Wednesday, October 22, 2008

"Socialism" Vs. Progressive Taxation.

In my earlier post about "Joe the Plumber", I wrote about how his elevation (by the McCain campaign and the Right Wing media) to the status of "middle class everyman" obscured the very real arguments being made about taxation in America. Apparently the majority of Americans are secretly seething about Obama's proposal to suspend the Bush tax cuts to the very wealthy. We are supposed to believe that 95% of America thinks that the richest 5% is overburdened by progressive taxation. Evidently no one realizes that we have reached the point where the interest on our national debt is approaching the amount we spend on our federal budget. How we are supposed to finance the government is increasingly an underexamined question.

We are in the midst of a financial crisis that is about to hit the American middle class with the force of a category 5 hurricane, and the GOP and its cronies have been trying to make the "socialist" brand stick to Barack Obama and his fiscal and domestic policy platform. I think that (once again) it's time to get our definitions straight. "Socialism" is "any of various economic and political theories advocating collective or governmental ownership and administration of the means of production and distribution of goods". Progressive taxation obviously doesn't fall within the parameters of the definition. But this is what the extreme Right is referring to when it talks about its opponent's "socialist" policies.

Republicans would have you believe that the core principal of Socialism is income redistribution- "Take from the haves to give to the have nots." Not only is this crudely simplistic, but it is a Cold War-based lie that's been repeated since Ronald Reagan's presidency. Perhaps that's why the GOP is running on an anti-intellectual and anti-academic platform- because careful analysis exposes their argument for what it is. The US has been traditionally referred to as a "Capitalist" country. It is therefore illuminating that the vast majority of American economists (81%) support progressive taxation (SOURCE) and Obama's policy positions (SOURCE). But why should you bother listening to the experts when you have "your own" strong opinions?

What does a study of history tell us? If you are dead-set in changing the definition of the word "socialism" to include progressive taxation, then you have to accept that the USA has been socialist since 1862, when the first progressive income tax was passed in this nation (SOURCE). It is therefore an AMERICAN VALUE that has carried us through the years and helped us become a superpower. If you are against this tax policy, the case can be made that you are ANTI-AMERICAN. Naturally a "free market" idealogue is going to attempt to fight this conclusion using any means necessary. But the reality is that their alternative is a fantasy- "free markets" have never existed anywhere except in theory. It's a grand "utopian" fairy tale that wealthy people (and sycophants) have used to put the masses to sleep.

You often hear the "free market" dictum that “wealth creates wealth”. It’s not that there’s no merit to this argument. That’s why I don’t necessarily support “socialism”. But on the other hand, entrenched wealth creates obstacles to competition and innovation. The ideas that make men wealthy eventually become outdated with the changes in the environment. Yet wealthy men often have little incentive to adapt to those changes, because they risk losing their competitive advantage. They are more motivated to protect their wealth artificially by working to maintain the status quo. They have the resources to set the conditions to attain that end. Progressive taxation works against that stagnation.

Thomas Jefferson said, “"The tree of liberty must be refreshed from time to time with the blood of patriots and tyrants." I’m not in favor of class warfare or anarchic revolution. I believe in incremental social change. By shifting the tax burden on to the wealthy, you free up the middle class to provide new ideas to adapt to a changing society (and to put their own money behind these ideas)- something that the entrenched wealth of the upper classes has proved itself incapable of. Entrenched wealth stifles innovation and competition the same way ruling classes have in so-called "socialist" nations. Progressive taxation doesn't "punish" achievement. That's a ridiculous notion. It fosters enhanced economic class mobility, which is crucially necessary in encouraging the adaptation necessary over the long run.

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24 Comments:

Anonymous Steve said...

I think a lot of people have a problem with Obama's so-called "tax cuts" for the millions of people who don't pay taxes to begin with. These people will be receiving checks in the mail. Call me crazy, but that's not a tax cut; that's welfare. Why not just keep that money in the coffers?

6:21 PM  
Blogger Merge Divide said...

I understand the resentment to a certain extent. The Obama campaign says that this is a refund of payroll taxes, not to exceed $500.

They should have called it a "stimulus package", and then most people would have been fine with it. It's certainly not welfare because that program doles out continuous monthly checks in excess of $500. By this time next year people from all over the political spectrum are going to be begging for help.

Let's say that 80 million people get a "tax refund" after paying no income tax- and they all get the maximum of $500. That's $40 Billion. If we look at it like their cut of the bailout bill, it doesn't seem so exorbitant anymore.

