What’s Wrong with Redistributing the Wealth?

A specter is haunting America. Or at least haunting the fevered brains of John McCain and his fellow Republicans.

It’s the specter of “socialism”, in the form of Democratic presidential nominee Barack Obama and his alleged determination to “spread the wealth around.”

It comes as a little bit of a surprise to us that Barack Obama is one of us, because we haven’t seen him at any of the meetings.

But Michelle Malkin is certain about it. “There’s no question,” the right-wing commentator declared, “that Barack Obama has been steeped in and marinated with the socialist ethos.” Talk radio host Glenn Beck fumed, “I believe there’s a socialist agenda there for America.”

Adds one-time contender for the Republican presidential nomination Mike Huckabee: “When you punish people for making more money, and you reward them for nothing, that is socialism. And that’s a terrible, terrible way for this country to move.”

So what is this national tragedy in the making? The McCain campaign (including its new national mascot, Joe the Plumber) is irate about Obama’s proposal to rescind tax cuts enacted under George Bush for households with an adjusted gross income of $250,000 and over — the richest 2.3 percent of U.S. taxpayers, according to Citizens for Tax Justice.

The income tax rate for the very top rung of the ladder would rise (as it was scheduled to anyway in 2010 when the Bush cuts expire) from 35 percent to 39.6 percent, where it stood under the Clinton administration. “This is a very modest — you might even say, timid — response to what has, in the last 15 years, been a redistribution of wealth from the bottom up to the top,” Rick MacArthur of Harper’s magazine said in an interview on Democracy Now!

This is what’s so “terrible, terrible”? Restoring tax rates for the very richest Americans to the levels of the 1990s — during which time, incidentally, the U.S. economy underwent the longest sustained expansion since the Second World War, so the wealthy couldn’t have been that bad off?

Thanks to John McCain, millions of people must be asking themselves: If expecting the rich to pay a little more in taxes is “socialist,” what’s wrong with socialism?

The desperate McCain campaign is betting on a piece of conventional wisdom that both main parties cling to: That ordinary people will rebel against any form of tax increase — in fact, they’ll probably vote for whichever candidate promises the bigger tax cut.

Meanwhile, the mainstream media pronounce authoritatively that even people with modest incomes oppose higher taxes on the rich, because they expect to make it into the ranks of the wealthy someday themselves.

But that’s not accurate. There is support for taxes among ordinary people, even higher taxes, but only if they think something worthwhile will be done with the money. For example, opinion surveys show a majority of people in favor of more government spending on education and health care, even if that means higher taxes. Among adults under 30, the sentiment is even stronger — upwards of 90 percent in favor.

Of course, the government never does seem to spend money on those priorities, or anything else worthwhile. Instead, the political system operates beyond the control of working people. Case in point: The U.S. government is set to match the $1 trillion-plus price tag for a war on Iraq that a majority of people oppose, with a bailout of Wall Street and the banks that will cost at least as much, and that is also opposed by the majority.

So most people are, naturally and understandably, suspicious of taxes. And the Republican Party — which devotes itself in office to making sure that government doesn’t do anything useful for working people –t hen plays both sides against the middle by exploiting sentiment against taxes.

Not that most Democrats are any better. Obama’s response to the ludicrous claim that he was advocating socialism was to disavow any desire to “spread the wealth.” Instead, Obama said — in a classic example of politician-speak — he wants to “spread the opportunity.” His campaign platform is carefully tailored to emphasize a range of tax breaks — and not just for the “middle class,” but small and big businesses under a variety of circumstances.

So it’s little wonder that Comrade Obama is holding onto his supporters in traditionally Republican business circles. For example, according to MacArthur, Obama has collected $740,000 in bundled campaign contributions from Goldman Sachs, the super-bank that’s leading the way in Wall Street’s shift behind the “tax-and-spend” Democrats.

McCain’s attack line about taxes produced a stream of the standard complaints from conservatives about how taxes are unfair because the rich pay at a higher rate than the poor. But this is a distortion of how the tax system actually works in the U.S.

First, no one in the over-$250,000 category ever pays 35 percent today, or paid 39.6 percent before Bush, on all their income — unless their tax accountant is incompetent. There are all kinds of loopholes and deductions available to those at the top.

Plus, most taxes other than the income tax are “regressive,” not “progressive”, meaning they’re more of a burden the poorer you are. For example, state and local sales taxes are a flat rate charged on products that people have to buy, which means that lower-income households end up spending a higher portion of their income on sales taxes than higher-income households.

The same thing is true about the federal payroll tax for Social Security and Medicare. But the effect there is even worse because the tax for Social Security isn’t collected after an individual’s income reaches $102,000 in a year. So payroll taxes, too, are a far greater burden on workers. Multibillionaire Warren Buffett, by his own admission, pays less in federal taxes than his secretary because of the effect of the payroll tax.

The other side of the conservative argument is that the rich not only pay more, but they get less, the implication being that most government services go to the poor. Thus, John McCain claimed that “Barack Obama’s tax plan would convert the IRS into a giant welfare agency.”

