Share the wealth

By :: October 23rd, 2008

A few more thoughts on "Barack the wealth spreader," as Sarah Palin now describes the Democratic nominee. I'm inspired in part by commenter D.F., who wrote this morning, "Tax rebates don't work. We need a flat tax."

First off, John McCain is right when he says Obama's tax plan is redistributionist, if by that he means his rival would give his biggest tax cuts to the lowest earners. TPC calculates that Obama would cut the average tax rate for the lowest 20 percent of earners by more than 5 percent while he'd raise the rate by a roughly equal amount for the top 1 percent.

But the argument McCain is apparently going to use in the final days of his presidential campaign goes beyond that. It is that Obama is going to take "your" money and give it to someone else—someone by inference, far less deserving than you. This, McCain suggests, is a shocking and dangerous new development in tax policy.

There is only one problem. Today's tax code is riddled with examples of government "taking" money from one taxpayer and giving it to another. For instance, viewed through this lens, it takes billions of dollars from renters and gives them to homeowners. Washington explicitly redistributes tax revenues to corn farmers, developers of low-income housing, families with kids, and everyone who gets their health insurance at work. TPC's Len Burman and Eric Toder have estimated that for individual taxpayers alone the annual value of these targeted tax goodies—often called tax expenditures—is a whopping $750 billion.

McCain may have missed this, but for decades government has used the tax code for much more than raising money. These days, redistributing tax revenues are the principal way government encourages people to do what it wants and discourages them from doing what it doesn't.

"Sharing the wealth," as McCain puts it, is what government does. McCain's support of President Bush's 2001 and 2003 tax cuts may have been slow coming, but it has been whole-hearted throughout this campaign. And those bills were redistributionist heaven.

While he doesn't come out and say so, McCain, like D.F., seems to be arguing for a flat tax. Now, I am a huge fan of low rates (that would be rates, with an "s") and a broad base. It would be wonderful if we could move in the direction of a system where corn gets the same tax treatment as kumquats. McCain is right that Obama, who seemingly has a new tax credit for each of society's perceived woes, isn't getting us there.

But if McCain favors a flat tax, he should tell us and explain why he thinks it is a good idea to redistribute income by raising taxes on the middle class and giving the money to the wealthy.

8Comments

  1. Anonymous  ::  12:09 pm on October 27th, 2008:

    There are two issues at play. I have been doing the numbers and it amazes me that a FLAT TAX can generate so much capital. What is equally amazing is that if the congress uses what I call DECORELA (Debt Consolidation Relief Act) something I as an ordinary citizen developed that people (even those with poor current credit) get a fresh start and level the playing field. Everyone could build wealth and we would not be creating slaves but creating partners in not only a great democracy but a great economy.
    It is interesting that our 58+ Trillion dollar debt could be paid and the foriegn debt repurchased and turned into capital assets with an across the board debt and tax plan in a paper entitiled “I am no one special, but I have something to say”.
    While I enjoyed the various tables in this website I things some of the table that I have created just might open some eyes.
    fixing the economy is a three step process:
    (1) Debt consolidation with a flat interest rate allowing all forms of debt to be put into one loan package.
    (2) Flat Tax. This would eliminate the need for reams of tax code and begin to move the nation in as little as four years to a BALANCED BUDGET Ammendent. People knowing there government was responsible and not spind thrift would encourage people and corporations to be more responsible and if done properly reward good economic practice instead of poor practice. This would also move the natio toward the elimination of the IRS and turn it into more a more user friendly organization.
    (3) Developing DECORELA Bonds would allow all Americans to purchase back debt from foreign nations so that our HOMELAND SECURITY would not be at risk in the hands of a foreign power that could and would hold hostage the American people.
    In any event, regardless of who achieves the goal of President-elect, both Obama and McCain will need to lead. Consider these words:
    Consider that:
    Happiness is when what you think, what you say, and what you do are in harmony. – Mahatma Gandhi
    Great leaders are almost always great simplifiers, who can cut through argument, debate and doubt, to offer a solution everybody can understand. – Colin Powell
    It's fine to celebrate success but it is more important to heed the lessons of failure. – Bill Gates
    Nate S (Virginia)

  2. Anonymous  ::  4:52 pm on October 28th, 2008:

    Lost in the debate is the point that both presidential candidates, and presumably every member of Congress, support a tax system that redistributes wealth. The only way a tax system could NOT be redistributive, in fact, is if it taxed each citizen at one lump sum amount (as opposed to a flat tax, which taxes everyone at the same rate, but is still redistributive); even the most radical supporters of tax reform wouldn't accept such a proposal.
    Ben Harris

  3. Anonymous  ::  9:43 am on March 24th, 2009:

    Redistribution of wealth when in comes to taxes is not fair to the people of this state. Tax policies of the government are becoming complex nowadays without giving due consideration to the economic crises and meltdowns being experienced by everyone. Sarah Palin's earmarked money, for example, is a drop in the federal budget. In these times of economic meltdowns, using government funds and pegging them for a specific cause is not a good idea. Sarah Palin may have a good intention on these but thinking about the practicality of doing it, it's a big NO NO. The real problem here is that Palin asked for $140 million to be set aside for her state, which makes Alaska one of the biggest users of earmarks in the U.S. This is after she gave a large cash advance building an oil pipeline. And she's also having her daughters' contentious break up to deal with. Rumors are still going around about her running in 2012, but if she fails to live up to campaign promises it won't be an easy sell for Sarah Palin for President.

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