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Didn't that Manchester bank robber last week know that if you are going to rob a bank on Elm Street, ManchVegas, you are supposed to tape a tree to your head?
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Andrew Cline has been editorial page editor of the New Hampshire Union Leader since October of 2001. His writing has appeared in more than 100 newspapers and magazines, including The Wall Street Journal, The Washington Post, and National Review.Jonah Goldberg: Tax policy and sharing the wealth
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By JONAH GOLDBERG
Friday, Nov. 7, 2008
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 United States, 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's e-mail is JonahsColumn@aol.com.
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YOUR COMMENTS
Paradis, Wally: did you miss the part where I prefaced the task of looking into socialism with: Are you saying you've never benefited from redistributive policies? Did you miss the part where I said I pay taxes to educate others' children? You think I was arguing that socialism doesn't exist but is coming?
I think you missed the point that this country has vast socialist components and to sit back and rail against them while also benefiting from them is hypocritical.
Pete: did you see that the market gained 200 points when Obama gave a press conference? I bet you're goona put money into the market every time Obama has a scheduled press conference. Simple is as simple does.
- Chip Sanders, Wilton
No one here represents the entire views of any party. Get a blog if you want angst.
- Creez, Manchester
Pete from Manchester, thank you for once again reminding us that the Republican party is the party of the wealthy. Evidently your wealth is surpassed only by your humility and goodwill.
Take your ball and go home now.
PS Pete one more thing, you Republicans may want to stop reinforcing that "we have all the money" meme if you expect to ever have a realistic chance of regaining control of the White House and Congress.
- Mike Lane, Manchester
Yep. Obama won the election with his delusional dreams all the desperate democrats actually bought....but as you see the dow plummet after his victory ....it is we, the republicans who have the money and are pulling out of the market. Enjoy.
- Pete, Manchester
This is awesome! I don’t even know were to start.
Kevin from Derry, “work harder to make up the difference”? For what? To support the degradation of humanity? Sloth is one of the seven deadly sins. Is that too harsh? I know Bad things happen to good people and the system was built to help them. Good people use the system reluctantly and pull themselves back on their feet, press forward, then support the filth themselves. What about the single mother of two who works full time and attends collage at night to better herself and her children, or the double amputee who goes to work everyday and never complains? They pay taxes to.
Comrade Chip, Bill Howard is correct. Redistribution of wealth is the 2nd plank of the Communist Manifesto and the 10th plank addresses free education. You said you pay for education without having children. You’re speaking of property taxes? If so, that’s covered in the 1st plank of the manifesto. Also he Community Reinvestment Act sounds a lot like the 1st plank. Some might argue were already Communists.
Here’s a scenario for the “where’s my stuff” people. If you’re in the 35% tax bracket, live in NH and are divorced with at least 2 children, 68% of your income is gone pre tax. Give another 10% to tithing, that leaves one with 22%. I know several people like this and are proud to pay out that 33% & 10%. Could you live on 22% of your total gross income? They live modestly and often wonder themselves.
Distributing the wealth is not prosperity, it’s disparity.
- Wally, Manchester, NH
Richard, great reference, from a great book.
I wonder how many kleptocrat wannabe's have read anything by Ayn Rand. I would guess very few, and even fewer have understood it. If they would read and understand we may not have as many well-intentioned, but mis-guided liberals to fend off.
The well-intentioned, yet ignorant American will be the ruin of us.
- Michael Paradis, Manchester
Hey Chip, you need to return to school, elementary 101 and look up definitions of socialism and marxism. I will be coming back a few years down thte road saying, "I told you so, chipper. . ." This thug from Chicago has come but not to save the country as poor dingbats think, but to destroy America. We have handed over our country to a pure socialist and baby killer.
- Mary Wilhelm, manch, nh
It is pretty funny that someone is citing Wikipedia as a source of information. Again the rantings of Bill Howard from Exeter show us all why Republicans lost the election. Tom from Compton apparently does not know much about the economy. The Dow has been down the 2 previous days due to weak retail sales numbers and even weaker retail sales forecast for the holiday season, high unemployment figures and dissapointing earnings.
- Matt, Newton NH
Sanders, I took you up on your suggestion to "look up" socialism on Wikipedia. I know the definition, but, apparantly you don't, so here you go.
"Socialists mainly share the belief that capitalism unfairly concentrates power and wealth among a small segment of society that controls capital and creates an unequal society.
All socialists advocate the creation of an egalitarian society, in which wealth and power are distributed more evenly..."
Chipper, before accusing a person of not having a "grasp", and then challenging that person to "look it up", you may want to take your own challenge, as a first step. Even better, for our country, maybe you should have "looked it up" before you voted for the very socialist Obama.