7:39 PM  
Blogger JusticeForNatalee said...

Merge Divide WHY do you lie?

This is what you left on my blog a while back. You are just like the rest of "THEM". Shame on you.
Tomorrow you will have another reason. FLIP FLOP FLIP FLOP. LOL

MERGE DIVIDE SAID ....
"What it comes down to is that John McCain is erratic and irresponsible. I don't want World War III, and I don't want to vote another big oil/military-industrial complex ticket into the White House. That's why I'm choosing Obama. It has nothing to do with socialism or social programs."

8:50 PM  
Blogger That dude Paul said...

Spin it brother, spin it. Shape it and make it "purdy" to look at.

At the core of the issue it's still giving money to people who didnt contribute to the income tax program. That sir is welfare whether it's a single occasion or re-occuring.

12:45 AM  
Blogger DaBlade said...

A rose by any other name would smell as sweet. Call it whatever you want, but it still smells like a decaying pile of aborted dead baby carcuses.

If confiscating a little more from the "wealthy" is a good idea, why not just take it all Merge? Even if you confiscated ALL of the money currently in the possession of the rich, every dime of it (you could only do this once), how much money would you have? But then, I don't want to repeat myself.

6:50 AM  
Blogger Merge Divide said...

justicefornatalee,

Where's the lie? I'm NOT voting for Obama because he supports "socialism", because HE DOESN'T support it, as I've clearly demonstrated in this post. For God's sake get your definition straight, woman. I suspect that I might get a marginally better deal on my taxes from McCain, but this just isn't the biggest issue to me.

The quote you included is a good partial summation of why I back Obama, and I stand by it.

8:00 AM  
Blogger Merge Divide said...

that dude paul,

That's just the thing. I've quoted the historical definition of "socialism". Can't get any less spin-worthy than that. Apparently your ideological spin coincides quite nicely with the following quote:

“If you tell a lie big enough and keep repeating it, people will eventually come to believe it. The lie can be maintained only for such time as the State can shield the people from the political, economic and/or military consequences of the lie. It thus becomes vitally important for the State to use all of its powers to repress dissent, for the truth is the mortal enemy of the lie, and thus by extension, the truth is the greatest enemy of the State.”

8:02 AM  
Blogger Merge Divide said...

dablade,

"If confiscating a little more from the "wealthy" is a good idea, why not just take it all Merge?"

That's what bothers me about the Far Right. There is never any appeal to subtlety, complexity, or nuance... it's always driven to such ludicrous extremes. This kind of rhetoric destroys any oppportunity for a meaningful dialog.

8:05 AM  
Anonymous Anonymous said...

I'm so sick of all the hypocrites falling back on the flip flop comments pointing fingers to their opppostion. a simple search will pull up numerous clips showing mccain is no different. from early 2000 until this campaign he can be heard speaking out against all the things he is now for; bush's tax cut, the war, etc. anyone see the clip over the weekend from 2006 mcain saying, there's nothing wrong with expecting the rich to pay a little more tax??? i did. i guess he just fell in love with joe the plumber recently... so just stop with the flip flop comments and open your eyes.

10:51 AM  
Anonymous john morris said...

You are right Merge, progressive taxation does not fall correctly within the definition of Socialism but does fall within the definition of "collectivism", or statism.

Here's a quiz. What form of collectivism advocates a pretense of private ownership with real control in the hands of the state? The answer is Fascism.

11:18 AM  
Anonymous John Morris said...

I leave it to the reader as what specific form of collectivism Obama's ideas most closely relate to.

Here is a quote from the Wikipedia entry on the economics of Fascism.

"Nevertheless, fascists did have a number of important political views that shaped many of their economic decisions. The first of these was the fundamental fascist opposition to both socialism and liberal capitalism. Fascists argued that the implementation of their ideas into the economic sphere would represent a "third way", and they favoured corporatism and class collaboration. They believed that the existence of inequality and separate social classes was beneficial (contrary to the views of socialists)[18], but they also argued that the state had a role in mediating relations between these classes (contrary to the views of liberal capitalists).[19]

Fascists claimed to provide a realistic economic alternative that was neither laissez-faire capitalism nor communism.[20] An inherent aspect of fascist economies was economic dirigisme[21], meaning an economy where the government exerts strong directive influence, and effectively controls production and allocation of resources.

In general, apart from the nationalizations of some industries, fascist economies were based on private property and private initiative, but these were contingent upon service to the state"

http://en.wikipedia.org/wiki/Economics_of_fascism

You can see the core concept is a state with almost unlimited power to "an economy where the government exerts strong directive influence, and effectively controls production and allocation of resources."

