28 thoughts on “Spreading THE Wealth”

1. Rand, have you either watched the video of the whole original encounter between Obama and Joe or read the entire (short) transcript? Did Obama really sound like he wanted to give away someone else’s property in that encounter?

   Here’s the transcript:

   Obama: What’s your name?

   Joe: My name’s Joe Wurzelbacher.

   Obama: Good to see you, Joe.

   Joe: I’m getting ready to buy a company that makes about $250,000 � $270-$280,000 a year.

   Obama: All right.

   Joe: Your new tax plan’s gonna tax me more, isn’t it?

   Obama: Well, here’s what’s gonna happen. If you’re a small business which you would qualify as, first of all, you’d get a 50 percent tax credit, so you get a cut on taxes for your health care costs. So you would actually get a tax cut on that front. If your revenue is above $250,000, then from $250,000 down, your taxes are gonna stay the same. It is true that for � say, from $250,000 up, from $250,000 to $300,000 or so �

   Joe: Well, here’s my question �

   Obama: I just want to answer your question. So, for that additional amount, you’d go from 36 to 39 percent, which is what it was under Bill Clinton. And the reason we’re doing that is because 95 percent of small businesses make less than $250,000 so what I want to do is give them a tax cut. I want to give all these folks who are bus drivers, teachers, auto workers who make less � I want to give them a tax cut and so what we’re doing is, we are saying that folks who make more than $250,000 that that marginal amount above $250,000, they’re gonna be taxed at a 39 instead of a 36 percent rate.

   Joe: Well, the reason why I ask you about the American Dream I mean, I work hard. I’m a plumber, I work 10-12 hours a day �

   Obama: Absolutely.

   Joe: � and I’m, you know, buying this company and I’m gonna continue to work that way. Now, if I buy another truck and adding something else to it and, you know, build the company, you know, I’m getting taxed more and more while fulfilling the American Dream.

   Obama: Well, here’s a way of thinking about it. How long have you been a plumber? How long have you been working?

   Joe: Fifteen years.

   Obama: Okay. So, over the last 15 years, when you weren’t making $250,000, you would have been getting a tax cut from me. So you’d actually have more money, which means you would have saved more, which means that you would have gotten to the point where you could build your small business quicker than under the current tax code. So there are two ways of looking at it. I mean, one way of looking at it is, now that you’ve become more successful �

   Joe: Through hard work.

   Obama: � through hard work, you don’t want to be taxed as much.

   Joe: Exactly.

   Obama: Which I understand. But another way of looking at it is, 95 percent of folks who are making less than $250,000, they may be working hard, too, but they’re being taxed at a higher rate than they would be under mine. So what I’m doing is � you know, put yourself back 10 years ago when you were only making whatever � $60,000 or $70,000. Under my tax plan, you would be keeping more of your paycheck, you’d be spending lower taxes, which means that you would have saved and gotten to the point where you are faster. Now, look, nobody likes high taxes, right? Of course not. But what’s happened is that we end up � we’ve cut taxes a lot for folks like me who make a lot more than $250,000. We haven’t given a break to folks who make less and, as a consequence, the average wage and income for just ordinary folks, the vast majority of Americans, has actually gone down over the last eight years. So all I want to do is � I’ve got a tax cut. The only thing that changes is, I’m going to cut taxes a little bit more for the folks who are most in need, and for the 5 percent of the folks who are doing very well, even though they’ve been working hard � and I understand that; I appreciate that � I just want to make sure that they’re paying a little bit more in order to pay for those other tax cuts. Now, I respect your disagreement, but I just want you to be clear. It’s not that I want to punish your success. I just want to make sure that everybody who is behind you, that they’ve got a chance at success, too.

   Joe: It seems like you’d be welcome to a flat tax then.