In addition to reading the dictionary more often, perhaps you should read more of Mark Twains writtings. IIRC, it was he who said,"It is better to leave ones mouth shut and be thaught a fool, than to open it and remove all doubt."(that may be a slight paraphrase)
Words to live by, Chipper, words to live by.
- Michael Paradis, Manchester
I wonder who you will loot from when Atlas shrugs?
- Richard, Manchester
Hey Bill, I take it you were the guy with the McCain sign at the polls chanting "4 more years, 4 more years!"
- Stephen Waintroub, Mont Vernon
Bill Howard: what world are you living in? Come back to reality. Business are laying off people because the handwriting is on the wall??? Try, there is a HUGE economic collapse thanks to the failed policies of the GOP and Bush over the last 8 years. Now I'm sure you're gonna come back with Congress' approval ratings and saying dems controlled congress for 2 years. Did they have enough votes to overturn a veto? Didn't think so.
As for the tax policy helping those with 8 kids, are you talking about the Mormon families too? I have no kids and pay for education, is this redistribution of wealth? I, just like those running the fortune 500 companies, was given a free education.
Try taking a look in the mirror, are you telling us that you've, in no way benefited from policies that redistribute wealth? Come back to reality.
Please look up the definitions of Marxism and socialism before touting that we are heading there. It is clear you don't have a grasp either.
- Chip Sanders, Wilton
Is that article old? Because the min wage is 7 something..
- Joe, Derry
The socialists are out in full-force today.
Punish anyone who went to school, maintains values and works hard. Take his earnings and "spread it around" to lazy, failures. Reward the fine ladies who choose to have nine babies by six different, crack-dealing boyfriends.
A corrupt, community organizer who has never run anything is not going to fix the economy. He will do no more for the "what's-in-it for me" crowd than he has done for his illegal-alien aunt, in Boston public housing.
Obama rails against anyone producing anything of value for this country. Business owners see the handwriting on the all and are laying off thousands of people.
Soon here will be nothing left to redistribute and you will be stuck with a Marxist White House.
- Bill Howard, Exeter
Here's the facts, Jonah:
.
"...Other Bush administration policies have contributed to these negative income trends, particularly the regressive redistribution of federal revenues through the President's tax cuts. The Bangor Daily News summed up the problem succinctly:
"Suppose that the administration's tax cuts, which began in 2001, remain in effect until 2015. Over these 15 years, more than half of the tax cuts - 53 percent - will go to people with incomes in the top 10 percent, according to studies commissioned by The New York Times. And 15 percent of the cuts will go to the top one-tenth of 1 percent of taxpayers. By 2015 the tax cuts, if retained, will provide average yearly tax savings of $23 to taxpayers in the bottom 20 percent. The wealthy will fare better. The top one-tenth of 1 percent of all taxpayers will save an average of $196,000 a year, or a total of $2.9 million over the 15 years. By 2015, the top 1 percent of taxpayers will pay a lower share of total taxes than they did in 2001."
Far from distributing money back to average American families, the Bush tax cuts overall have profited the super rich, leaving the vast majority of Americans with comparatively little or nothing to show for it. This has only made the distribution of income and wealth across America more skewed."
$23 for the bottom. $3,000,000 for the top.
I'm underwhelmed, Jonah.
Try again.
- Tim Seaver, Adamant, VT
Please delete the contribution from Tim Seaver of Vermont, which excerpts an old article off the Internet on the minimum wage. The minimum wage WAS raised in the last Congress and all his assertions of fact are out-of-date.
Do Democrats intend to keep agitating for further increases by arguing that it HAD gone unchanged for a long time--in 2006?
Separately, it is not true (1) that using the minimum wage to make certain jobs illegal helps the poor, (2) that it is proper to judge the current minimum wage against the highest level it ever reached, and (3) that, if the purchasing power of the poor increases, "the wealth gap" is a public policy problem. (Sure, I'm wealthier, but the guy up the hill is wealthier too--please fix it!) This stuff is only believed by the bitter individuals who think that someone else's success is what is keeping them down.
- Spike, Brentwood NH
You know what wealth I don't like distributing? Whatever percentage of the Union Leader price that pays Jonah Goldberg. If I only buy the paper for the news and sports, I also have to pay for this blowhard's opinion even if I don't read it, or wish I hadn't. And what about the cost of all the products I buy that contribute to advertising revenue that helps pay this windbag? Do I get rebates if I don't read Goldberg? He's typical of a guy who only likes parts of the system that benefit him directly, and blind to the big picture.
