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More on “Socialism” and “Wealth Redistribution”

October 27th, 2008 | by Ken Grandlund |

Last week, I put together a short video about the history of socialism in America. (In case you missed it, you can watch it here.) Whether you want to admit it or not, America is now, and has for some time been, a nation filled with socialism and wealth redistribution. It is how we pay for our common defenses, programs, and infrastructure. No matter how much conservatives and right-wing whacko’s decry the words themselves, socialism and wealth redistribution are as American as apple pie. As point in fact, elected officials of both parties understand that only through the collection of taxes (wealth redistribution) can America provide all the infrastructure, programs, and national defense (socialism.)

It’s always nice to have some forms of confirmation that I’m not out picking daisies in left field when I put forth these kinds of positions. So it was a pleasant surprise to read to articles this weekend that offered opinions similar to my own with regards to American socialism and wealth redistribution. Without reprinting the entire articles (which you should go and read anyhow), here are some salient points to consider…

The first I’ll share is from the San Diego Union-Tribune:

Is it really socialism to talk of “spreading the wealth”?

Actually, it has been part of the American economic system since its founding.

In a letter to James Madison in 1785, for instance, Thomas Jefferson suggested that taxes could be used to reduce “the enormous inequality” between rich and poor. He wrote that one way of “silently lessening the inequality of property is to exempt all from taxation below a certain point, and to tax the higher portions of property in geometrical progression as they rise.”

During the early days of the republic, the government relied mostly on tariffs to collect revenue, under the theory that since the rich bought most of the imports, they would pay most of the taxes.

“The rich alone use imported articles, and on these alone the whole taxes of the general government are levied,” Jefferson wrote in 1811. “The poor man, who uses nothing but what is made in his own farm or family, will pay nothing. (With) our revenues applied to canals, roads, schools, etc., the farmer will see his government supported, his children educated and the face of his country made a paradise by the contributions of the rich alone, without his being called on to spend a cent from his earnings.”

Although the income tax was abolished in 1872, the idea of using taxes to share the wealth remained an important part of the public discourse. Teddy Roosevelt was a vocal proponent of this idea in the early 1900s.

“I believe in a graduated income tax on big fortunes, and in another tax which is far more easily collected and far more effective: a graduated inheritance tax increasing rapidly with the size of the estate,” he said in 1910.

In times of economic peril, the tax rates were raised – rather than lowered – to ensure that money was more evenly distributed. During the Great Depression, Franklin Roosevelt’s administration boosted the highest tax rate from 63 percent to 79 percent in order to fund his New Deal programs. He pushed it to 94 percent during World War II.

Roosevelt was matched by Dwight Eisenhower in the 1950s, who, with the aid of a Republican Congress, maintained an income tax rate of more than 90 percent for top earners. It took Lyndon Johnson to lower the upper tax rate to 77 percent. It remained near that level until the second year of Ronald Reagan’s presidency.

But doesn’t a high tax rate strangle economic growth? It’s hard to make that case. During the 1950s, when the upper-income bracket was taxed at its highest peacetime rate in history, the economy grew at a robust 4 percent per year, using inflation-adjusted figures. The 1950s growth rate certainly did not occur because of the high taxes, but the tax rate apparently didn’t impede it.

“Every dollar spent by the government must be paid for either by taxes or by more borrowing with greater debt,” Eisenhower warned in the 1950s. “The only way to make more tax cuts now is to have bigger and bigger deficits and to borrow more and more money. Either we or our children will have to bear the burden of this debt. This is one kind of chicken that always comes home to roost. An unwise tax cutter, my fellow citizens, is no real friend of the taxpayer.”

Clearly, over this nation’s history until very recently, both major parties had candidates and presidents who understood that America’s real promise of a better life for all relied on both socialism and wealth redistribution. But the Republicans and theif frenzied fans can’t seem to concede the point, even when the evidence comes directly from their own mouths and actions.