   Obama: You know, I would be open to it except for � here’s the problem with the flat tax. If you actually put a flat tax together, you’d probably � in order for it to work and replace all the revenue that we’ve got, you’d probably end up having to make it like about a 40 percent sales tax. I mean, the value added, making it up. Now, some people say 23 or 25, but, in truth, when you add up all the revenue that would need to be raised, you’d have to slap on a whole bunch of sales taxes on it. And I do believe that for folks like me who are, you know, have worked hard but, frankly, also been lucky, I don’t mind paying just a little bit more than the waitress who I just met over there, who’s � things are slow and she can barely make the rent. Because my attitude is that if the economy’s good for folks from the bottom up, it’s gonna be good for everybody. If you’ve got a plumbing business, you’re gonna be better off if you’ve got a whole bunch of customers who can afford to hire you. And right now, everybody’s so pinched that business is bad for everybody. And I think when you spread the wealth around, it’s good for everybody. But, listen, I respect what you do and I respect your question. And even if I don’t get your vote, I’m still gonna be working hard on your behalf ’cause I want to make sure � small businesses are what creates jobs in this country and I want to encourage it. All right. (applause) One other thing I didn’t mention. For small-business people, I’m gonna eliminate the capital gains tax, so what it means is if your business succeeds and let’s say you take it from a $250,000 business to a $500,000 business, that capital gains that you get, we’re not gonna tax you on it ’cause I want you to grow more so you’re actually going � you may end up � I’d have to look at your particular business but you might end up paying lower taxes under my plan and my approach than under John McCain’s plan. I can’t guarantee that ’cause I’d have to take a look at your business.

   Joe: Okay, I understand that.

   Obama: All right. Thanks for the question, though. I appreciate it. Okay, guys, I gotta get out here. I’ve gotta go prepare for this debate. But that was pretty good timing. Thanks.

2. Bob, do you have to drink a cup of the koolaid every morning, or are you on an IV drip?

   Just curious. 😉

3. The analogy with the iron is a load of manure. I listened to the whole exchange with “Joe the Plumber” and Obama on you-tube and got an entirely different impression on what Obama meant regarding tax rates for small businesses. Taking that last sentence out of context and claiming it means that Obama thinks of wealth as community property is ridiculous. Some people have told me that taxation is stealing and it amazes me how many people use government services and support the Iraq war but think this magically happens without someone having to pay. As for creating wealth – the $100 million that a CEO makes from stock options wasn’t earned or created but money being exchanged. You’ll have to forgive me if somehow I don’t think this is fair and yes, I think maybe they should be taxed at a higher rate (Oh my god – a progressive tax – must be a socialist).

4. Bob, it’s an interesting exchange, and it certainly emphasizes that Barry is quick on his mental feet. The guy came up with a plausible economic libertarian argument for a more progressive income tax in about 10 seconds flat — that’s impressive! I’d love to hear him tackle a proof of the existence of God.

   On the other hand, the problem with this exchange (and with Obama) is exactly what makes it (and him) so impressive. He’s so good at superficially plausible argument that he could easily convince anyone (including himself, and including Congress) that black is white, truth is ignorance, war is peace, and so forth. It would only be after you woke up from the dream, with the terrible hangover, that you’d realize how wrong he was. But it sounded so sensible at the time! That’s the fundamental difficulty with pure reason, uncontaminated by empirical measurement: it does sound so sensible at the time — but alas it rarely passes the cruel tests of factual reality.

   Like, in this case, Obama is arguing that a progressive tax structure is a powerful engine for creating wealth, because, see, you get to save lots more when you’re earning less, so that you get to the point of earning more faster.

   Sounds great. But it’s utterly false. Actual experiment proves, without the slightest shadow of a doubt, that the one thing a progressive tax structure isn’t is an engine of wealth creation. It always reduces net total wealth creation, and the more progressive it is, the more it does so. Generally, up until now, the left has acknowledged this bitter reality, and simply argued that we have to forgo a certain amount of wealth creation in the interests of compassion, i.e. a more even enjoyment of the wealth created. What’s unique about the New Left, as represented by Obama, is they don’t feel tied to this historical reality, and are willing to entertain the notion that their theory is right, while all historical experience is…well…misinterpreted? The result of generations of idiots who didn’t understand how to implement The Beautiful Theory correctly? I dunno. There’s some rationalization, I’m sure (and maybe you’ll provide it for me below!).

   Now, we can argue all day about why progressive taxation reduces net wealth creation — the usual argument is that the problems of capital accumulation mentioned by Obama are not serious, not compared to the psychological de-motivation resulting from the fact that you keep less and less of each extra dollar you earn — but the one thing we can’t argue about, not if we’re honest and informed, is the fact that it does.

   So even though Obama sounded much smarter here, with his lovely long paragraphs of logic, it was Joe who was actually “street” smarter: a flat tax is, indeed, a much more powerful engine of net total economic growth.

