14 October 2008

Redistribution and Envy not Fairness

Where to begin? I'll try with this, Barack Obama discussing his tax plan with a plumber:

"Your new tax plan is going to tax me more, isn't it?" the plumber asked,
complaining that he was being taxed "more and more for fulfilling the American
"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 for success too," Obama responded. "My attitude is that if the economy's good for folks from the bottom up, it's gonna be good for everybody ... I think when you spread the wealth around, it's good for everybody."

Let's follow that up with this colloquy with Charles Gibson:

GIBSON: All right. You have, however, said you would favor an increase in the
capital gains tax. As a matter of fact, you said on CNBC, and I quote, "I
certainly would not go above what existed under Bill Clinton," which was 28
percent. It's now 15 percent. That's almost a doubling, if you went to 28
percent. But actually, Bill Clinton, in 1997, signed legislation that
dropped the capital gains tax to 20 percent.
OBAMA: Right.
GIBSON: And George Bush has taken it down to 15 percent.
OBAMA: Right.
GIBSON: And in each instance, when the rate dropped, revenues from the tax increased; the government took in more money. And in the 1980s, when the tax was
increased to 28 percent, the revenues went down.
So why raise it at all, especially given the fact that 100 million people in this country own stock and would be affected?
OBAMA: Well, Charlie, what I've said is that I would look at raising the capital gains tax for purposes of fairness.

Aside: let's give Charles Gibson a big round of applause for understanding part of the deleterious effect of tax increases and his historic accuracy.

Then there's this description of Obama's tax plan by the Wall Street Journal. His plan will, according to him, cut taxes on 95% of "working families," (n.b.--he does not say "taxpayers"). He will raise taxes on the other 5%, no doubt in the name of fairness (above) and patriotism* (here, I know I've already posted this but something this asinine needs to be aired fully). Let's put aside the "fairness" of 95% of the populace penalizing the other 5% for being, what? good at whet they do? Or just for the sin of being rich or wealthy. They didn't earn it, so it's "fair" to take it from them, eh?

His plan moves pretty far away from the argument of whether a progressive tax system is more "fair" than a flat tax system. The majority of the "working families" that will receive the "tax cut" don't pay income tax. As the Journal piece has it:

Here's the political catch. All but the clean car credit would be "refundable,"
which is Washington-speak for the fact that you can receive these
checks even if you have no income-tax liability. In other words, they are an
income transfer --a federal check -- from taxpayers to nontaxpayers.

Once upon a time we called this "welfare," or in George McGovern's 1972 campaign
a "Demogrant." Mr. Obama's genius is to call it a tax cut.
So let's give Obama credit for diligent lexicography, but I still can't seem to find where it is the responsibility of the federal government to play the role of Robin Hood. Nor where the people ever gave the government the authority to do this stuff.

Let's say, for the sake of argument, that it is a concern of the federal government to provide some welfare services for people (it isn't, but I grant it here for giggles), it is now the explicit policy of would-be President Obama to forgo mere welfare services (or add onto them) by just giving people cash for lack of productivity.

And the fact that Obama acknowledges that the Capital Gains tax increase will decrease federal revenues when he is planning to give more federal money away to people who didn't earn it that was taken from people who did.

This is offensive on just so many different levels.

First of all, increasing taxes on the most productive members of society (and believe me, it pains me to know that Paris Hilton, Brittney Spears and Bill O'Reilly fit into this category) necessarily leads to less productivity. This is to be avoided in the best of times. It is spectacularly dense when the economy is in the shitter.

This isn't some supply-side theory, or my desire to see Bill O'Reilly have more money. It is economic fact. And it is no right of mine to pretend to know when someone else has "too much money" (or even enough money) or to imagine that taking some of your money, under the authority of the government's police power, to give to them increases the amount of "fairness" in the world one bit.

Which brings us to giving people money for not earning a lot of money. This, too, will result in less productivity. It is so self-evident I really can't see how this entire proposal is taken seriously.

If the only effect of the tax hike would mean fewer Spears' albums, no Factor and less of whatever it is Paris actually does, then I'd be all for it. But this group includes people that are really fabulously productive and smart and like to invest their money so as to earn more. Sometimes it does; sometimes it doesn't, but all that investing leads to production and growth.

The only thing that will grow under Obama's proposal is the government, and government doesn't produce anything. Except garbage like this.

One would hope that, if elected, a grown-up with a lick of sense will take charge of Obama's economic policies. But if you hope in one hand and crap in the other, guess which one fills up first?
I think that's what we're going to be getting come January.

Perhaps if this is who we continue to appoint to elected office, we shouldn't be surprised at the results. This may be the best that they can give. As with a slow child, we should be encouraged by their effort.

I don't even know why I get surprised anymore. I look forward to next month when I can put away all of the italics and bolds.

Go Phillies.

*"Towards the government I feel no scruples and would dodge paying the tax if I could. Yet I would give my life readily enough for England, if I thought it necessary. No one is patriotc about taxes."
--George Orwell, War Time Diary, 09 August 1940


Claudio said...


SeanEBoy said...

The point was Obama's view of the role of taxation. Specifically to use the tax revenue of some to give directly to others, not to pay for government services, in the interest of "fairness." Whether his tax increases affect the plumber or me or you isn't the point.
And whether the man is licensed or not is irrelevant, also, to the larger point. But while wer're at it: state licensing is nothing more than a way for an interest group to restrain trade in a particular industry while creating a new revenue stream for the state (licensing/continuing education and renewal fees). Does the fact that this guy doesn't have a state license to practice plumbing make him less of a plumber? Does the state of Ohio or any of its bureaucrats possess any more information than the rest of the marketplace as to this man's competency? Or what it takes to make a better plumber?
Obama wants to take money from a class of people and give it to another class of people in the name of fairness. And because the people of the first class are rich and few in number this is OK. This is fair? Again, outside of being successful, productive, diligent or maybe just plain lucky why or how is it fair to shift the tax burden on a smaller and smaller class? And also, if Obama wants actually to fund many of his other programs, other taxes are most certainly going to have to be increased. When would it begin to bother you?

The type and formula of most schemes of philan-thropy or humanitarianism is this: A and B put their heads together to decide what C shall be made to do for D. The radical vice of all these schemes, from a sociological point of view, is that C is not allowed a voice in the matter, and his position, character, and interests, as well as the ultimate effects on society through C's interests, are entirely overlooked. I call C the Forgotten Man. For once let us look him up and consider his case, for the characteristic of all social doctors is that they fix their minds on some man or group of men whose case appeals to the sympathies and the imagination, and they plan remedies addressed to the particular trouble; they do not understand that all the parts of society hold together and that forces which are set in action act and react throughout the whole organism until an equilibrium is produced by a readjustment of all interests and rights. They therefore ignore entirely the source from which they must draw all the energy which they employ in their remedies, and they ignore all the effects on other members of society than the ones they have in view. They are always under the dominion of the superstition of government, and forgetting that a government produces nothing at all, they leave out of sight the first fact to be remembered in all social discussion — that the state cannot get a cent for any man without taking it from some other man, and this latter must be a man who has produced and saved it. This latter is the Forgotten Man.

--William Graham Sumner