But this is also false. To start with, just look at the summary of the federal budget and see how a program like food stamps stacks up against, for example, the Pentagon’s purchases from military contractors.

Beyond that, ask yourself this question: Do you think the government would build a new expressway on-ramp to make it more convenient for you to get to work? Certainly not. But the executives and shareholders of corporations like UPS demand this kind of infrastructure project when they plan for new facilities.

The biggest drug companies make use of federally funded research in developing new products. And, of course, the oil giants can count on the U.S. military — whichever party occupies the White House — to ensure a steady flow of Middle East oil, no matter what the toll in human misery.

In reality, the mantra that “big government is bad” — shared by most Republicans and Democrats for the past several decades — applies only to certain kinds of big government.

Thus, when there was money to be made off high-stakes gambling in the Wall Street casino, the banks and hedge funds and investment firms wanted regulators to keep away. But now that the boom has gone bust, only a multitrillion-dollar bailout from the federal government can stop the system from grinding to a halt, and even that might not be enough.

Not only that, but there won’t even be any sacrificing at bonus time this year. According to the Guardian, salaries and bonuses for top executives and employees at major banks and investment firms will add up to $70 billion this year. So 10 percent of the $700 billion that Congress committed to “rescue” Wall Street will end up “rescuing” the bank accounts of some of Wall Street’s richest players.

Now that’s redistributing the wealth.

When you look at the bigger picture, the U.S. government, its tax system included, serves as a very effective tool of wealth redistribution, but upward, from workers and the poor to the very richest people in society. Obama’s modest increase in the income tax for top taxpayers won’t turn this tide.

There’s an even more fundamental deception hidden in the conservatives’ arguments about taxes,for example, Mike Huckabee’s claim that Obama’s tax proposal would “punish people” who made money, while “rewarding” other people who did “nothing.”

Punishment? The biggest lie of all is that the rich do anything special to deserve the vast sums they possess.

The disaster on Wall Street provides ample evidence. Every top executive at the big banks was raking in tens of millions of dollars for heading up sophisticated gambling operations — and running them into the ground over the past several years. Thus, Richard Fuld Jr., former CEO of the Lehman Brothers investment bank, made a half-a-billion-dollar fortune selling his stake in the company as it was crashing toward bankruptcy.

This isn’t just true about disgraced Wall Street bookies, but generally about those who run the capitalist economy and its political institutions.

At most, the top executives and owners of big corporations organize the process by which something useful is produced or takes place. But they get to exercise this control not because of any special talent or ability they possess, not, at least, compared to the collective knowledge and skills of those who do the actual producing and who typically know much more about what takes place in a workplace than the managers above them.

The economic power of those at the top comes from their connection to ownership, whether they’re owners themselves, or they manage the enterprises in the name of owners who do even less work.

The vast majority of people who are rich in this society got that way because they were lucky, in a few cases like Bill Gates, lucky enough to associate themselves with a product or technological innovation that took off; in others, lucky enough to know the right people who helped them in the scramble to the top; in still others, lucky enough to be born into incredible wealth.

And if it’s true that the rich don’t do anything special to deserve to be rich, the opposite is also true — nothing that much larger numbers of working people do justifies the difficulties they face, whether it’s those who suffer outright destitution or the larger group of people who get by, but have to struggle to make ends meet.

One of the most hilarious moments of the whole Obama-is-a-socialist farce came a few days ago when a right-wing wacko, masquerading as a television journalist from a local Florida station, asked during an interview with Joe Biden:

You may recognize this famous quote: “From each according to his abilities, to each according to his needs.” That’s from Karl Marx. How is Senator Obama not being a Marxist if he intends to spread the wealth around?

Biden rightly wanted to know whether the question was a joke, before retreating to the campaign position that Obama didn’t want to spread anybody’s wealth, etcetera, etcetera.

But this controversy does raise the question: What would be so terrible about a society organized around such a principle?

The standard answer is that without the promise of profit and riches, no one would do any work.

But is that true? Does that square with the reality of most people’s lives? Think about the jobs that people you know have chosen, or the activities they volunteer to be part of, or the interests they pursue in the time they have to themselves — and ask if it’s true that they wouldn’t do anything useful for society but for the reward of big bucks or the threat of poverty?

It says a lot about the view of human nature under capitalism that people are seen as motivated primarily by either the carrot or the stick.

A genuine socialist society would spread the wealth around — without apologies — because its top priority would be to meet the needs of every person in it. Organizing such a society would require new forms of democracy so that everyone could have a say in how resources were used, what was produced, how it was produced and so on. The goal would be a world where every person could have control over their lives and the opportunity to follow their aspirations and hopes.

In short: From each according to their abilities, to each according to their needs.

Alan Maass writes for Socialist Worker where this article first appeared. Read other articles by Alan, or visit Alan's website.

10 comments on this article so far ...

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  1. Guy said on October 29th, 2008 at 10:35am #

    “But is that true? Does that square with the reality of most people’s lives? Think about the jobs that people you know have chosen, or the activities they volunteer to be part of, or the interests they pursue in the time they have to themselves — and ask if it’s true that they wouldn’t do anything useful for society but for the reward of big bucks or the threat of poverty?”