   It’s interesting to me that Obama has figured out that he can bullshit the intellectuals, the folks with PhDs and comfortable salaries, better than the proles. That’s why I think he’s picked the platform he has. He tells the proles the truth: he’s going to give them some of the rich people’s dough. Nothing else will get them into his camp. But he bullshits the smart and well-off people — don’t worry, by taxing you more I’m really in the end going to make you richer, trust me! And they buy it. That’s one of the disadvantages of being an intellectual. You’re much more susceptible to verbal shell games.

   You’d think those folks would sit down and think it through carefully and quietly at some point. Hmmm. If all those people who are deeply envious of my success love Obama’s plans, why do I think those plans will end up making me happy? Either I’m deluded, or a whole lot of other folks are, because our interests are fundamentally in conflict.

5. That was an excellent careful discussion of the issue from Obama. I hadn;t read the transcript earlier. Very impressive.

   As seems to be typical recently, e.g. the Mugger Case which elicited such deep analysis on Obama followers, Rand seems to find the lines between fact and fiction blurring in righteous passion.

6. Bob, it’s an interesting exchange, and it certainly emphasizes that Barry is quick on his mental feet. The guy came up with a plausible economic libertarian argument for a more progressive income tax in about 10 seconds flat — that’s impressive! I’d love to hear him tackle a proof of the existence of God.

   -Carl.

   That’s the guy I want talking to foreign leaders.

   We will be damn lucky to have him as President as opposed to the jokers on the other ticket.

7. Aaaaand along comes Tom, to drive home Rand’s point:

   Some people have told me that taxation is stealing and it amazes me how many people use government services and support the Iraq war but think this magically happens without someone having to pay.

   Notice the clever use of the vague pronouns there. You’d almost think, from the way Tom puts this, that the “many people” using the government services are the same as the “someone” who doesn’t want to pay for them. That, indeed, seems like foolish and selfish irresponsibility, doesn’t it? If you use services but aren’t willing to pay for them?

   But of course, that’s not how it is. The “many people” using the government services are not the “someone” who doesn’t want to pay for them. They’re entirely different people.

   However, if Tom spoke honestly, without trying to put one over on you by artful use of language, he’d be saying something like:

   It amazes me how people who don’t use government services themselves don’t want to pay for someone else to use them.

   Or:

   It amazes me how people who use government services want someone else to pay for them.

   But then he’d sound like an idiot.

   Rand has a great point, although George Orwell pointed it out first, how powerful is the use that the left makes of twisting language around. Perhaps it’s not so surprising that the left draws most of its useful idiots from those who parse and use language for a living, and does not do so well among those who work with their hands.

8. Well, Rand, it is funny that you asked. While I was reading Carl’s response, the Democratic candidate for state rep in my district called and asked for my opinions and so I told her I thought her advertisements were too negative, full of brainless slogans, unfair to the Republicans, and insulting to the public. Turned into a long conversation and since she challenged me to help her improve things, probably more involvement from me. My head is spinning with ideas – it is almost as if someone gave me spiked koolaid. 😉

   The transcript above got jumbled, at least on my browser, so here’s the easier-to-read source: http://www.tampabay.com/news/perspective/article858299.ece

   Rand, thanks for hosting this and tolerating an extra long comment — I think letting people read the real Joe The Plumber transcript so that people like Carl can easily rebut it is a great service. Carl, I’ve got to think more about what you said.

9. That’s the guy I want talking to foreign leaders.

   Oh yeah, right, because Vladimir Putin and Ahmadickhead of Iran are just as silly and naive as any University of Chicago graduate student intellectual, absolutely in love with words and thoughts, who can easily be swayed away from his own best interests by a lovely torrent of words.

   Give me a break. That’s a really silly piece of reasoning. The one thing folks like Putin and Ahmadickhead most certainly are is extremely cynical about words and theories. For God’s sake, look how they deploy the bullshit themselves! You don’t think they could survive if they believed that kind of stuff themselves, do you? Does a con man who’s easily swindled survive?

