We've Been Practicing Various Forms of Socialism for the Better Part of the Past Century; and We've Been "Spreading the Wealth" Too.
When "Joe the Plumber" asked Obama about his tax plan, the candidate gave a lengthy answer in which he said, in part, "I think when you spread the wealth around, it's good for everybody." And with three key words, the fire and fear were immediately stoked. "Spread the wealth" instantly became a national catch phrase.
Suddenly, Joe, the most unusual arbiter for such a national debate, became the spokesman for the anti-socialism cause. But, in short order, we found out that Joe really wasn't a suitable candidate to be at the center of such a deliberation. Who could have figured?
For starters, the man has never been a licensed plumber, a plumber's apprentice, or a member of the plumber's union. Secondly, he doesn't earn enough to be adversely affected by Obama's proposed tax increase on the wealthy; in fact, he'd be a beneficiary of it. Thirdly, he was once on welfare -- the very essence of socialism. And lastly, perhaps most incredibly, Joe (whose actual name is Samuel) actually owes back taxes.
So, he was complaining about future taxes he won't have to pay, about past taxes he hasn't yet paid, and about a system from which he has personally benefitted. Unbelievable, isn't it? Apparently, Joe hates taxes even more than the rest of us.
To be fair, a "plumber" who isn't even an expert in plumbing can hardly be expected to be an expert in economic theory. However, this reality -- along with the fact that Joe doesn't actually earn enough to buy his boss' company, as he claimed -- was lost on millions of Americans and did little to quell their fears.
To be fair, a "plumber" who isn't even an expert in plumbing can hardly be expected to be an expert in economic theory. However, this reality -- along with the fact that Joe doesn't actually earn enough to buy his boss' company, as he claimed -- was lost on millions of Americans and did little to quell their fears.
Yes, Joe, and everything about him, turned out to be a fraud. But despite his glorious ignorance, Joe initiated a national discussion about the system he undoubtedly benefits from, even as he rails against it. He and countless others like him -- lower class, working class and middle class citizens -- have been served by the most altruistic aspects of our American system and its many forms of collectivism.
But that didn’t stop John McCain from using Joe as an example during campaign stops and proclaiming, “America didn’t become the greatest nation on earth by spreading the wealth.” Regardless of whether, or how, America became “the greatest country on earth,” spreading the wealth has been the essence of the US tax code, and part of the American way, for much longer than many people realize, or care to admit. The truth is, the progressive tax code has been one of the best examples of socialism in America for nearly a century. In fact, it was the precursor to the collectivism of the New Deal. More on this in a moment.
Joe isn't an isolated or unusual case; just about all of us have benefitted, or will benefit, from some form of socialism. "Citizen Joe" and the McCain campaign raised an important opportunity for America to discuss what socialism really is, and for us to recognize the myriad examples of what might be termed "socialism" that most Americans presently live with and benefit from, often unknowingly.
When the greater whole contribute to a cause, a program, or an endeavor that only some of us directly use or benefit from, that can be viewed as socialism. When a societal safety net is created in which everyone's money, or tax dollars, is pooled for the greater good, that too is a form of socialism. Some examples are unemployment insurance, worker's compensation, disability insurance, health insurance, bank deposit insurance, public schools, state colleges, Social Security and Medicare. Whether it is employment, banking, healthcare or education, socialized programs are designed to work from the bottom up and help everyone. The majority of the citizenry -- the poor, the working-class, and the middle-class -- benefit greatly. There are some programs, such as farm subsidies and other forms of corporate welfare, that work from the top down and benefit only the wealthy minority.
The Merriam-Webster dictionary defines socialism as such:
1: any of various economic and political theories advocating collective or governmental ownership and administration of the means of production and distribution of goods
2 a: a system of society or group living in which there is no private property b: a system or condition of society in which the means of production are owned and controlled by the state
Another dictionary definition says the following:
A political and economic theory of social organization that advocates that the means of production, distribution, and exchange should be owned or regulated by the community as a whole.
• in Marxist theory, a transitional social state between the overthrow of capitalism and the realization of communism.