The recent avid support for the government bailout -- Fed money printing, government bank takeovers, Shadowy government endorsed " corporate shotgun weddings" and the like are characteristicaly fascist as are Obama's proposals for government "investments" in new energy technologies. Progressive taxation also fits within the fascist concept of the states right to control the allocation of resources.

Of course, for the record, John McCain's ideas fit in the same zone.

Another core aspect of Fascism is not just power in the hands of the state but power in the hands of the executive branch of government. Of course in a true Fascist society this means dictatorship.

12:40 PM  
Blogger ian said...

I speculate that the principle objection to the notion of progressive taxation (fallaciously extended to income redistribution and welfare statism) is the core "American" belief that by providing a person with a challenge-free lifestyle - access to basic necessities affordable within modest means - would create a huge class of unproductive, lazy, dependent shits. This belief implies that our country will be its greatest when each of us struggles aggressively to compete in the marketplace, with the dual motivations of limitless wealth in return for success, and devastation or prison in the case of failure.
This premise may have validity if the goal of a great country is the maximization of consumption and accumulation of wealth, and in a world with infinite resources and divine environmental stewardship.

The further notion that "wealth creates wealth" is overstated. Surely "wealth begets accumulation" is a more precise dictum, also pointing quietly to the inevitable failure of the free market to provide adequate distribution of resources.

I agree with you, Merge Divide, that the anti-scholarly, anti-intellectual position with which Americans have become increasingly comfortable is the product of a willingness to delude oneself into ignoring any collective and reliable understanding of truth. In America today, as it is in most religiously fundamental cultures, emphatic belief supercedes scientific inquiry. In some ways, this is consistent with the notion that we are best all left competing for ourselves and our families - a lonely, stand-on-your-own-two-feet, that's-what-you-say, get-government-off-our-backs, it's-mine-i-earned-it society where words have no meaning and truth is a personal matter.

So, I ask this: If wildly disparate division of wealth is necessary to liberty and the healthy progress of society, just how wealthy will the top, say, one percent need to be before the remaining 6 billion of us can all live decent lives?

1:25 PM  
Blogger Joe said...

First off the black background and white text hurts my eyes. The 90's wants their css back. hehe jk

This is like a game of semantics here. OK, it's not socialism. It's socialism lite. We fought a revolutionary war over comparatively similar taxes.

Moreover it is not a "red herring" as you commented on my blog when your "dear leader" makes a gaffe and exposes is economic long view - spreading the wealth.

Maybe I am wrong but you're even writing from the premise that Barack is not even a left-wing fringe liberal in a cute little moderate package. It's not arguable, He's a liberal.

So, give him 1 year and he'll tax the job creators in whatever prose you want. Give him 2 and he'll gut the intelligence services and the military like Bill did, give him 3 and he will side against our traditional allies (Joe the Biden gaffe), give him 4 and he'll want more because the rich are still getting richer and the poor are still getting poorer.

Jeez, it's the same every year.

Does anyone here own there a business of there own?

2:58 PM  
Blogger Joe said...

It's about job creation, I mean unless you want to work for me for free.

3:08 PM  
Blogger Merge Divide said...

anonymous,

"anyone see the clip over the weekend from 2006 mcain saying, there's nothing wrong with expecting the rich to pay a little more tax??? i did. i guess he just fell in love with joe the plumber recently... so just stop with the flip flop comments and open your eyes."

Thanks for pointing that out, anonymous.

4:38 PM  
Blogger Merge Divide said...

John,

Without getting into a super-long argument where we will never concede a single point to each other... let me make a couple of observations.

I understand why you call taxation "collectivist" and/or "statist". But with that being said, the US started progressive taxation (as I pointed out) in 1862, and it's been a large part of governance since 1913. Surely it hasn't been all bad.

We've also discussed "fascism" before, and I really don't consider progressive taxation as a factor that puts "real control in the hands of the state". Obviously it's all a matter of degree, and we disagree on this point. I do think that Bush's maneuvers lately (especially allowing the government to purchase shares in private banks) are "socialist" and potentially quite dangerous.

I also share your fear of the power the Bush/Cheney administration has seized for the executive branch. I will join you in your call for the relinquishment of said powers no matter who is elected.

4:47 PM  
Blogger Merge Divide said...

