Skip to comments.Fair Taxation?
Posted on 10/20/2008 9:56:54 PM PDT by Kaslin
God bless him. Joe the plumber, that is, for coaxing from Sen. Obama his true motive for raising taxes. It isn't to fund the government, or deal with the deficit, or to establish a rainy day fund. It's to "spread the wealth around," which the Illinois senator insists is "good for everyone."
Sen. Obama calls this a "tax fairness plan," but what is fair?
Everyone knows that some people work harder than others. We've all witnessed it. If John Q chooses to work 60 hours a week to advance his career, and Henry Y prefers to spend time playing video games, who is to say that Henry deserves some of the extra income John has earned? Is that fairness? I call it completely unfair.
What's that? John and Henry didn't start out in life in the same position? Well, that's true. But there is no such thing as a totally equal society. (Nor is it desirable.) Even in places like Sweden, some are born into loving, wealthy two-parent families and others are born to alcoholic single mothers. Some have good looks and talent, others don't. No society south of Heaven can ever be completely equal. But the essential justice of a society is measured, I believe, not by whether you have equality of condition but by whether you have equal opportunity. Not only is this more fair in principle, it is also more successful in practice. People do not work for the general good. They work for their own individual ends, which in turn promotes the general welfare. Societies that ask workers to labor for "the people" get poor results. As the joke from the old Soviet Union had it -- "They pretend to pay us and we pretend to work." By contrast, the capacity of the American economy to reward effort and initiative is legendary and has lured ambitious people to our shores for more than two centuries. It has also made us the wealthiest society in history.
You don't have to look at socialist countries to know that redistribution of income punishes success and rewards sloth. We've seen it here. Our welfare system was intended to help the poor -- but because it was poorly structured, it wound up discouraging work and marriage, thus prolonging poverty rather than alleviating it for many.
Here's another problem for Sen. Obama: He wants to spread the wealth around as if wealth and poverty and "middle-classness" (to use the Rev. Jeremiah Wright's terminology) were fixed categories. They aren't. Economic and social mobility in the United States is the norm, not the exception.
Using data from the Current Population Survey, the National Center for Policy Analysis looked at income quintiles over time. They found that after one year, one-third of those in the bottom quintile had moved up, and one-quarter of those in the top group had moved down. After 10 years, 60 percent of those in the bottom group had moved up to higher quintiles, with 8 percent getting all the way into the top quintile. Correspondingly, 6 percent of those in the top quintile went all the way to the bottom after 10 years, and 54 percent of those at the top had moved to some lower group 10 years later.
Democrats like to talk about "the rich" as if they are a fixed group of individuals, but anecdotal evidence suggests that two-thirds of those on the Forbes 400 list in 1994 were no longer on the list a decade later. And 80 percent of those on the list were self-made.
People tend to begin their work lives at or near the bottom quintile of income. White male 21-year-olds, for example, begin at the 20 percentile in overall white men's income. As they gain experience and skills, they move up. By age 31, they reach the 50th percentile mark. And between the ages of 31 and 59, they average near the 60th percentile mark for all workers. When they get close to retirement age, their incomes tend to fall.
We already have a steeply progressive income tax, with the top 5 percent of earners paying 60 percent of the taxes (in 2006), and the top 25 percent paying 86 percent. Obama wants to perform an experiment by confiscating more of the income of the most productive earners (who create the overwhelming majority of jobs) and distributing it to those who earn less.
It's been done before -- with dreadful results. Call it socialism if you like. But don't call it "fairness."