The term “socialism” has been used to describe positions as far apart as anarchism, Soviet state communism, and social democracy; however, it necessarily implies an opposition to the untrammeled workings of the economic market. The socialist parties that have arisen in most European countries from the late 19th century have generally tended toward social democracy.
There certainly isn't any threat of communism suddenly breaking out in America. Nor is there any great threat from anarchism, which would require way too much effort for most of us. There is plenty of private property ownership, although the government may be forced to buy millions of foreclosed and abandoned homes. But we're not screaming too loudly about that, much less protesting. The above definitions, or examples, of socialism simply don't apply or warrant our concern. And, despite its recent actions, the government doesn't own all our various industries or control production -- at least not yet.
However, the government's recent nationalization of AIG, the investment banks, and potentially the American auto industry -- amounting to nearly $1 trillion -- is the most glaring example of socialism in America today. But the whopper is the federal government's nationalization of Fannie Mae and Freddie Mac, the country’s two gigantic—and heretofore private—mortgage holders. It all amounts to a $5.2 trillion takeover. That means that Uncle Sam is now the owner of almost half of all mortgages in the nation. Yes, our government owns one out of two mortgaged homes in the country—and all the extra debt too.
The US has railed against Vladmir Putin and Hugo Chavez for doing exactly the same kinds of things—seizing and then nationalizing private companies. And, to my dismay, the same moves by our government were actually supported by the Republicans. The bailouts of these massive corporations are worthy of citizen protest; but Americans are asleep. Our citizenry has been soothed and placated through rampant consumption and consumerism. We are fat, comfortable, and relatively happy in our ignorance. So, we don't complain very loudly, and we certainly don't protest or picket much -- if at all. We're not like the citizens of South America, Europe and parts of Asia, where protest is a way of life.
However, the ignorant fear-mongering that began when "Citizen Joe" asked candidate Obama about income taxes should have been met head-on and squelched. But Sen. McCain and Gov. Palin quickly piled on, joyfully stoking the flames and the fears of their constituency, and away we went into the land of falsehoods, lies and delusion.
A cursory review of the history of the top tax rates is in order. And here we can see that "spreading the wealth" has been the rule in America for nearly a century.
A cursory review of the history of the top tax rates is in order. And here we can see that "spreading the wealth" has been the rule in America for nearly a century.
Since the ratification of the Sixteenth Amendment in 1913, the US has always had a progressive income tax code, in which wealthier Americans have paid a higher percentage of income tax, and poorer Americans have paid a lower percentage. By it's very nature, this system "spreads the wealth."
The top rate has varied over the decades, from an initial low of 7% from 1913-1915, to as high as 94% during WWII.
Here's a look at the top rates of the US Tax Code by decade: 73% in the 1920s; 79% in the 1930s; 94% in the 1940s; 92% in the 1950s; 91% in the 1960s; 71% in the 1970s; 50% in the 1980s; 39.6% in the 1990s; and 39.1% in this decade.
The top rate has varied over the decades, from an initial low of 7% from 1913-1915, to as high as 94% during WWII.
Here's a look at the top rates of the US Tax Code by decade: 73% in the 1920s; 79% in the 1930s; 94% in the 1940s; 92% in the 1950s; 91% in the 1960s; 71% in the 1970s; 50% in the 1980s; 39.6% in the 1990s; and 39.1% in this decade.
As you can see, the top rate has been in steady decline since the 1960s.
At present, the top rate is 35%, established in the Bush cuts of 2003. However, it is worth noting that the top tax rate was 91% under Republican Dwight Eisenhower; 77% under Republican Richard Nixon; and 50% under Republican Ronald Reagan.
At present, the top rate is 35%, established in the Bush cuts of 2003. However, it is worth noting that the top tax rate was 91% under Republican Dwight Eisenhower; 77% under Republican Richard Nixon; and 50% under Republican Ronald Reagan.
In fact the top rate in Reagan's term didn't drop to 38.5% until his second to last year in office, or year 7 of an 8-year term. The relatively relaxed rates of the 1990s and this decade, ranging from lows of 31%-35%, have not been seen in well over a half-century. In fact, the last time the top rate was lower than now was the period from 1925-1931, when it ranged from 24%-25%. And Obama's tax plan would keep tax rates at historically low levels, returning the top rate to its Clinton-era level of 38.6%.