    Of course it’s true. That’s why I am a teacher – I am in it for the big bucks.

  2. brs said on October 29th, 2008 at 12:48pm #

    If the republicans really believed that work and effort should be rewarded and that people should not be rewarded with things they did not earn then they would be proposing the complete abolition of the income tax which taxes the rewards people have worked for. At the same time they would tax inheritances at 100 percent because that is completely unearned. Instead they fight to the death to eliminate taxes on the gift of inheritance and let taxes on working people rise.

  3. John Hatch said on October 29th, 2008 at 1:12pm #

    Modest tax cuts for the middle class: socialism.

    A trillion dollar bailout for corrupt banksters: capitalist business as usual.

    I’m always astonished at the sheer stupidity of it all.

    Next we’ll hear that Sarah Palin is having an affair with Joe the Plumber.

    And that amidst all the torture and murder.

  4. Poilu said on October 29th, 2008 at 4:19pm #

    You know, it amazes me. Huey Long didn’t merely suggest “spreading the wealth around a bit” in his own immensely popular (and Populist) rhetoric; he directly proposed implementing a program to “SHARE the wealth”! Yet the Kingfish never considered himself a “Socialist”, just a man with a decent perspective on essential fairness! And his prescriptions — in theory, at least — still sound remarkably sensible today:

    ” Senator Huey Long: – ‘Share the Wealth’ ” [speech to Congress]
    http://www.themoderntribune.com/governor_huey_long_speech_1934_share_the_wealth.htm

    ” ‘Share the Wealth’: Huey Long Talks to the Nation ” [radio broadcast]
    http://historymatters.gmu.edu/d/5109/

  5. Jason Paul Oberg said on October 29th, 2008 at 4:58pm #

    A superb article by Alan Maass. The American people would do well to realize that Socialism is not some insidious, sinister ideology. Rather, it is just what any intelligent, compassionate and sensible society requires and most definitely deserves. From the time we are old enough to listen, we are told in America that Capitalism is the way to go. We are force-fed this garbage that Socialism is the same thing as Communism, Fascism, and all those other supposedly evil forms of government. It is endoctrinated into us. Sadly, most Americans continue to buy into this propaganda throughout their lives. McCain comparing Obama to a Socialist is, for one thing, ridiculous, since he knows as well as anyone that Obama is just as much a corporate pig as he is. But it also is a grand example of the government’s presumption that we all hate and fear the idea of Socialism in America. Well, guess what, McCain? We don’t! On the contrary, we WANT socialized medicine! We WANT socialized child care! We WANT socialized college education! What a laughable example of how out of touch these multi-millionaire idiots are with the common American.

  6. Chuckypita said on October 29th, 2008 at 7:25pm #

    http://www.chuckypita.com/barack-obamas-redistribution-of-wealth-how-is-john-mccain-any-different-socialist-or-national-socialist/

    I found that to be an appealing post. There’s no question that “redistribution of wealth” will be found to be a “good thing” to some and a “bad thing” to others….. the problem is the philosophy.

    When we grant our government to legally plunder, we grant supreme power where it should not be placed.

    Our founding fathers fought hard against this and now it is an everyday occurrence in our society. Unfortunately, until America sheds the FED – nothing will change.

    Polarization will continue and America will sink further and further into debt.

    Maybe this post will shed some light:http://www.chuckypita.com/barack-obamas-redistribution-of-wealth-how-is-john-mccain-any-different-socialist-or-national-socialist/

    Thanks for your incredible post.

  7. Jim said on October 29th, 2008 at 8:21pm #

    A nice article. I wish many in the US have the opportunity to read articles like this. As well, I also think this article can describe what Socialism is:
    http://democracyandsocialism.com/Articles/ALittleTalkAboutSocialism.html

  8. bambata said on October 30th, 2008 at 12:20am #

    the perfectly conditioned slave must believe he is free

  9. Hue Longer said on October 30th, 2008 at 3:57am #

    Poilu,

    when asked about if he was advocating socialism, he said something like, “hell no, I’m trying to avoid it” (I tried to remain silent with a Huey post, and failed…I see some flaws in him(as you too once pointed out with your Newman quote) I do have some American action heroes who I like even more for not knowing much about them other than their moral courage when it counted…Sitting Bull, Captain Fagen and Captain O’Reilley were some guys that the US should be proud of).

  10. Poilu said on October 31st, 2008 at 12:14am #

    Hello, Hue!

    Actually, I quite admire Huey Long. My Newman paraphrase — actually based on Randy’s reference to Lester Maddox in the song “Rednecks” (“Well, he may be a fool, but he’s our fool”) was merely in deference to the recognized criticisms of the Kingfish, such as the assertion that he built 3 million dollars worth of highways for the people of Louisiana with 8 million dollars of their money, or something like that. While it may be true, the “Old Guard” which preceded him did virtually nothing for the common people of the state. How much did they conceivably pocket while providing no real public service?

    Many claimed he was a rascal. But the “crackers” certainly appreciated him. So do I.

    Love your own quote above. That would be Huey, alright. :-)