The History of Spreading Wealth
Scott W. Johnson, who normally writes for the Powerline blog, wrote an article for the Christian Science Monitor in which he takes a closer look at Obama’s statement that he wants to “spread the wealth around.” Johnson points out that Obama’s plans stand in a long, strong progressive tradition in the United States:
Until the Civil War, the idea of a tax on individual incomes would have seemed preposterous to most Americans. Only as an emergency wartime measure did Congress adopt an income tax in the 1860s, and the measure was allowed to lapse with little fanfare in 1872.
The modern income tax begins with the Progressive era in American politics. In an influential 1889 article titled “The Owners of the United States,” crusading attorney Thomas Shearman argued that the lion’s share of the country’s wealth was in a limited number of hands. If an income tax were not adopted, he warned, within 30 years “the United States of America will be substantially owned” by fewer than 50,000 people. …
Progressives condemned the Constitution as an instrument crafted by the rich to protect their selfish interests (J. Allen Smith), and a document rendered obsolete by intellectual progress in the century since its drafting (Woodrow Wilson).
Frenzied attacks on “the rich” and “the wealthy” culminated in the ratification of the 16th Amendment in 1913, authorizing federal taxation of income from all sources without limit. The same year, historian Charles Beard published “An Economic Interpretation of the United States Constitution.” This book – later debunked – suggested that the Constitution was the handiwork of a propertied elite serving its own interests. Such sentiment has poisoned American political thought ever since.
To which Ed Morrissey, writing for Hot Air, adds:
In any event, the income tax passed almost a century ago was supposed to limit the influence of the rich by forcibly redistributing their wealth. One has to proclaim the redistribution, at least, as a success. As Scott writes, 40% of all income taxes get paid by the top 1% of filers, and those paid in total the same amount as the bottom 95% of all filers. We’ve grown so accustomed to the “progressive” tax system (which has two distinct and accurate meanings) that we no longer question whether this is actually good policy — at least not until a Joe the Plumber speaks up.
Obama is very fond of the number 95, especially in terms of percentages. We’ve had the progressive income tax for 95 years, and progressives still want to soak the rich even more than they do now. Has this succeeded in terms of efficient use of capital, or has it created a flabby, bureaucrat-ridden monster of a federal government to redistribute capital in about as costly a manner as can be imagined? The top 5% of American earners now provides half of the funds for the federal government; has that made them less influential, or more influential?
I disagree with both authors on certain points, of course. I wouldn’t call it a failure as such, and I don’t believe for one second that it has only caused problems: lest we forget a very large percentage of the American people were living in terrible conditions in the late 19th century and early 20th century. For those who do not realize just how these people, ‘workers,’ lived, I recommend taking a look at some photos made in that era. They are stupefying. The wish of Wilson, for instance, to help the poor did not come out of nothing, and neither did LBJ’s later in the 20th century; the circumstances were truly, utterly horrific. They were living in worse conditions than the homeless live in today. But they worked, often 12 to even 15 hours a day, and they forced their kids to work at age 10, because if they didn’t, the entire family would starve.
Fiscal conservatism is nice, but it would be unwise to pretend that all was well one hundred years ago. It was most certainly not.
Those who want to see some photos, by the way, can call on me; I’ve got some, I believe. They’re not fun to watch, but they do serve an education purpose; poverty was very real back then. Very real. Those people had to be helped. It is that simple.
Lastly, I only wrote down criticism, because regular readers of this website will know my general take on fiscal issues, which is quite conservative.
I agree that it’s naive to say that we were so much better off back then, before the income tax.
In general I’m a free-market supporter, and as such I generally favor less taxes and less government programs. However, I think some people who share my views have gone too far. The free market is not perfect, as much as I’d like it to be. The problem is that it is unfair at an individual level. In general, it is fair because people who work hard and make wise decisions succeed–in general. However, there are certainly exceptions: people who struggle because of circumstances beyond their control. In a pure free market, those people would be trampled. Ideally, I think it would be great if Americans would be charitable and organized enough to take care of their own–cover medical expenses for people who fall ill and can’t get insurance, support the widow with kids who’s husband died prematurely, etc. I’m even in favor of having some mercy to those whose misfortunes were their own fault (after all, we all make mistakes), even if by doing so we do weaken somewhat the driving force of the free market–we should at least make sure people have basic needs covered. So far, charity is not big and organized enough to cover most of these needs. Until they are, I’m in favor of government picking up the slack.
So, I agree that income tax is not all bad. But of course their are limits. I wonder, sometimes, when the progressives will be satisfied that the tax system is progressive enough. Even after Obama implements his tax policy, there will still be rich people and poor people (maybe even more poor people, if trickle-down economics really was right). So will the cries for fairness end?
The two arguments are exactly what makes a vote for the Libertarian Party not an easy one just as much as voting for the Democrats or Republicans. The purists in the party are definitely not in favor of having to pay many, or any taxes.
Yet, funding for a federal government has to come from somewhere. In general, I do believe in government help, even if it does reach too far in some cases. I believe in balance in government involvement vs. no government involvement, which means some give and take from the populace.