There are many points to be gleaned here: 1.) Tax rates have always been progressive. 2.) Contrary to popular belief, taxes haven't always been low, or lower, under Republican Administrations and, in fact, have been remarkably high. 3.) Taxes have been raised and lowered through the years, according to economic conditions and times or war. 4.) Over the last 20 years, the top tier has been historically low, falling to 31% during the George H.W. Bush Administration. 5.) The Obama plan would actually cut taxes for 95% of American taxpayers, while returning the tax rate of the wealthiest Americans to its 2002 level, still historically low.
However, while the percentage paid at the top has dropped, some Americans are actually paying zero percent. In 2006, the Tax Foundation estimated that 40% of Americans were paying no federal income tax at all due to deductions, credits and evasion.
Most of these people are the nation's lower, or lowest, income earners. They would tend to be unskilled workers, high school dropouts, and those with only a high school education. Many of them are rural and "Red State" voters. Yet, oddly enough, these have been some of the loudest voices complaining about Barack Obama's proposal to raise the top tax bracket back to the 38.6% level of the Clinton years, from its current 35%.
The stunning truth is that the bottom 50% of income earners pay just 3.5% of federal income taxes. Yet there is a lot of protest coming from this group. What are these people complaining about? How much lower should their contribution be? How much less than zero can 40% of our fellow citizens pay?
These people have been whipped up into a frenzy with the mistaken belief that other people are getting what is rightfully theirs. But it's the other way around; millions of these Americans benefit from the various social programs directed toward lower-income people. This is a clear example of wealth redistribution. Yet many of these same people vote Republican and complain about taxes. It amounts to nothing more than aspirational voting. It's a logic that says, Someday I might be rich, and then I won't want to pay those higher taxes. Best of luck. We should all be so fortunate to have such concerns.
Yet, these apprehensions are simply absurd. If you're not making over $250K annually, you have no need to worry about a higher tax burden being imposed on you, much less on the nation's highest income earners. But if the wealthiest Americans are inclined to howl in protest, at least their anger is justified.
The reality of who is paying the bulk of income taxes, and in what amounts, is quite revealing and informative. A 2006 report from the congressional Joint Economic Committee exposed who actually pays the vast majority of the taxes in the United States:
- The top 50% of income earners pay a whopping 96.5% of federal income taxes, while the lower 50% pay just 3.5%
- The top 25% pay 83.88% of federal income taxes
- The top 10% pay 65.8% (these are people with an adjusted cross income of about $95,000 or higher)
- The top 5% pay 54.4%
- The top 1% pay 34.3% (these are people with an adjusted gross income of about $300,000 or higher)
And where do these rich people live? As you'll notice, it's not in the conservative strongholds where McCain and Palin received their greatest support.
The 10 wealthiest states, in order:
The 10 poorest states, in order:
Mississippi (Red), West Virginia (Red), Arkansas (Red), Oklahoma (Red), Alabama (Red), Louisiana (Red), Kentucky (Red), Tennessee (Red), Montana.(Red)
The report stated, "Rich households in America have been leaving both middle and poorer income groups behind. This has happened in many countries, but nowhere has this trend been so stark as in the United States."
So the wealth has indeed been getting spread around, and it's been going in one direction -- up.
That reality may be worthy of the ire of the lower and middle classes, but not the tax rates of the wealthy. It's a classic false flag, and nothing but a distraction from the real issues.
Maryland (Blue), New Jersey (Blue), Connecticut (Blue), Hawaii (Blue), Massachusetts (Blue), New Hampshire (Blue), Alaska (Red), California (Blue), Virginia (Blue), Minnesota (Blue)
As you can see, nine of the 10 wealthiest states are "blue" states. The one that isn't, Alaska, levies a tax on the oil and gas industry that is then distributed to state residents in the form of dividend checks. Since 1982, Alaska has given more than $13 billion in oil and gas revenue dividends to its citizens. This year, nearly every Alaskan will get $3,269 -- part of a record payout from the state’s oil savings account. The Juneau Empire referred to it as "sharing the wealth brought by high oil prices."
