What’s wrong with redistributing the wealth?

October 28, 2008

John McCain says Americans should be worried that Barack Obama wants to "spread the wealth around." And why is that a bad idea, asks Alan Maass?

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


It comes as a little bit of a surprise to us here at SocialistWorker.org 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.

John McCain, Karl Marx and Barack Obama

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.

What else to read

Socialist Worker editor Alan Maass is the author of The Case for Socialism, an introduction to socialism and the socialist tradition. Paul D'Amato's The Meaning of Marxism provides a lively and accessible account of the ideas of Karl Marx, using historical and contemporary examples.

Lance Selfa's The Democrats: A Critical History examines the two-party system in the U.S. and focuses on a socialist analysis of the Democratic Party.

Hal Draper's The Two Souls of Socialism makes the case for the genuine socialist tradition that looks to the self-activity of the working class to change society.

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.


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--then 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.


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.


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.



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."




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.



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 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?




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