fun to mock what the Brits call a “twit” and we call an “empty suit” or a “well-connected lightweight.” (Anton Ego also said such columns were “easy to write.”) I get that. Heck, maybe I’m even – – dare I say it? – – “woke.” But I’m also thinking there’s a tangle of serious and distinct issues all mixed up here on both money and morals.
Seems to me we use the tax code for every purpose under the sun . . . EXCEPT just plain raising money. Or at least not for trying to raise the most possible money. (See two tax stories below.) If memory serves, Obama when asked what he would do if the Laffer curve turned out to be right, replied something to the effect that he would still be opposed to lowering rates on the high earners because it wouldn’t be fair or just. He thought higher earners ought to pay more. He supported progressive tax rates because he thought them morally correct, even if they really would reduce the total amount the Treasury took in. He was willing to make a cash-for-morals tradeoff; the opposite of a morals-for-cash swap. He was willing to do what he thought was right even it cost more money. (The opposite, selling morals for money, is often termed “selling out.”)
I understand more about airplanes than I do about taxes. There’s a “best corner” airspeed in a jet; the maximum possible turn rate. There’s a “best endurance” speed schedule; maximum minutes per pound of fuel. That’s always a slower speed than “best range;” maximum nautical miles per pound of fuel. There’s even a chart showing effects of off-speed or off-altitude on range. When you’re on that weight-altitude-speed schedule, you’re getting all the miles the jet has to offer. Higher or lower; faster or slower, and you get 98% of the max or 95% or whatever. If for some reason you decide you need to go faster or slower, you can figure out how much extra gas you will lose. That way you can make an “informed consent” choice – – is that fuel penalty worth it? I understand why the jet behaves that way – – the net result is how two inversely proportional variables play out. Induced drag (lift) gets smaller when parasitic drag (speed) gets larger.
Ignoring all the moral questions for now, those fuel flow and range and turn rate curves for a jet suggest to me that there’s similarly some combination of tax rate and base which will yield the maximum possible amount of income to the IRS. Lay out any combination of interest rate, gold price, oil price, inflation (I guess CPI?), dollar-yen exchange rate, any one of the various U-something unemployment rates, etc, etc, and it seems to me that for any given set of values plugged into that collection of blanks there’s some “perfect” combo of rate-base which gets the largest possible number on the other side of the “=” sign.
But even if stone tablet falls out of the sky this afternoon with “X% of the first Y dollars and Z% of all the remaining dollars is the answer you’re looking for,” would we do it?
Finally, as to the moral issues, the one I’ll bring up here is how Obama’s position can be the most moral solution. I don’t think it is. As I appreciate his view, the 1% will be paying higher rates. So they’ve already been charged what we’re going to charge them. But having conceded that the higher rates on the upper crust – – whatever it is – – brings in less money, the difference must be made up somewhere else. That either means the middle and the bottom pay more than they otherwise would have, or else we go deeper into debt to finance a larger deficit. I guess most of the voters down here in Louisiana feel good because the homestead exemption is so high and thus their property taxes are “none” to “small.” OTOH, we all pay 10% on a box of Tide. And I’ve always heard that the most regressive taxes of all are sales taxes.
Political Horizons: A popular but itty bitty exemption has little economic impact
by Mark Ballard | firstname.lastname@example.org Aug 26, 2017 – 9:30 pm [just 1 comment]
Two sides clash at Metro Council over whether industrial tax exemptions help, hurt Baton Rouge
by Andrea Gallo | email@example.com Aug 23, 2017 – 8:36 pm [21 comments]
A little more food for thought: