Tuesday, October 21, 2008

All Taxes Redistribute Wealth -- That's What They Are For

There has been some very foolish talk on the campaign trail lately that one side is bad because they want to use taxes to redistribute wealth. This is silly -- all taxes redistribute wealth. They take from everyone to serve the common good. We all pay taxes so we can all have roads and schools and mail and security and thousands of other common goods. Some of our taxes go to individuals for their individual needs, such as school loans or medicare payments. Even the small fraction of Americans receiving straight-up welfare in order to take better care of their kids are serving the common good. The Earned Income Tax Credit is better than old-fashioned welfare because it only goes to people who are working, and only goes to working people who do not make quite enough to take care of their kids.

Rich people get back less money in services because they need them less, and poor people get more because they need them more. That is just. That improves the common good.

16 comments:

Michael Kruse said...

There is an important distinction here. I know of few who doubt that government assistance is just and necessary for the poor.

Obama is not talking about the poor. He simply believes (by whatever criteria that) that the distribution of wealth is "unfair." Therefore, he will redistribute from the 5% to the 95%.

This is not based on a moral obligation to help the most needy. It is based on the presumption that all wealth is society's wealth and the government will be the final arbiter of what is a fair distribution of "its" wealth.

That is philosophical shift from just care for the poor to socialism.

Gruntled said...

I think the principle of progressive taxation is one of the pillars of legitimacy on which our social order rests. Too whom much is given, much will be required. We are not anywhere close to the rates at which the rich of the '50s taxed themselves. We are inching up the portion that those most blessed with riches in a rich society give back.

Michael Kruse said...

I think a good case can be made for progressive taxation. I'm going to put a post up at my blog in the morning that shows the percentage of taxpayers who pay no income tax over the last 30 year. It was 25% at the beginning of the Bush administration and is now 33%. Under either Obama's or McCain's plans that percentage will rise to about 44%. Right now the top 1% pay 40% of federal taxes and the bottom 50% pay 3%. How progressive is progressive enough? Can we become to progressive?

This should also highlight the misleading claim Obama keeps making about cutting taxes for the bottom 95%. One third of the 95% pay no taxes and can not receive a tax cut. What they are getting is a distribution of income they did not earn. This be warranted or not, but it isn't a tax cut.

On another note, I agree that the wealthy have an obligation to the poor and to support work that benefits the community. However, I eschew the language of "give back" as though becoming wealthy means you stole something. The vast majority who become wealthy do so through careful stewardship of financial resources, providing useful goods and services over a lengthy period of time, and creating jobs and wealth for others while frequently shouldering enormous risk and responsibility. "Giving back" gets to close to a zero-sum game perspective for me.

Sorry for rambling. I expect to do a few posts on this stuff next week at my blog.

Katie said...

While we're on the topic of redistribution of wealth and Obama, was I the only Obama supporter completely horrified that he and Biden both gave so little to charity? I'm tired of charitable giving being almost non-existent outside of the "Republican base." Where are my fellow Democrats who believe that helping those less fortunate shouldn't be the government's job alone?

Gruntled said...

Amen on Obama and Biden's charitable giving. The Obamas have little kids, but the Bidens are settled and could give more. Catholics do, as a rule, give less than Protestants, but liberals give less than conservatives.

Michael Kruse said...

Actually, as I recall, Obama gave more than the average for folks with his income and I think Palin was in a similar range. McCain was way above average but so was his household income. Biden is the real mystery to me. All these years of running for president and not even an cosmetic attempt to make himself look better.

halifax said...

"In the most advanced countries, the following will be pretty generally applicable.

...

2. A heavy progressive or graduated income tax.

...

5. Centralization of credit in the hands of the State...

...

10. Free education for all children in public schools...Combination of education with industrial production.'

K. Marx, 'The Communist Manifesto'

Now, just because Marx said it doesn't mean it's obviously wrong, but...

Marty said...

"...but liberals give less than conservatives."

True, but of course liberals believe it is the job of government to take care of the poor. And many will even invoke scripture to back up their claim...

But then, where are the shrill cries of "theocracy!" when they do?

The silence is deafening. But just wait until a conservative tries to invoke scripture in support of a government program!

Gruntled said...

The irony of The Communist Manifesto is that the specter of communism is meant to be scary, but the specific proposals that Marx and Engels make were pretty reasonable. Most have become a normal part of welfare states, "social democratic" or "free market."

c3 said...

I would echo Michale Kruse's comments, particularly how much progressive taxation is enough. If its "fair" for the top 1% to pay 40% of taxes then why isn't it fair for the top 1% to pay 50%. Strict fairness would be one percentage for all though I don't believe flat taxes work.

