A good read:
Obama, Joe the plumber, and the gospel of envy
A call to 'spread the wealth' around is an old – and dangerous – theme.
When Barack Obama responded to the Ohio plumber who didn't want his taxes raised by saying that he wanted to "spread the wealth around," I wanted to tell the Illinois senator to spread his own wealth around.
Senator Obama, in a rare moment of candor, all but told "Joe the plumber" that his wealth should be seized in the name of equity. Their personal encounter this past Sunday played out one of the old themes of democratic politics: the appeal to the many to take from the few. It's traditionally an easy sell in democratic regimes.
Despite Obama's implication to the contrary, however, it doesn't represent much in the way of change.
The personal income tax, the federal government's main source of revenue, is collected overwhelmingly from a relative handful of Americans. Indeed, the most recent IRS data shows that the top 1 percent of filers paid nearly 40 percent of all income taxes. That means the top 1 percent paid about the same as the bottom 95 percent, according to the Tax Foundation, a nonpartisan research group. The bottom 50 percent paid just 3 percent.
Given that poorer citizens always outnumber the rich, political philosophers have long worried that government based on majority rule could lead to organized theft from the wealthy by the democratic masses. "If the majority distributes among itself the things of a minority, it is evident that it will destroy the city," Aristotle warned.
The Founders of the United States shared Aristotle's worry. Up through their time, history had shown all known democracies to be, as James Madison put it, "incompatible with personal security or the rights of property." Madison and others therefore made it a "first object of government" to protect personal property from unjust confiscation.
Given that one of the causes of the American Revolution was an unjust tax, the Founders understood very well that taxation could become a way for one group to prey on another. So while the Constitution empowered the federal government to levy taxes, it limited this power mostly to indirect taxes such as tariffs, duties, and excise taxes. For much of American history, the federal government subsisted solely on those fees.
Until the Civil War, the idea of a tax on individual incomes would have seemed preposterous to most Americans. Only as an emergency wartime measure did Congress adopt an income tax in the 1860s, and the measure was allowed to lapse with little fanfare in 1872.
The modern income tax begins with the Progressive era in American politics. In an influential 1889 article titled "The Owners of the United States," crusading attorney Thomas Shearman argued that the lion's share of the country's wealth was in a limited number of hands. If an income tax were not adopted, he warned, within 30 years "the United States of America will be substantially owned" by fewer than 50,000 people.
This marked the beginning of a never-ending campaign. Many activists since have characterized America as a permanent plutocracy. And their prescription has generally been more and higher taxes.
Shearman's advocacy of an income tax found a receptive audience in populist politician William Jennings Bryan. Exploiting the dire conditions created by the depression of 1893, Bryan promoted the adoption of an income tax.
His proposal succeeded when Congress passed a 2 percent flat tax on incomes over $4,000 in 1894. The following year, however, the Supreme Court held the tax to be unconstitutional.
In response, Progressives condemned the Constitution as an instrument crafted by the rich to protect their selfish interests (J. Allen Smith), and a document rendered obsolete by intellectual progress in the century since its drafting (Woodrow Wilson).
Frenzied attacks on "the rich" and "the wealthy" culminated in the ratification of the 16th Amendment in 1913, authorizing federal taxation of income from all sources without limit. The same year, historian Charles Beard published "An Economic Interpretation of the United States Constitution." This book – later debunked – suggested that the Constitution was the handiwork of a propertied elite serving its own interests. Such sentiment has poisoned American political thought ever since.
So why hasn't the majority in America helped itself to more of the minority's wealth, as Aristotle and our Founders feared? Partly because the protections for individual property erected by the Founders have worked. Partly, too, because many Americans' political convictions are (thankfully) based on principle rather than immediate economic self-interest. And partly because the fraction of Americans who think of themselves as rich, or likely to become rich in the future, is quite large, undercutting the incentive for bashing the rich.
Obama's appeal for higher taxes to "spread the wealth around" nevertheless harks back to an old theme in political philosophy and American politics. You can believe in it, but it's not exactly change, and it is more to be worried about than hoped for.