From the New Yorker Magazine:

On October 12th, Obama gave one of his fullest summaries of his tax plan. After explaining how his tax plan would work, Obama added casually, “I think that when you spread the wealth around, it’s good for everybody.” McCain and Palin have been quoting this remark ever since, offering it as prima-facie evidence of Obama’s unsuitability for office. Of course, all taxes are redistributive, in that they redistribute private resources for public purposes. But the federal income tax is (downwardly) redistributive as a matter of principle: however slightly, it softens the inequalities that are inevitable in a market economy, and it reflects the belief that the wealthy have a proportionately greater stake in the material aspects of the social order and, therefore, should give that order proportionately more material support. McCain himself probably shares this belief, and there was a time when he was willing to say so. During the 2000 campaign, on MSNBC’s “Hardball,” a young woman asked him why her father, a doctor, should be “penalized” by being “in a huge tax bracket.” McCain replied that “wealthy people can afford more” and that “the very wealthy, because they can afford tax lawyers and all kinds of loopholes, really don’t pay nearly as much as you think they do.”
For her part, Sarah Palin, who has lately taken to calling Obama “Barack the Wealth Spreader,” seems to be something of a suspect character herself. She is, at the very least, a fellow-traveller of what might be called socialism with an Alaskan face. The state that she governs has no income or sales tax. Instead, it imposes huge levies on the oil companies that lease its oil fields. The proceeds finance the government’s activities and enable it to issue a four-figure annual check to every man, woman, and child in the state.

A few weeks before she was nominated for Vice-President, she told a visiting journalist—Philip Gourevitch, of this magazine—that “we’re set up, unlike other states in the union, where it’s collectively Alaskans own the resources. So we share in the wealth when the development of these resources occurs.”

Hmmmm…..McCain says higher incomes should mean higher taxes…at least he did back in 2000. And Palin governs a state where socialism (taking money from the big wealthy oil companies and giving it back to every person in her state) is the main rule.

Even the deniers of socialism and wealth redistribution, as we know and practice it here in America, are tied to our history, and not so subtly practicing the very things they now say will make Obama “unfit” to lead.

Pot. Kettle. Black.

(cross posted on Common Sense)

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  1. 6 Responses to “More on “Socialism” and “Wealth Redistribution””

  2. By steve on Oct 27, 2008 | Reply

    Based on percentages, higher wage earners pay more taxes. What you are not admitting is that the rich already are paying the bulk of the taxes with extreme annual incomes the small percentage.

    Obama is not talking about spending less… just taxing more. Where are you Ken on spending? McCain talks about spending less. Isn’t that more important and than taxing more. Do you think the government wastes dollars that could go towards a lot of things like social well being, health care

    As far as the issue of wealth redistribution, it seems Obama thinks it is a civil right to have wealth redistributed. Some how, that does not seem fair to me, does it to you? It fair to someone that worked hard their whole lives and earned a higher pay to suddenly have to give more of it away to help someone who doesn’t get off his/her ass and work for it? It’s bull shit Ken. And where does it stop. Obama is already say that 95% of all tax payers won’t pay more, when the real number, according to FactCheck.org is 81%. Why is he out and out lying?

  3. By Ken Grandlund on Oct 27, 2008 | Reply

    I think spending should be cut in many areas Steve, but even across the baord cuts wouldn’t put a dent in our massive deficit. So I’m for spending cuts AND a new tax plan that puts the playing field back where FDR and Eisenhower had it set. And remember Steve- federal income taxes are graduated-meaning that not ALL of a wealthy persons income is taxed at higher levels, just those portions over certain base amounts.

    And wealth redistribution is what taxes are, in a nutshell. All governments redistribute wealth,a s do all people. Any cash from your hand to another is redistribution in the strictest sense. In fact, capitalism wouldn’t survive w/o it.

    Seems to me that for over 200 years, America’s system of socialism and wealth redistribution made this country the paragon that it was…those policies helped us win two world wars, get through the Great Depression, become the greatest economic engine in the history of the worls, and offer us great advances in technology and education. Of course, the drastic changes made to the tax structure under Reagan began the downslide into national indebtedness and it has continued to sprial ever since. No surprise perhaps that America’s standing in so many critical areas (including education, scientific superiority and health care) has taken a dive too.

  4. By steve on Oct 27, 2008 | Reply

    “And remember Steve- federal income taxes are graduated-meaning that not ALL of a wealthy persons income is taxed at higher levels, just those portions over certain base amounts.”