Ian,

Holy crap, man. That was an exceedingly articulate and well-reasoned argument. Do you keep a blog? If not, you should. I'd read it every day.

4:50 PM  
Blogger Merge Divide said...

joe,

You are not wrong, in the respect that I do indeed suspect Barack Obama would be a lot more "centrist" than a lot of "conservatives" fear. Why do you think people like Colin Powell, Warren Buffet, Christopher Buckley, Ken Adelman, Larry Sommers et al. have embraced him? Because he wants to make us communist? I just don't agree with you.

4:53 PM  
Anonymous Anonymous said...

Just a few words about the second part of the post's title, progressive taxation.

First, I wonder how many people the Reps think they will gain new support from complaining how the "wealthy" are going to get socked with an increase in taxes. Perhaps big donors, but not likely much of the general population.

Second, I am not happy with the prospect of facing an increase in my marginal tax rate. As such it IS one of the items I'll have on my pros and cons checklist.

Third, however, I am old enough, having filed and paid income taxes for 40 years, to know a little history about the top marginal rats in this country. In only five out of the last 75 years have the "wealthy" (disclaimer, I don't call everyone making $250,000 a year wealthy, though I suspect many would) have those at the top of the income scale had a LOWER maximum marginal rate. To reference its history, see:

http://www.taxpolicycenter.org/taxfacts/displayafact.cfm?Docid=213

Four, though economically conservative (with a degree in Economics of all things) and a lifelong moderate Republican, I am not convinced that lowering the top tax rate is as directly connected to economic prosperity as some would have us believe. If that were true, we would see a pattern over the last 75 years of a direct correlation between the two. Most certainly we enjoyed healthy growth years when that rate was 91%,, or 75%, as the case may be.

Fifth, and last, I am not in favor of lowering the taxes of that portion of the 95% who actually pay no income taxes. Here I agree with Merge, that it might better be called a stimulus benefit, and whatever the amount, paid to ALL Americans, regardless of income level. Certainly the Dem's couldn't complain about taxing someone $100,000 more and then handing them back $500. It would be more philosophically palatable to me, and remove the label of "socialistic". If progressive taxation is socialistic, we've been there for 3/4rds of a century..I think not. [And no, I am not in that category of income, though I most certainly will pay more under Obama.]
jg

jg

5:17 PM  
Anonymous Anonymous said...

Obama is a socialist/communist.

Communism is a socioeconomic structure that promotes the establishment of an egalitarian, classless, stateless society based on common ownership of the means of production and property in general. It is usually considered to be a branch of socialism, a broad group of social and political ideologies, which draws on the various political and intellectual movements with origins in the work of theorists of the Industrial Revolution and the French Revolution, although socialist historians say they are older.
http://en.wikipedia.org/wiki/Communism

You are a fool.

3:45 AM  
Blogger Merge Divide said...

You can attempt to stretch the definitions of words to encompass just about anything... it doesn't make it appropriate. As Obama himself has said: "Words matter".

No one can stop you from repeating the same lie that's been told again and again. But that will never make it true. It's clear that you are merely trumpeting the party line du jour.

Your claim is refuted in my original post.

10:50 AM  
Anonymous Anonymous said...

Re the progressive taxation as a form of socialism, that's a stretch by any definition. Now, the redistribution of wealth by actually paying people who don't already pay taxes, out of money collected from those who do...that's a horse of a different color, for sure. But socialism? I don't think so. In any case, if it were, who then should we label socialistic? It isn't as if this is a revolutionary and new idea. And, it's hardly Obama's brainstorm The EIC (Earned Income Credit) program already does just that, send checks to people who pay no taxes. It's been in effect for years (I know, I used to be in charge of payroll for a $100 mil institution). I wasn't thrilled about it as an employer or as a economic-conservative Republican WHEN RONALD REAGAN INSTITUTED IT DURING HIS TERM. He not only cut everyone's taxes, but gave tax funds to those who didn't pay.
jg

6:35 PM  
Blogger Merge Divide said...

JG,

Thanks for pointing that out. I actually heard that fact a few week ago on NPR, but I figured that it was just more propaganda from the "leftist media" that the Far Right is always talking about.

6:41 PM  
Anonymous Anonymous said...

All these posts seem to indicate that the "Right" is making too much of Obama and his ambitions. While the "Left" imply that there is nothing there to complain about.

The "Right" has reason to worry, when has left-leaning government of any form been willing to self impose limits on themselves.

Never...because left-leaning governments can only achieve their goals by taking control for the benefit of all society.

2:14 PM  

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