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The Democratic Strategist

Political Strategy for a Permanent Democratic Majority

“Spreading the Wealth Around”

Aside from the desire to create an imaginary avatar of the White Working Class Voter threatened by Barack Obama’s tax plan, there’s another big reason for the Joe the Plumber obsession among Republicans right now. Conservative gabbers are convinced that Obama’s “spread the wealth around” remark in his original encounter with Samuel J. Wurzelbacher was politically disastrous evidence that he wants to use tax rates to engineer a socialist “redistribution” of income.
Last week Hilzoy usefully went through the Obama/Joe the Imposter exchange and showed convincingly that Obama was talking about the macroeconomic benefits of more broadly distributed wealth, not advocating redistribution-via-the-tax-code. In terms of tax policy, I think it’s abundantly clear that Obama was challenging the whole conservative premise that wealth and jobs are created strictly by investors and employers, whose marginal tax rates must be kept as low as possible, so that those middle-and-lower income freeloaders may continue to passively benefit from their munificence. This does indeed represent a sharp dividing line between progressive and conservative economic philosophies, since progressives do tend to believe that the skills and work–and for that matter, the buying power–of non-capital-holders are a very big deal for the economy. And that’s the actual difference between the Obama and McCain approaches to tax policy, with Obama wanting to make income tax rates more progressive, while McCain–like all those conservative “flat tax” or “fair tax” advocates–wanting to make them less progressive.
If a majority of Americans agreed with conservatives on this fundamental issue, they would surely agree that taxes are high enough, and perhaps too high, for upper-income Americans and for corporations–you know, for the people who create all the jobs and wealth.
But if you check out the Gallup site, the most abundant source of polling on the broad outlines of tax policy, it becomes clear that the McCain-Palin campaign is really barking up the wrong tree.
As of April of this year–long before the Wall Street scandal roused particularly intense populist feelings–63% of respondents told Gallup that “upper-income people” paid too little in taxes. 9% said such people paid too much in taxes. While the term “upper-income” wasn’t defined in the poll, Obama’s definition–the top 5% of earners–couldn’t be too far off the mark. And for the record, the “too little” figure was actually a bit higher back in the Clinton years, when the top rate was very similar to where Obama would try to put it.
Another common conservative talking point on taxes, echoed by John McCain in the final presidential debate, was that corporate taxes in the United States are too high. According to Gallup in the same April 2008 poll, 6% of Americans think corporations pay too much in taxes, while 73% think they pay too little.
But let’s take this to another level. Suppose Republicans can convince people that Obama really does want to pursue a Robin Hood tax policy. Would that represent a political death sentence for the Democrat?
Here’s another question posed by Gallup: Do you think our government should or should not redistribute wealth by heavy taxes on the rich? In April of 2008, 51% of Americans answered that question “yes,” while 43% said “no.” Those who think of the New Deal Era as the high tide of American “socialism” might want to note that Roper asked the identical question in 1939; 35% said “yes” while 54% said “no.”
So the bottom line is that under the most abrasive (and inaccurate) characterization of what Obama meant by “spreading the wealth around,” he would still be reflecting a majority sentiment. Once again, the McCain-Palin campaign probably ought to be talking about something else.

4 comments on ““Spreading the Wealth Around”

  1. Keith Roberts on

    I have not yet seen anyone refute the Republican claim that the tax system, as Obama would have it, transfers wealth from the rich to everyone else. The Wall St. Journal regularly claims that the top 5% of income earners pay 68% of the taxes. Of course, I doubt they include payroll taxes in this calculation! But we need a credible economist to analyze the data and tell the actual truth. That is, after all, discoverable since we are dealing here with numbers.

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  2. gaylord on

    I am not an economist but my observations tell me that most small business owners are not the only suppliers of needed services or goods i.e. food, shelter, clothing. They need customers to choose them because of their individual characteristics. If their potential customers are heavily taxed or without jobs they will buy goods from the cheapest supplier, i.e. Wal-Mart, manufactured homes, etc. So even if you potentially might make $250,000 and may be taxed a little higher under Obama, wouldn’t it be better to have customers and stay in business rather than have no customers and go out of business?

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  3. PrahaPartizan on

    “…I think it’s abundantly clear that Obama was challenging the whole conservative premise that wealth and jobs are created strictly by investors and employers, whose marginal tax rates must be kept as low as possible, so that those middle-and-lower income freeloaders may continue to passively benefit from their munificence. This does indeed represent a sharp dividing line between progressive and conservative economic philosophies, since progressives do tend to believe that the skills and work–and for that matter, the buying power–of non-capital-holders are a very big deal for the economy…”
    This Republican-crafted meme that investors “create” jobs has killed the virtuous cycle which enabled investors to actually make money. Demand drives a capitalist economy, not investment. Without demand, no one will create a product or service for sale. Without growing demand, no one will put additional capital at risk of return. Republican policies are shrinking demand because of their assault on the middle and working class. Further, their own policies are beginning to put at risk their own base’s economic well-being. Of course, Keynes and Roosevelt could have told them that.
    No investor will put capital at risk without some idea of what demand will be for their product or service. To believe otherwise is to stake all on the spin of the roulette wheel or roll of the dice. Indeed, it means that Republicans believe only in the casino economy – not a true productive, functioning economy. Instead of prudent, sober fiscal conservatives, the modern Republicans have become wild-eyed gamblers waiting for the next big score. I have yet to understand why they are more interested in vengeance than they are in even improving their own fortunes. They differ not at all from the National Party in South Africa who punished themselves by implementing their apartheid policies, thereby denying their own country the potential of increased demand from the indigenous population and increased productivity by training them. Can their self-loathing be that great?

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  4. links on

    Well, those Gallup poll numbers are one thing, but do not underestimate the Republican attack machine’s ability to make this debate about tax policy a fear campaign about how Obama will take money from hard working Americans and give it to the dangerous, free loading “other.” McCain’s probably too far behind for it to do him any good, but check out what is happening to Shaheen in New Hampshire, where she has been hit hard on taxes. Shaheen has the burden of having been Governor before and actually supporting a property tax increase (and maybe a state sales tax also), but the point is that the economic crisis won’t always work to Democrats favor when the other side can spin it and make the tax question about who is going to cost the white working class voter more money. BTW, what’s wrong with a little socialist redistribution? I can live with inflation and higher unemployment if it means that there will be a real social saftety net to catch me if I fall.

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