Posted on 11/06/2008 11:31:43 AM PST by NutCrackerBoy
We almost had a really interesting conversation about taxes in the waning days of the election. Almost.
To the surprise of few, it was discovered that Barack Obama favors something called “redistributionism.”
John McCain, it was discovered, opposes it — which also surprised a lot of people. To a certain extent, the outrage from folks on the right, at times including yours truly, over Obama’s response to “Joe the Plumber” was overdone. It was, after all, Teddy Roosevelt — McCain’s hero — who introduced the progressive income tax for precisely the purpose of spreading the wealth around. The maverick’s campaign saddlebags are heavy with redistribution policies that redistribute wealth as well.
I still believe that redistribution for its own sake is little more than institutionalized covetousness. But that’s a subject for another day. What was left out of the national tax conversation was the reality of the situation: America already redistributes its wealth. A lot of it. In fact, we’re one of the most progressive countries in the world in this regard.
Now, first let me vent a peeve. Many people think “progressive” means “good,” even though something can be progressive and bad, too. When economists refer to a “progressive” income tax, they merely mean a tax rate that increases as you move up the income ladder. (Right now in the U.S., the poor pay somewhere between 0 percent and 10 percent in federal income tax. The middle class pays 15 percent to 28 percent, and the highest earners pay 33 percent or 35 percent.) But most liberals also think that the income tax is “progressive” in the same sense that fair-trade coffee and weepy acoustic-guitar college music are progressive — i.e. good and enlightened.
Either way, the U.S. tax code is a lot more progressive than you might think. A new study by the Paris-based Organization for Economic Cooperation and Development reveals that the United States “has the most progressive tax system and collects the largest share of taxes from the richest 10 percent of the population.” Our tax system is, in fact, the most “pro-poor,” according to a Tax Foundation analysis of that study, of any developed country’s save Ireland. That’s right, we’re more progressive than France and Sweden.
The bottom 40 percent of income earners receive more from the federal income tax system than they pay into it. Meanwhile, the top 10 percent pay 71 percent of all income tax, despite only earning 39 percent of our pretax income. Taxes on the top 1 percent constitute 40 percent of tax dollars.
Lower- and middle-income workers pay a lot in other forms of taxation, particularly regressive payroll and sales taxes. Indeed, that’s one reason Obama wants to offer the middle class a tax cut. I don’t like his version of it, but I think he’s right that the middle class deserves some tax relief.
But what all Americans need is tax reform. Our tax code is outrageously impenetrable. And we’ve built a system that treats the wealthy like an inexhaustible natural resource.
Experts on economic development have long noted what they sometimes call the “oil curse.” Countries with huge oil reserves become economically wealthy but democratically impoverished, because the government can fund itself without taxing the middle class. As a result, the middle class demands less accountability from government because, heck, they didn’t pay for it. (No taxation, no representation.) In the process, the people become subjects rather than citizens.
Both Obama and McCain have a tendency to see villainy as an explanation for our economic woes. Obama thinks opposing tax increases is unneighborly and selfish. McCain has a long habit of denouncing Wall Street “greed.”
One moral hazard of such attitudes is that the investor class will start applying its entrepreneurial skills to protecting its existing wealth from the tax collector rather than trying to create more wealth.
But the greater danger is that millions of Americans might believe that all that is keeping them from the good life is the tightfistedness of people doing better than them and a government unwilling to pry those wealthy fingers open. That’s a recipe for an unhealthy political culture.
A sane tax code, under any president, would be simple, clear and direct. We’re not going to give up on redistribution in the form of, say, the earned income tax credit. But it’s important that the working and middle classes feel as if government spending comes out of their wallets, too. Otherwise, the line between citizen and subject is blurred and the costs of government are seen as someone else’s problem.
— Jonah Goldberg is the author of Liberal Fascism: The Secret History of the American Left from Mussolini to the Politics of Meaning.