    They still pay more than the average person. And they buy things like Yachts and Expensive Cars and pay luxury tax. They pay higher property taxes. We also tax their investments with capital gains on the sales of large sums of stock. You can’t sit knowing that and believe every word Mr. Obama says.

    We seriously need to not look into cutting spending across the board… but look for those $500 toilet seats and $25 nails in those budgets and get real. Most of that fluff is probably put there by liberals any way.

  5. By Craig R. Harmon on Oct 28, 2008 | Reply

    Part of the problem is that “socialism” is such a slippery word. It has become like “fascism” — a word the definition of which, as often used, seems to mean nothing more than: “The ideology of anyone concerned with law and order, protecting law abiding citizens, catching and imprisoning law-breakers.” In the case of “socialism”, it has come to mean, “The ideology of anyone concerned with wealth inequality, economic injustice”.

    With F. A. Hayek, I have no problem with a wealthy nation voluntarily, through laws enacted by elected representatives, using taxation to set a minimum standard of living below which that population will not tolerate for those that legitimately are not able to work, produce and, thus, negotiate their labor skills in a contract with an employer to earn money. I think that it’s perfectly fine (is not socialism in a pejorative sense) for society to agree that the legitimately disabled be kept from starving to death on the streets.

    I just don’t get how taxing some people at a higher rate than others is fair or just. Fairness isn’t interested in whether the rich can afford to pay higher tax rates. Such progressive taxation is inherently unfair and unjust. The Constitution insists that all people be treated equally before the law. Therefore, in my mind, a tax law that taxes one person at a different rate than it taxes another person is inherently unconstitutional. I don’t see how one can unhypocritically say one wants to erase one injustice (wealth inequality) through another injustice (unequal taxation).

  6. By Chris Radulich on Oct 28, 2008 | Reply

    For the conservatives who want to get back to the roots of America.

    Thomas Paine sparked the first bestseller in American history – a fiery pamphlet entitled, Common Sense (1776), which sold over 120,000 copies in its first few months of publication and successfully encouraged a declaration of independence from England. The heart of Paine’s famous pamphlet contains a withering criticism of hereditary government. This critique extends through all his works. “All hereditary government is in its nature tyranny.” “Hereditary succession . . . is in its nature an absurdity, because it is impossible to make wisdom hereditary . . .. History informs us that the son of Solomon was a fool.” “To the evil of monarchy we have added that of hereditary succession; and as the first is a degradation and lessening of ourselves, so the second . . . is an insult and an imposition on posterity.”

    Later in life, Paine extended this critique of inherited political power to a critique of inherited economic power. It is important to remember that Paine distrusted governments, disliked taxes, and heartily approved of late night tea parties in Boston Harbor! He opens Common Sense with an attack not only on monarchy, but also on government itself. “Government even in its best state is but a necessary evil.”

    Modern libertarians tend to adopt Paine as their patron saint, stressing his description of government as evil while forgetting the modifier, “necessary.” Paine, unlike modern libertarians, never viewed “the government” and “the people” as mortal enemies. As he says, “Government and the people do not in America constitute distinct bodies.” His love of liberty was tempered by a commitment to the common good. Ironically for a revolutionary, he wrote an entire pamphlet, The Necessity of Taxation (1782), arguing that taxation is the “criterion of public spirit.”

    In two works, The Rights of Man (1791) and Agrarian Justice (1797), Paine argues for the adoption of an inheritance tax in England to balance out the unfair distribution of “landed property.” For Paine it is common sense that God gave “the Earth as an inheritance” to all of God’s children. Therefore, he proposed an inheritance tax to create a national fund that (1) would give the sum of 15 pounds sterling to everyone turning 21 years old as a compensation for the loss of their “natural inheritance,” and (2) would give a sum of 10 pounds a year to every person over the age of 50 as an early version of Social Security.

  7. By Chris Radulich on Oct 28, 2008 | Reply

    Why a progressive tax? Let us say you need 1 million dollars to run your army. If you tax all people at a tax rate of 6% you would raise 500,000. Assume at that rate no one is forced into poverty to pay for your army. Do you double the tax rate for everyone and force people into poverty, do you cut your army in half, or do you raise the money by getting from those that can afford it without going into poverty?

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