The Alex P Keaton Syndrome

Frank Pasquale has a damn solid post up with some frankly surprising findings about how Americans view themselves in relation to the American Dream.

It’s an interesting topic to tackle because it also gives us insight into how Americans often view taxes, as well as some of the allegiances that form as a result. Frank leads off with, to me anyway, one of the most surprising and interesting stats; that as recently as 2000, 19% of Americans actually believed they were in the top 1% when it comes to income. Another 20% believed that they would make it into that incredibly exclusive percentile.

That’s a pretty profound statement when you think about it, especially when we start looking at the kinds of tax policies proposed by politicians that would only affect those in the highest percentiles of income.

While the 19% who think they’re already in the top 1% comes as a shock, the other twenty percent really doesn’t. I’ve known about this, and seen it many a times, and I suppose you could call it the Alex P. Keaton syndrome.

In a way, the Alex P. Keaton syndrome can be good; it’s that desire to succeed that pushes some of us to excel in our careers, make wise investments, and follow through on that part of the American dream that involves boot straps and a whole lot of initiative.

On the other hand, though, the APKS can have its drawbacks. It gives us something of a distorted lens when some of us look at taxes and economic policies. For instance, capital gains taxes; if you do a little online trading as something of a hobby, and not as your sole means of income, APKS may have you viewing cap gains taxes through the same lens as someone who actually makes a living off this stuff.

The difference, however, occurs in the sums of money. The guy whose livelihood is trading in stocks may be paying out a whole lot more in cap gains taxes than you, true, but he’s also probably make a crap ton more money than say someone with my job who spends an hour a day fiddling around on the internet.

The career trader doesn’t want high cap gains taxes because he loses a part of his yearly income, while you don’t, but he’s not concerned with Joe Sixpack seeing the difference because as long as Joe Sixpack equates losing a couple dollars to what he loses in cap gains taxes, you’re going to vote his way.

Problem is, Joe Sixpack probably isn’t driving the cars John Trader is driving, doesn’t have as nice of a house, and I’m sure you can see where we’re going with this.

It’s a plausible reason why people will get sucked in by Charlie Gibson’s argument that people in the 200K a year range shouldn’t be taxed the same as someone in the 100K a year range; because they think they’ll someday be in that 200K a year range.

A lot of these folks will never appreciably benefit from such tax cuts, but they either think they will (those with some form of the 19%er mentality), or they think some time in the future when they move up the social ladder they will (those with the 20%er mentality), and they don’t want to ruin things for when they do come in the money.

Of course, there’s absolutely nothing wrong with thoughts of upward mobility. But, as we see time and again, this mentality, this APKS, can ultimately cloud judgment and convince people that voting against their economic situation is actually a vote for their economic situation.

What makes this even trickier is that you really can’t argue against it, especially if you’re a politician. What are you going to do, go up to someone and say, “You’ll never be that rich so let’s tax the rich?” That’s not likely to produce many good results.

What it does mean is that again, as I keep trying to say, we need to start re-engineering the way we approach the tax debate. My preference remains focusing not on how much money we’re going to take from whom, though there should be no attempts made to run from that, but instead where the money is going, and how that will benefit everyone in society.

In any case, just promising to tax the rich obviously isn’t going to work. Too many people seem to think that A) they are rich, B) they’ll be rich soon, or C)They aren’t rich, but your taxes aimed at the rich are really a secret plot to tax a grossly overblown middle class.

(edited by DrGail)

2 Responses to “The Alex P Keaton Syndrome”

  1. Chief says:

    Mr. Pasquale answers his own question in the last graf, “Perhaps the people who work in politics and media are disproportionately highly educated people who come from wealthier families, which could result in expectations of higher incomes and higher standards of living than are enjoyed by the true “middle-class.”

    Mrs. Chief & I retired a little over 5 years ago. My income from work and Navy retirement for the last full year I worked, 2002, was well short of $100,000. But, we have 4 retirement checks coming in, own (at least half) our own home and can afford modest car payments, all the while putting something back each month for the proverbial day.

    I know I am never going to be a millionaire and am not even close to being at the middle of the “middle class.” But I know there are a hell of a lot of people earning far less from working every day than I make in retirement. That says a whole heck of a lot about Bush.

  2. Yeah, it really does. It also kinda says something that you’re running off of four retirements as well and you describe yourself as being on the wrong side of the middle of middle class. That’s really not a great place for us to be in.

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