   It doesn’t matter the quality of the talk that the American President can deliver, because no dangerous foreign leader is a sophomoric unexperienced idiot who can be moved from what he sees (usually quite correctly) as his own best interests by mere poetry. All that matters is the substance of what the President has to say: does he have something substantial to offer? A credible threat to make? And so on. Only the underlying reality matters. It can be presented as beautifully as Shakespeare or as plainly and stutteringly as, well, George Bush would speak it. Doesn’t matter.

   But to prefer an ace bullshitter for President because you think he can bullshit other nations…! That’s really naive. Hopefully you don’t choose your employment similarly. I’m going to go work for this firm, even though their product/service sucks, because they’ve got such clever salespeople they can probably bamboozle customers into buying it indefinitely. Ugh.

10. Carl,

    Instead of focusing on how well-spoken Obama is, I wish you’d focus more on the argument you’re making, or at least point to a resource for a poorly-read guy like me.

    You said “Now, we can argue all day about why progressive taxation reduces net wealth creation — the usual argument is that the problems of capital accumulation mentioned by Obama are not serious, not compared to the psychological de-motivation resulting from the fact that you keep less and less of each extra dollar you earn — but the one thing we can’t argue about, not if we’re honest and informed, is the fact that it does.”

    I’d like to understand more about the tradeoff between the psychological demotivation resulting from keeping less and less and the decreasing pschological hit that results from the fact that tax payments impact on your comfortable lifestyle less and less as you become wealthier. At this point, I can certainly absorb a much larger tax hit than I used to be able to, and I look forward to the day when I’d be able to comfortably absorb an even bigger one!
    Any reading suggestions?

11. At this point, I can certainly absorb a much larger tax hit than I used to be able to, and I look forward to the day when I’d be able to comfortably absorb an even bigger one!

    Bob, why are you so eager to give more of your money to the government? Why do you think that it will spend it more wisely than you will?

12. Rand, I’m not. I’m just saying that the richer someone gets, the easier they can psychologically accept forking over a larger percent. The government expenditure still has to be justified. In the case of the local race I was just tempted to get more involved in, the issue involves clean water, which individuals can’t take care of by themselves. We can install filters under our sinks, but that doesn’t address the whole problem – government involvement is necessary, and that’s the justification.

    Carl, you said:

    If all those people who are deeply envious of my success love Obama’s plans, why do I think those plans will end up making me happy? Either I’m deluded, or a whole lot of other folks are, because our interests are fundamentally in conflict.

    Why should they be in conflict? I thought the whole point of Republican trickle down economics, or, in Obama’s case, trickle up economics, is that everyone wins, and that this isn’t a zero-sum game. Joe wants his customers to be wealthy so that they can afford more of his services and make him even more wealthy.

    (Someone on TV pointed out that plumbing is recession-proof, but it isn’t — people call plumbers for optional rennovations.)

13. Any reading suggestions?

    How about getting a job that pays hourly and offers time-and-a-half or double-pay for overtime?

    Then realize that you get overtime only when the company has a real need for you to work it.

    Then consider that at some point, the time-and-a-half pay becomes less than normal pay, because you just entered the next tax bracket. You may not see this at first, but you will after a few paychecks drive that point home.

    Finally, then decide home many overtime hours you are willing to work at extra pay before you decide time off is better than the hours worked.

    As I said earlier, wife’s an RN. There is a shortage of RN’s almost across the nation. So, overtime is a frequent option. The young ones are willing to work overtime almost as much as they can, because they have debt, and need the money. These are also the least experienced. The older RN’s usually cut off after x number of hours because of pay. Why? Because when more money comes out in taxes, it is demotivating, so they rather take time off. These are the more experienced nurses. Overtime typically occurs on the weekend, and the weekend is typically when cases are more emergent than optional. Which nurses do you want taking care of you in an emergency?

    There, combined tax policy with healthcare. I didn’t need a book, I just talked to real people who work necessary jobs. You can practically substitute plumber in place of nurse if you like. My wife’s cousins and uncle are industrial plumbers (they have licenses); I hear the same thing from them.

14. I’m just saying that the richer someone gets, the easier they can psychologically accept forking over a larger percent.

    And I’m saying that it depends on the person. Just because it’s true for you, or Warren Buffet, doesn’t make it true for everyone. It’s not true for me, for example.

