Democrats - Party of the Rich (Imported Article)

Washington Times

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Study: Democrats the party of the rich
November 23, 2007

By Donald Lambro - Democrats like to define themselves as the party of poor and middle-income Americans, but a new study says they now represent the majority of the nation's wealthiest congressional districts.

In a state-by-state, district-by-district comparison of wealth concentrations based on Internal Revenue Service income data, Michael Franc, vice president of government relations at the Heritage Foundation, found that the majority of the nation's wealthiest congressional jurisdictions were represented by Democrats.

He also found that more than half of the wealthiest households were concentrated in the 18 states where Democrats hold both Senate seats.

"If you take the wealthiest one-third of the 435 congressional districts, we found that the Democrats represent about 58 percent of those jurisdictions," Mr. Franc said.

A key measure of each district's wealth was the number of single-filer taxpayers earning more than $100,000 a year and married couples filing jointly who earn more than $200,000 annually, he said.



But in a broader measurement, the study also showed that of the 167 House districts where the median annual income was higher than the national median of $48,201, a slight majority, 84 districts, were represented by Democrats. Median means that half of all income earners make more than that level and half make less.

Mr. Franc's study also showed that contrary to the Democrats' tendency to define Republicans as the party of the rich, "the vast majoritiy of unabashed conservative House members hail from profoundly middle-class districts."

"I just found the pattern across the board to be very interesting. That pattern shows the likelihood of electing a Democrat to the House is very closely correlated with how many wealthy households are in that district," Mr. Franc said in an interview with The Washington Times.

The shift in the number of wealthier Democratic districts got a significant bounce in the last election.

"A fair number of these districts are represented by freshmen, a lot of the guys who got elected in 2006," he said.

"The demographic reality is that the Democratic Party is the new 'party of the rich.' More and more Democrats represent areas with a high concentration of wealthy households," he wrote on Nov. 5 in the Financial Times of London, in a preview of his study.

In addition, the current Senate tax debate provides an example of how the Democrats' rich constituents are influencing their agenda and have divided House and Senate Democrats.

In the House, for example, Democrats have made elimination of the alternative minimum tax, known as the AMT, the centerpiece of a sweeping tax-revision plan crafted by Rep. Charles B. Rangel of New York, the chairman of the House Ways and Means Committee. The AMT law was passed by the Democratic Congress in 1969 to make sure that wealthy taxpayers — some of whom were able to use tax breaks to avoid paying anything — paid at least some taxes.

Over the years, as many middle-class incomes rose, people were increasingly being pushed into higher tax brackets once reserved for only the richest Americans. The largest portion of these taxpayers live predominantly in Northeastern "blue" states dominated by Democrats, who, inundated by constituent complaints, soon began joining their Republican counterparts in pushing to eliminate the AMT.

But the strongest manifestation of the influence that the Democrats' wealthiest constituencies are wielding over party policy came earlier this month as Democratic leaders were considering a proposal to offset revenue losses from AMT repeal by raising taxes on hedge-fund managers, many of whom are major contributors to the Democratic Party.

A "stopgap" bill authored by Mr. Rangel to tax hedge-fund compensation at 35 percent as regular income rather than the current 15 percent capital-gains rate, which passed the House Nov. 9, appears to be going nowhere with Senate Democrats.

Sen. Charles E. Schumer of New York, the chairman of the Democratic Senatorial Campaign Committee, which has raised tens of millions of dollars from Wall Street financiers and hedge-fund managers, opposes Mr. Rangel's plan. Earlier this month, Sen. Max Baucus of Montana, the chairman of the tax-writing Finance Committee, said the tax increase was a bad idea and could not pass the Senate.

Rep. Rahm Emanuel of Illinois, the House Democratic Caucus chairman, also has said he wants a stand-alone fix for the AMT without an offsetting tax increase, fearing that any vote to raise taxes now will hurt vulnerable Democrats in next year's elections. More moderate Blue Dog Democrats in the House have also been among the critics of the tax increase.

Some Democrats acknowledge that moneyed interests are exerting a strong influence on their party's agenda and legislation.

"The fact is that [the Democratic campaign committees] have had large contributions from these hedge-fund folks," said Dean Baker, co-director of the Center for Economic and Policy Research, a liberal think tank.

"As far as the hedge funds and tax breaks go, the Democrats are clearly getting a lot of money from people who are affected by that, and they're responding," Mr. Baker said.

Mr. Franc thinks this turnabout by Democrats, whose campaign mantra has long been to tax the rich more, is only the beginning.

"Increasingly, we will see Democrats responding to the economic demands of this particular upper-income constituency," he said.

"What the data suggests is that there will be a natural limit to how far and how much the Democrats can sock it to the rich, because in doing so, it means they will have to sock it to their own constituents," Mr. Franc said.