Goldberg cites the citizen/subject problem of oil-rich countries as a cautionary example.
Just wait for the reverse income tax to come about.
Excellent post!
I hope they start with the 401k’s of the media people.
“...redistribution?” Don’t kid yourself, it’s just another word for reparation
“A sane tax code, under any president, would be simple, clear and direct. We’re not going to give up on redistribution in the form of, say, the earned income tax credit. But it’s important that the working and middle classes feel as if government spending comes out of their wallets, too. Otherwise, the line between citizen and subject is blurred and the costs of government are seen as someone else’s problem.”
Flat tax. For EVERYONE. 25% (or similar). Of everything. Period. Don’t have it? To quote Goodfellas; “$#%& you, pay me...” Start selling your stuff until its paid.
No lawyers, no tax code. Everybody, just pay it and shut up.
We would all be paying attention to spending then, wouldn’t we?
My new tag line;
NO REPRESENTATION WITHOUT TAXATION !
What do you think the EITC is?
Down down about 900 since the coup of Nov. 4. It is just starting.
Thank you for the excellent point.
I know but libs are wanting to expand the EITC a lot further up the income chain.
But...
if they actually CALLED it “reparations”,
they would only be able to do it once.
As it is, when they call it welfare, AFDC, foodstamps, Section 8, “a tax cut”,
they can do it again and again and again and again and again.
This is EXACTLY what all good people of moral conscience should be concentrating on -
keeping their wealth from feeding the immoral socialist/marxist government of the USSA.
Think about this - if you DON’T do everything you can to lower your tax bill, you are
FUNDING THE KILLING OF BABIES. (FoCA)
The problem is that the average American taxpayer does not understand this. Sure, they feel overtaxed. They know that the more you make, the greater the amount the government will take. But they are inundated with all of the left wing tripe through the media about how the rich pay very little tax in this country.
Of course the poor understand how this game works.
I don’t think that Obama will screw with 401(k)s. He knows that the moment he does, he will give the GOP an issue to run him out of office with. That’s not to say that he’s philosophically opposed to the concept (which of course is quite troubling). My guess is that Obama will pick his spots to push a radical left wing agenda, relatively small matters in which there is little opposition. Then again, this is the best case. Ugh.
The “progressive tax” is not a redistribution of wealth. It takes into account that working people and families need a minimum amount to live on and taxing income proportionately above that level. Obama’s stimulus proposal, however, proposed to “rebate” tax monies to people over and above the amount of federal taxes they had paid. To the extent that is true, it was a redistributive policy. (Realistically, they do pay federal taxes in a variety of other ways, including gas taxes.)
I get pretty sick of the rhetoric here about low income people not working. The median income of our entire county is around $30,000. Many people do hard physical work in agriculture, logging, timber milling and mining. Natural resource industries create wealth at the bottom of the economic chain and the work is not known for being high pay. Greater value is placed on outdoor living, freedom, independence and family. They are certainly not lazy and many have university degrees.
Regulatory and land use policies that have been crafted by green big government have eviscerated the rural economy. Where a logger could make a very good family wage in years past, (at a very difficult and dangerous physical job,) the Forests are now virtually shut down and jobs are scarce. In agriculture, more and more personal time and dollar goes toward managing for open space, wetlands, the public’s fish and wildlife habitat, clean streams and clean air as profits diminish.
Now that the election is over, I feel I can say - wake up people and look around you. People making less than you are not lazy losers. Walk a mile in their shoes and understand how policies can support their quest for the American dream. No wonder many of them voted for Obama with this type of high falutin cold attitude.
“No Representation without Taxation!”
FR is becoming depressing. I´m having a hard time seeing the light at the end of the tunnel...
Teddy Roosevelt may have endorsed progressive income tax in principle, but he was never able to implement it in practice because the Supreme Court routinely struck down federal income taxes until the 16th Amendment was passed under Wilson expressly to permit such taxes.
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