- Brian, Manchester
The reason we "almost" had a debate on taxes, the reason even down-to-earth Joe the Plumber couldn't resonate with the American people, is that, on tax policy, McCain was not very different from Obama. McCain is totally comfortable with redistribution, provided it is he writing the rules. (Example: The big tobacco settlement.) Late in the game, he signed on to defend the Bush tax cuts, but the conservative base knew he was not one of us, nor even a dependable ally on the tax cuts he had originally opposed. The Republicans ran with no message.
Why does Goldberg end his column with the soothing note that we won't touch the Earned Income Credit? "We will make taxes simple and straightforward--though, of course, we won't disturb the welfare system hidden in the tax code!" This is an example of Republican cowardice undermining the message and making it unbelievable even to true believers.
- Spike, Brentwood NH
The wealth gap widened considerably under Bush's disastrous "leadership". Time to fix that.
"...Compounding this trend has been Congress's utter inability to pass even one minimum wage increase in the last nine years. The federal minimum wage still sits at $5.15 per hour and has lost over 17 percent of its purchasing power since 1997. In 2005, minimum wage workers earned only 32 percent of the average hourly wage and in fact, the wage would have to rise to $8.20 just to reach half of the current average hourly wage. If Congress fails raise the minimum wage this year, it will mark the longest stretch the wage has remained unchanged since it was instituted in 1938 and the greatest inequality between minimum wage and average wage earners since the end of World War II."
Since WW2. Got that?
http://www.ombwatch.org/article/articleview/3344/1/180?TopicID=1
- Tim Seaver, Adamant, VT
Joe T, ifyou think that government spending makes a nation prosperous then Keynes is your guy. However, the theory was implemented in 1939 and was tested under special circumstances. The reason Nixon tossed the economic thought was because it created massive stagflation which was contained by imposing price and wage controls.
- Gavin G., Concord, NH
Obama is not socialist. He is Keynesian, which is an economic philosophy that prevailed from after WW2 until Nixon dismembered it in the seventies. It made America prosperous, and may do so again-but I doubt it.
- Joe T., Derry, NH
To Kevin from Derry,
So if the top earners in this country have more money taken away from them by the government they will work harder to make up the difference? Please tell me what historical data you base that statement on because everything I've ever experienced in our free market indicates just the opposite happens. If the government tells me the harder I work the more of my money I have to part with I am not inspired to make more...but I am looking for a place to hide it...and I certainly am not investing it knowing the profits I may receive will be taxed at confiscatory rates as well. But chin up Kevin, there are millions in Europe who embrace your logic...and they seem to be happy with their double digit employment rates and stagnant economies...right?
- Scott, Suncook
The poor rich people who have to pay taxes. The wealthy should pay more, and progressively so, as they get a progressively higher benefit from public institutions: their work force is publically-educated; their products travel to customers over publically-funded infrastructure; they have more to lose and therefore disproportionately benefit from our police, fire, and military safety nets. Buck up, pay up, and quit whining, it is unseemly and unmanly. Pay your fair share.
- Steve Hart, San Diego
Kevin: Holy cow, did you really say that the opportunity to become wealthy in this country is because of redistribution of wealth? The opportunity to become wealthy is because we have a market economy that rewards initiative and hard work, and also because we are *not* a class-driven society that limits opportunity to only the upper crust. And if anyone thinks that tax cuts lead to recession, please take an economics course, and bring Kevin with you.
- Rick, Portsmouth
The DOW has dropped 10% since Obama won the election. His irresponsible and naive campaign rhetoric has frightened investors and our global trade partners.
Obama is meeting with his economic advisors today and will give a press conference afterwards. To stabilize the markets and reassure our allies, Obama will need to backtrack on his campaign rants against free trade and for punishing taxes on investment. This would be a singular disgrace for Obama since it would mean his economic policy has been discredited even before he is sworn in. I believe Obama is too vain and arrogant to admit he was wrong.
We will see what his press conference today brings.
- Tom, Campton
Another Day, another exreme conservative article in the UL.
This article actually proves Obama is right, No country is more pro poor and no country has as many wealthy people, not surprising because the opportunity to become wealthy due to the redistribution of wealth is the greatest. Bush tax cuts and the recessin have shown trickle down does not work, the above editorial proves that redistributing the wealth works. Though it's only logical, if you make 1 million dollars and now pay 300,000 in takes and that goes to 400,000 your going to be alright. And the evidence seems to show you'll work even harder so next year you make 1.2 million to make up for it. And the people that benefitted from the redistribution will have the money to reinvest in themselves(not just live) bringing up there standard of living which means they spend more and that helps the rich get richer as well, win-win as the editorial makes clear despite arguing the opposite.
Like anything else there is a breaking point but the editorial makes it clear we are not there yet, once the # of millionaires and wealthy stops increasing at such a high rate we'll know the tax burden on the rich go too heavy. Clearly not there yet.
- Kevin, Derry NH
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