On November 4, 2008, John McCain was faced with the news that he would likely never be president. Many books and blogs will be written about the tactics, the issues, the strategies, and the policy attacks by both sides that carried Barack Obama to the White House. Many will not remain real issues over the next four to eight years, like the ridiculous notions regarding Obama’s patriotism, and his “paling around” with terrorists. Others, however, will survive the campaign. They will be relevant, controversial, and salient, because they go to core issues that are not yet resolved in the American populace. One of these will undoubtedly be the hard-fought battle over the future tax policy in the United States, and the charges of “socialism” will be heard long after the political signs and banners of 2008 rot away in the dustbin.
The debate over tax policy is something that conservatives have clung to as one their aces in the hole for well over three decades. Those on the right have made a career out of shouting that if they do not get elected, success will be punished and everyone’s taxes will go up (especially for those who cannot afford it). They find votes in scare tactics designed to wean away those who deeply care about government intrusion- financial intrusion. These constituencies truly believe that the government is already taking too much money and “redistributing” it to those that did not work for it. People who earn more are seen as working harder, deserving more, and victims of leftist politicians who want to destroy capitalism as we know it.
Ethically, it is admittedly difficult to imagine why some people should be taxed more than others, despite their wealth. The greatest philosophers in the world cannot agree on a formula for how we judge what is ethical- how can politicians voice it to millions of screaming stalwarts? The problem with this mindset is that too often in this country, the wealthy in the U.S. are not taxed more than the less wealthy, and the politicians are lying to their constituents about the unfair tax burden placed on them. Warren Buffett made a famous $1,000,000 bet this election cycle that someone could not show him how his secretary paid a smaller share of taxes (rate-wise) than he did. Warren Buffett has not paid out this million dollars, and he probably has not paid taxes on it either. Companies and individuals who know how to get credits, deductions and depreciations typically pay very little of their income to the IRS. Should it be this way? Probably. Expenses happen, and businesses, large and small should have mechanisms for dealing with overhead so they can grow and become rich. It’s just that the poor and middle class don’t have as many of them, and they don’t have them on the same scale.
Getting away from ethical considerations, it is hard to conceive of this notion that Obama is furthering socialism. One of the tenants of his plan is to bring back Clinton’s tax rate of 39% to the wealthiest, up from 36%. Realize this bizarre overreaction. The wealthy are still (theoretically) being taxed over a third of their income, and this is perfectly fine and good in the wonderful world of free market capitalism. Raise it three percent, and unabashed socialism is rearing its head, gnashing productivity and growth in its government fangs, destroying any reason to try to earn money in this country. Other arguments are equally as silly. The earned income tax credit, given to those who pay no or minimal income tax, contains a sum from the government given to the most poor and destitute in the U.S. Who signed this blatantly socialist idea into law? Reagan.
Does anyone out there know a millionaire who is going to give up trying to earn more money, and give up success, because his tax rate went up three percent? Will you give me his/her address, so I can ask them what they will do now with the rest of their lives, and with their sudden loss of drive and ambition that, up until that point, they carried with them all their days? No one is going to work more or less hard because politicians in Washington play silly games all day with the U.S. Tax Code. They will get angry though when politicians try to scare them with false promises of money they cannot afford to lose, and this is what we may have to deal with for the next four years.
The battle over “socialism” is no less than a debate over the philosophical and ethical mindset of this country. Who are we really? A nation of individuals, a nation of Americans together, or can we be both at the same time? It is complicated, heated, and it will continue. A hundred dollars a week to feed a family costs the same whether you created Microsoft or whether you are living out of a car. It just doesn’t make macroeconomic sense to beat the poor and middle class down with the same rate when the cost of a dollar remains the same. How about this plan: if politicians want a flat tax, then the poor and middle class should get a discount when they purchase goods and services.