Scapegoating Anecdotes Creating Tax Laws

Scapegoating Anecdotes Creating Tax Laws

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Janet Novak of Forbes writes today in Billionaire Poster Boys for Tax Reform: Mellon, Buffett, Schwarzman…And Koch?

President Barack Obama’s decision to brand his bid to tax the rich more—the “Buffett rule”–  is hardly unprecedented,  but it is plenty savvy.

“Anecdotes have caused all sorts of tax legislation,’’ says Columbia University Law Professor Michael J. Graetz, a former Treasury official and author of several books on tax policy.

He adds:

“I tell my students, `In court, you want to argue the facts or the law, or, if you have neither on your side, policy. But if you’re talking to Congress, you tell them a good story’….It helps to put a face on tax policy.’’ …

When it comes to identifying rich tax targets, President Franklin D. Roosevelt stands at the head of the class. In 1937, while FDR was campaigning to close loopholes for the rich, Treasury Secretary Henry Morgenthau wrote an 11-page memo fingering wealthy folks who, based on  a review of their tax returns, had used such tax reduction  techniques as  incorporating personal holding companies to hold yachts and country homes, splitting income among dozens of trusts and loading up on tax exempt-bonds

Of course, Novak is right. Using the class-warfare card is as old as politics itself. The reason the tactic has lasted this long is because it works. But it only works in one direction.

Attacking allegedly oppressed minorities doesn’t work and usually results in the attacker being branded as hateful, racist, homophobic or heartless. But attacking allegedly advantaged minorities works for two reasons:

  1. People who have failed in life are likely to welcome scapegoating. If they can convince themselves that those who have succeeded are responsible for their failures, they will feel better about themselves and their circumstances. And we all want to feel better about ourselves; and
  2. People who might be inclined to defend the successful are hesitant to do so because their defense can be so easily misconstrued and mislabeled as a lack of compassion for the unsuccessful.

At the risk of going all Bocephus on you, the tactics of scapegoating¹ and class-warfare have been tried in our recent past by the most notorious propagandists with predictably disastrous results. The NAZIS scapegoated the Jews and the vast Aryan underclass lapped it up like pigs at a trough. Stalin scapegoated the propertied class and the non-propertied class followed him like Pied Piper’s rats. Today, of course, we have those darlings of the left, Fidel Castro and Hugo Chavez.

Were Sigmund Freud alive today he would remind us that class-warfare and scapegoating work because human beings are ego-driven. And as every first year psychology student knows, the ego must protect itself at all costs – even, and maybe especially, at the cost of blaming others for its owners’ failures.

Anyone who comes along offering the ego a reason to like itself better will be hailed as a hero and a savior. That’s what scapegoating does. It strokes the collective ego of the scapegoaters. And, as history has taught us, if you stroke someone’s ego enough you can convince them to do all sorts of outrageous things.

Footnote 1 contains a brief outline published by The Scapegoat Society of the psychological roots of scapegoating (emphasis is mine).



In scapegoating, feelings of guilt, aggression, blame and suffering are transferred away from a person or group so as to fulfill an unconscious drive to resolve or avoid such bad feelings. This is done by the displacement of responsibility and blame to another who serves as a target for blame both for the scapegoater and his supporters. The scapegoating process can be understood as an example of the Drama Triangle concept [Karpman, 1968].

The perpetrator’s drive to displace and transfer responsibility away from himself may not be experienced with full consciousness – self-deception is often a feature. The target’s knowledge that he is being scapegoated builds slowly and follows events. The scapegoater’s target experiences exclusion, ostracism or even expulsion.

In so far as the process is unconscious it is more likely to be denied by the perpetrator. In such cases, any bad feelings – such as the perpetrator’s own shame and guilt – are also likely to be denied.

Scapegoating frees the perpetrator from some self-dissatisfaction and provides some narcissistic gratification to him. It enables the self-righteous discharge of aggression. Scapegoaters tend to have extra-punitive characteristics [Kraupl-Taylor, 1953].

On another view, scapegoaters are insecure people driven to raise their own status by lowering the status of their target [Carter, 1996].

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About Peter Pappas

Peter is a tax attorney and certified public acccountant with over 20 years experience helping taxpayers resolve their IRS and state tax problems.

He has represented thousands of taxpayers who have been experiencing difficulty dealing with the Internal Revenue Service or State tax officials.

He is a member of the American Association of Attorney-Certified Public Accountants, the Florida Bar Association and The Florida Institute of Certified Public Accountants and is admitted to practice before the United States Tax Court, the United States Supreme Court, U.S. District Courts - Middle District of Florida


  1. HappyTaxDude says:

    Great post, Peter. The class warfare being engendered/perpetuated by the current political class is becoming very wearisome. I have yet to understand how taking someone who is better off financially than me down a notch or two helps my financial situation. And the imbeciles currently protesting on Wall Street are simply tools to expand this kind of envy and class warfare. And our glorious President has now praised their efforts to help us as a nation focus on the real problems in our economy. Greece, here we come.

  2. Hey Happy,

    Those Wall Street occupiers don’t even know themselves why they’re there. My favorite answer is “it sounded like fun.”