15. It’s easy to think that you wouldn’t mind paying ever higher rates of taxation as your income increased when the notion is abstract. When it becomes a reality, the notion isn’t nearly so attractive. My wife is also an RN so Leland’s example is pertinent. At one time, she worked for some prominent local oral surgeons. One in particular was very successful. However, due mostly to tax rates, he took off several months each year because it just wasn’t worth it (to him) to earn the higher income when so much of it went to taxation.

    The overtime example is accurate as well. My brother Steve is a master machinest and welder. He told me a story about 20 years ago where his company got into a severe crunch. He worked 40 hours of regular time and 104 hours of overtime in a single week (you do the math). He said, “Uncle Sam sent me a Christmas card.” As an ordinary guy, he saw how much of his hard work was ripped off by “progressive” taxation. He never was willing to work very much overtime after that. It just wasn’t worth it.

    Obama’s claim that “95% of Americans will get a tax cut” under his policies are a blatant lie. For starters, the bottom 50% of wage earners only pay about 4% of all taxes and most of them don’t pay any income taxes at all. Obama’s “tax cuts” consist of transfer payments from higher earners in the form of additional credits. Those aren’t tax cuts, they’re handouts. Obama’s playing to the “elect Democrats and get free stuff crowd.” The way things are going, they’ll soon outnumber those who actually pay taxes.

16. Huh? Carl Pham gives me too much credit but I think he is reading into this a little to much. I�m no English major. At least I�m in agreement with him that it is pretty foolish to use government services and not pay for them. But of course that is what we have had for the last eight years � instead of pay as you go, we have doubled the federal deficit with no end in sight. And the tax cuts sure haven�t helped this any. So now Obama is proposing a small increase of 3% on income about $250K for small businesses and it is the end of the World!

    As for the left twisting language, I think the 3% increase is pretty easy to understand, not like the right�s claim on trickle down economics.

17. And the tax cuts sure haven’t helped this any.

    There were no tax cuts. There were only tax rate cuts. Talk about twisting language.

18. If Obama wins and when my tax bill goes up, I’m going to come to Bob, Tom, Mike and that Douc#ebagII for my money back. You’re willing to give the government more, my little bit extra should be no problem. The whole progressive tax rate scam is…progressive. It’s also approaching Marxism. Each according to yada yada. Conservative Christians provide the most charity of any group in the country, progressive liberals the least. Why is that?

    Oh Tom, yes, the reduced rates helped because tax revenue went up. You can claim 3% isn’t much until you have to do without it. For me, that would be 200 bucks a month more out of my take home. For 250,000 it’s 625. I’ll be by to get your share of what you will owe me because it won’t stop at 250,000.

19. I remember seeing a study, back in the DArk Ages when I was young, about where your tax dollars go when you pay Uncle Sam. IIRC, about 24 cents out of every dollar was lost, wasted, misallocated or stolen. Of course, this was during the early Eighties and things might have tightened up since then… but the fact remains: If people like Obama and his worshippers here in this comments section wish to do more for the less fortunate among us, they’d get a significantly higher lercentage of bang per buck by making private donations.

    So… instead of picking MY pocket, why don’t y’all prove your chops by doing so? Tithe, and I’ll believe that you’re sincere. And while you’re at it, ask Obama why he’s spending 5.6 MILLION dollars on his “Victory” party (not the inauguration, just the election night party!) when that money could make such a difference to the poor ($5600000 is a $25,000 free-ride scholarship for 224 deserving inner-city youth, to attend the four-year school of their choice… or a compact car with tag, title, insurance, and gas for a year for 250 needy Black heads-of-households so they can find better jobs… or a $10,000 health-care voucher for 560,000 indigent families with medical problems… but I guess Obama feels that that money is better spent on gratifying his own ego, and I guess that the Socialists here assembled aggree with him).

20. So Bill, which is it? Do you make ~$80K a year in which a 3% tax rate increase above $250K would have no impact on the amount of tax you would pay or do you make $330K a year in which case, yes you would get hit with $200 more a month? If the latter, yeah, maybe you could get upset but I think this was the same tax rate as under Clinton so lets not go overboard.