It seems the prudent "middle ground" is one that considers fairness and also works hard to find that rate structure that increases tax revenue without leading to capital flight.

I would add to other considerations:
1) A conservative would be anxious about that point I mentioned above because it ignores the question of collecting taxes for "unnecessary programs" (i.e. midnight basketball or wind power subsidies)
2) A Christian perspective IMHO would draw on the tithing principle. In other words all must sacrifice to support AND those that have more should give generously. A secular translation of that might be that all should pay some taxes so that they feel they have a stake in their government.

Constructive Feedback said...

[quote]This is silly -- all taxes redistribute wealth. They take from everyone to serve the common good. [/quote]

Gruntled:

I notice that when I debate with many Progressives the issue of "Private Property Rights" rarely comes up nor does it serve as any particular boundary for their willingness to confiscate one's wealth in pursuit of YOUR IDEA of "the common good".

Your quotation above appears to me to be a dodge of the key issues. Few people debate the necessity for paying taxes for the basic operations of government. The debate comes with respect to the amount of taxation in the name of "progressive common good" should be permissible.

It is interesting that on the one hand it is clear that a man's income is an expression of his work efforts and the valuation there in. If you are so comfortable in confiscating the income received in the exchange for this labor why is it beyond the pale to ask a person who's labor is worth less in the market place to do compulsory work on behalf of the government using the claim of the "common good"?

Please tell me why it is off limits to ask the unemployed to take up a government broom, dustpan and trash bag and clean the streets in their OWN community for the "common good". The imposition of the very same sanctions that one receives from the IRS for failing to pay being imposed if they fail to contribute to "the common good".

Please highlight the ultimate differences if you don't mind.

Thank you in advance.

Anonymous said...

I don't consider building roads with tax dollars redistributing wealth. On the other hand I do consider sending a check to someone who pays no federal income tax welfare and not a tax break.The title of this post shows your mind set and it doesn't sound centrist to me.

Gruntled said...

Poor people who pay no taxes drive on roads, too. The EITC is better than welfare because you have to work to get it, but it recognizes that there is a social benefit to helping out the working poor who do not quite make enough to support their families well. And even if they don't pay income tax, they pay all the other regressive taxes.

Constructive Feedback said...

[quote]The EITC is better than welfare because you have to work to get it, but it recognizes that there is a social benefit to helping out the working poor who do not quite make enough to support their families well.[/quote]

Gruntled:

It appears that you only selectively response to questions asked of you.

For the record I am inclined to support the EITC over minimum wage laws because the later places the societal mandate of valuing a the worth of a worker's labor upon the small business man/business owner.

The EITC at least expresses this mandate in a manner that is distributed over the entire base of federal tax PAYERS.

My issue with you, again, is that there appears to be no limit in your theory in which "the common good" becomes abject confiscation from those who YOU don't believe need that much money.

This was evident over the SCHIP debate a few years ago. Where as some found it grand to provide tax payer funded health care services to children that were beyond the original income interval (making too much money for Medicaid while not enough money to afford private insurance) - others asked why the government should take on the cost burden that is shifted away from the individual who simply would have to give up some other discretionary purchases in order to pay for health care for their children.

Gruntled said...

I favor universal health care. I think it is a collective good like basic education. And as I said above, I believe in progressive taxation as contributing to the ethical legitimacy of the entire social system. If we agree on those principles, then we can negotiate over rates.

Constructive Feedback said...

[quote]I favor universal health care. I think it is a collective good like basic education.[/quote]

Please note - while we ALREADY have "universal (and compulsory) education" per government yet people still complain about the resource inequality there in yet people are making wild promises as to what "universal health care" will do.

It is interesting that as I do background research on Justice Thurgood Marshall, in reading the San Antonio vs Rodregez (sp?) case of 1973 Marhshall made the case of the discriminatory actions associated with allowing local political boundaries and local property taxes to fund education.

It is clear that his argument was that we should erode all district boundaries which otherwise allow us the freedom to express our POLICY PREFERENCES, PRIORITIES and ECONOMIC choices in the spirit of EQUAL funding for all.

The key problem that I have both with what I am discovering about Marshall's ideology and Obama's as well is that they are both able to fully articulate that which those who reside in the common state or the common nation owe to their fellow man. At the same time they seem equally incapable of detailing what this "fellow man" who receives net inflow from the other OWES this same society in the way of limiting his exposure to risky behavior that induces nationalized medical spending and other points along this line that I won't belabor your with.

I fear that with entitlement comes a loss in individual responsibility to do one's part