This collectivism is simply another form of socialism. Yet Sarah Palin and the citizens of Alaska don't seem to mind. Gov. Palin talks out of both sides of her mouth; she favors socialism in Alaska, but rebuked it like it was satanism while on the campaign trail. When the poorer majority (meaning the masses) benefits in any way from the wealthier minority (individuals, businesses, or corporations) typically that majority seem perfectly happy with the result.
The 10 poorest states, in order:
Mississippi (Red), West Virginia (Red), Arkansas (Red), Oklahoma (Red), Alabama (Red), Louisiana (Red), Kentucky (Red), Tennessee (Red), Montana.(Red)
Perhaps you noticed that these are all "red" states. The residents of these states were the people that McCain and Palin were primarily speaking to, courting, and deceiving. They managed to get all these people riled up about a tax bracket that they're not in, about taxes most of them don't pay, and about a system they all utilize and benefit from. Ignorance can be blinding, rigid, and unyielding.
Perhaps what these folks, and the vast majority of America, should really be fired up about is our growing wealth inequality.
According to an analysis of new wage data by Pulitzer Prize Winner David Cay Johnston, 33% of US workers make less than $15,000 annually, and 76% make less than $50,000 annually. Johnston says that roughly half of American workers make less than $500 per week. This strongly supports the contention that the middle class is vanishing.
But unfortunately, wage depreciation never became a big enough campaign issue. Too many of the affected people were distracted with the bogus notion that their "wealth" is being distributed to others. On the face of it, this very notion is absurd; what wealth do working-class and middle-class Americans really have? None, would seem a safe bet.
According to Federal Reserve Board data, as of 2004, the top 20% of Americans controlled 84.7% of our nation's wealth; the top 10% own over 71%; and the wealthiest 1% of Americans own 34.3% of our nation's wealth. This means that the bottom 80% (wage and salary workers) are left with just 16% of the wealth. It's a trend that been progressing for the last 25 years.
According to Edward Wolff, a professor of economics at New York University, the top 5 percent own more than half of all wealth. Or, to put it another way, the top 5 percent have more wealth than the remaining 95 percent of the population, collectively. And if you didn't know this already, perhaps you sensed it. This ugly reality is starting to to receive some publicity and people are taking notice.
The 30-nation Organization for Economic Cooperation and Development (OECD) just released a new report on income distribution and poverty. The report highlights global gaps between rich and poor. Guess what great industrialized nation had the fourth highest income inequality, followed by Mexico, Turkey and Portugal? Disturbingly, it was the US.
The report stated, "Rich households in America have been leaving both middle and poorer income groups behind. This has happened in many countries, but nowhere has this trend been so stark as in the United States."
So the wealth has indeed been getting spread around, and it's been going in one direction -- up.
That reality may be worthy of the ire of the lower and middle classes, but not the tax rates of the wealthy. It's a classic false flag, and nothing but a distraction from the real issues.
In order for our nation to have an honest, rational and objective discussion about "spreading the wealth" and "socialism," we must first understand what these things are. We need to be informed with the facts. We must first asses how these things are affecting our lives. We must consider how the concentration of wealth and income are balanced against our progressive tax code.
Only then can we have a reasoned debate about who should pay more taxes, who should pay less, who benefits from the current tax and social systems, and how they benefit. That discussion should also include what we can do about wage depreciation and the continually worsening problem of income and wealth inequality in America.
We can't expect everyone to agree, but if we at least start with the facts and avoid hyperbole, baiting, dishonesty and outright lies, that would be a great place to start.
Copyright © 2008 Sean M. Kennedy. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed without the author’s consent.
Sean is an L.A-based freelance writer. He has written on a wide variety of news and current events topics including politics and social issues, health and wellness, money, business and sports.
His work has been featured in various magazines, newspapers, and on-line sites.
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Comments: 7
But -- as we've seen with these epic and historic government bailouts of banks, financial institutions, mortgage lenders, the world's biggest insurance company, and the American auto industry -- socialism can take from the masses (the poor, the underclass, lower class, and middle class -- i.e., the masses) and give to the rich.
What we have suddenly instituted is "state capitalism" that benefits the wealthy and the powerful. Socialism, of all things, has quite oddly been embraced by those on the political and economic right.