    Dave, Obama is just spreading the wealth and there are probably a small business or two that benefits by getting some of this money. And seriously, there is nothing wrong with private donations but that seems to be a stretch to get there from tax rates. My private donations aren’t going to have much impact on helping someone in the middle class who’s wages have stagnated these last several years while the very wealthy have seen their incomes increase. My feeling is that it is a stacked deck and we need some changes in government to be more fair. And no, I would rather not increase tax rates but change policies but that won’t happen for sure under another 4 years of the same with McCain. And if you are worried about how much money the government is wasting, look no further than the Iraq war which blows away any other type of government waste. The people that support this are picking not only your pocket but everyone else.

21. “If the latter, yeah, maybe you could get upset but I think this was the same tax rate as under Clinton so lets not go overboard.”

    If I didn’t like it then, why should I like it now? What I am saying is that Obama can’t pay for all his programs without taxing more people at a lower income level. What you seem to be ignoring is when you take money away from people that know how to make it work for them and give it to those that don’t, you are hurting the economy. I’ve never understood how people like you can turn their envy of those making more into a desire to take it way.

22. > Just because it’s true for you, or Warren Buffet

    Warren Buffet doesn’t pay much in the way of taxes and never will.

    Remember when he testified before Congress that the inheritance tax should be reimposed and increased?

    It turns out that Buffet’s wealth is largely exempt from the inheritance tax. When he dies, no one will cut a check to the federal govt.

    In that, he’s like his buddy Bill Gates.

    Taxes for thee but not for me from billionaires is a bit much. It’s interesting that the “progressive tax” sorts use them as examples.

23. I’m going to go work for this firm, even though their product/service sucks, because they’ve got such clever salespeople they can probably bamboozle customers into buying it indefinitely.

    Yeah, that was the company I worked for in the early 1980s. A few years after the founder had a heart attack, he sold his business to people that thought cutting costs and increasing sales would be the key to success. How could you argue with that? So they fired several highly paid VPs and others (cutting costs.) They made a full court press on sales and initially had some good success. The problem was they were taking 6 weeks on average to provide a monthly service. As they lost customers, they didn’t focus on the production issues that were the problem (they’d fired the VP of production.) They thought they could replace lost customers with new customers. The founder had kept the business going for over 20 years. The new owners killed it completely in about 2 years. The new owners (4 of them) were all from the magazine industry and were considered quite sharp even by NY city standards.

    It’s interesting that Obama seems to be arguing against the fair tax (23%) without mentioning it by name. One thing the fair tax would do is reduce the class warfare because a rate change would affect everyone. The only thing that makes it progressive is the monthly check they would send out to everyone.

24. I’m just saying that the richer someone gets, the easier they can psychologically accept forking over a larger percent.

    Bob, Rand has already made the point, albeit in his telegraphic style, so I will only elaborate. The problem with your statement is its lack of precision. You (and the government) use a very simple raw measure (gross income) to decide how easy it is to pay taxes, and how deserving you are of government assistance. This is horribly imprecise. You might as well judge the probability of someone being a criminal by the color of his skin, because, ha ha, statistically speaking a higher percentage of black men are convicted criminals than white.

    As Rand notes, and Leland, and I’m sure you can find some examples in your own circle of friends, your gross income doesn’t really say very well how well things are going for you. You could be young and single, in great health, be living in a rent-controlled apartment four blocks from your job, and have just got a huge raise with plenty of future prospects for more, and be working in a field where you can set your own hours. In those cases, yeah, you could easily pay more taxes. And maybe you should.

    Or…you could be earning even more gross salary but be a guy in his late 50s, with zero prospect for future raises, with a wife that has a very expensive chronic health condition and high blood pressure yourself, one teenager in college, one kid floundering around in trouble whom you’re trying to help, and still a third who’s struggle to get along as a single parent. Plus your field requires you to travel a lot, or work long shifts scheduled months in advance, or otherwise makes your working life very inflexible. And you could have a 55 mile commute each way, so you spend a fortune on gas and sit in traffic all the time. And you own a home that is in huge need of repairs in a neighborhood where prices are plummeting because someone just discovered a toxic waste dump in it.

    Under those circumstances, more taxes would be a crucifixion, and the idea of taxing this poor schmo more (because he earns more) in order to give money to the carefree single guy (because he earns less) would be a nauseating perversion of the concept of social justice.

    Now, people who think the government should be meddling in people’s station in life understand this somewhat, and try to take it into account with stuff like exemptions for children, deductibility of certain medical expenses, maybe coming soon college tuition, and so forth.

    But experience teaches us that, no matter how you fatten up the tax code with a bazillion credits and deductions and exemptions and this and that, you never achieve the kind of subtle and effective sorting out of people into “those who can pay” and “those who should receive” that is necessary for the overall system not to be a cruel mockery of the concept of justice. Plus, by making the system so complex, you make it very expensive to administer (you need a big IRS), expensive to participate in (everyone needs to spend many precious hours keeping records, filling out 1040 forms, etc), and far more prone to fraud (like any complex system) and political grandstanding.

    So, really, the honest man takes a step back and says: this is hopeless. Maybe in an ideal world, with a species way smarter and honest than H. sapiens, we could effectively and efficiently evaluate each of 150 million workers, find out those most able to help out others, and those most in need of help from others, and pipeline the resources of the former to the coffers of the latter. But not in this world.

    And that, you see, says you should explicitly abandon any hope of adjusting the welfare of individuals, except in a few very clear-cut cases, through your tax and government benefit code. It’s just not practically possible, however theoretically ideal it may sound.

    What would we do then? Well, for starters, we’d whack everybody for some easy-to-predict, pretty evenly spread, pretty modest contribution to government. Like, take the budget, divide by the number of adults eligible to vote, and send everybody a bill. This is your share. If that share is, on average, too high to pay — then government is too big and too luxurious for us to afford. (And, indeed, I don’t see how, unless you think government should be in the business of defining everyone’s wealth, a government that hoovers up one quarter of the entire national income is not a fantastically over-large and over-luxurious government.)

    Secondly, we’d pick out a few clear cases where some degree of public charity is justified. Guy born with no arms or legs, parents are both killed in a car crash, no other relatives. OK, we’ll send him a maintenance check every month. Clear case. But such cases are, by definition, rare, and therefore the expense is minor. It’s only when you start declaring huge swathes of the able-bodied adult population — 40% or more according to Team Obama!! — as “needy” of public charity that things start to get weird and hard to justify — and expensive.

    Hope this helps. I’ve deliberately chosen a line of argument that is not along the libertarian/Reagan lines of “whose money is it anyway?” because I don’t think you’d be sympathetic. The line of argument I’ve chosen is the F. A. Hayek line, a line sympathetic to the goals of the socialist, but (regretfully) very skeptical of the means by which he proposes to reach those goals.

25. Tom, you wrote:

    So Bill, which is it? Do you make ~$80K a year in which a 3% tax rate increase above $250K would have no impact on the amount of tax you would pay or do you make $330K a year in which case, yes you would get hit with $200 more a month? If the latter, yeah, maybe you could get upset but I think this was the same tax rate as under Clinton so lets not go overboard.

    As I understand it, Obama has a combination of tax increases and tax credits which may or may not apply to Bill. Further, there is the alternate minimum tax to screw the calculation up. I simply do not believe these claims at this time. Same goes for McCain.

26. I don’t care who you are, or how much you make, the fact is that a progressive tax system has always been a illuminati socialist agenda to “spread the wealth.” The fact is if we wanted to truly have a “Fair” tax system we would be looking at more a consumption tax (I’m not say the “Fair Tax” from Bortz, but something similiar). Think about it, the larger the ticket item, the more tax revenue generated. Thus you would have a rich person who might purchase a expensive car at 100K paying 20K in taxes vs. a person paying for a 10K car paying 2K in taxes. (example only) This would remove the class warfare that we constantly get pepper by the media and politicians.

27. Well, and not only that, Dr. D, but keep in mind the old aphorism: tax what you want less of

    Does it make sense, in a capitalist economy, to supertax (i.e. discourage) advancing your skills, so that you’re worth a higher wage? Doesn’t that sound monumentally stupid?

    In all other areas, we agree to tax stuff we want less of (burning coal, generating pollution, smoking cigarettes) and avoid taxing what we want more of (solar power, home ownership). Why do we not extend the logic to the base of the tax system? Why tax production (income) and let consumption go tax-free?

    If you tax consumption, you will encourage work, income, and savings, all of which will be tax-free. You’ll really discourage spending beyond your means, because that’ll be the fastest way to poverty, and you’ll really encourage raising your income level as fast as possible by thifty living and saving up.

28. Interesting clip on McCain’s views of spreading the wealth.

    http://www.youtube.com/watch?v=c3AvZqYC4mw

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