Please note: the following should not be construed as an endorsement of the Obama tax plan, even if that is the context in which the post emerges.
Can we please get something straight about the notion of redistribution in our tax code as it relates to current and future fiscal policy as well to the positions of our two major political parties and their presidential candidates?
Let’s be clear: we currently have a progressive tax system that taxes income at higher percentages the more money one makes. This has been the case since the institution of the income tax in the early 20th century. The only change over time has been the number of brackets and the percentages that each bracket pays.
Beyond any of that, any tax system is, to one degree or another, redistributionist in nature. For example: even if every house in your school district pays the same flat tax rate on the value of the property, the bigger, more expensive houses will end up funding a large percentage of the schools. In other words, in such a system one doesn’t pay simply per capita (i.e., a flat fee per person), but rather one’s contribution is weighted based on the monetary value of one’s home. There is also the problem that many property tax payers do not even directly receive the service in question, as they have no school age children in the schools (and perhaps never did). Now, such a household still receives a public benefit from the school (no kids hanging around all day in the neighborhood with nothing to do, hopefully employable workers and so forth), but clearly the taxes from that household are being distributed to benefit other households with children, in some cases to households that pay very little property taxes.
I would be more than happy to have a major national debate about the nature of the code tax, all the way from whether the current behemoth itself makes any sense to complex questions about radical change, including the relative merits of the flat tax, consumption taxes (sometimes called “the fair tax”) or any other alternatives. While some wonks talk about it, as do some ideologues, it is clear that there has been no serious debate. Taking one quote by Barack Obama given to Joe the Plumber and turning it into claims that he’s a socialist does not equal such a debate (indeed, if one looks at the whole thing objectively, one should be able to see the absurdity of the current “debate” such as it is, when it is focused on that one statement, not to mention the circus that has emerged around Joe).
However, even if we went to flat tax or a national sales tax, that system would still redistribute wealth. The wealthy would pay for more of the public goods (schools, roads, the military) than lower income citizens. Beyond that, so long as we have any kind of social welfare system, there will be, by definition, redistribution (e.g., Medicaid can’t exist without redistribution–nor, for that matter, can public schools or public roads).
Therefore the debate is not about, despite what anyone calls it, between the redistributionist and the non-redistributionist. It certainly isn’t about the anti-socialist v. the socialist. Rather, it is a debate over tinkering with the exact nature of the currently re-distributionist system (such as where the top marginal rates ought to be).
In short: there are very legitimate debates to be had over what the exact percentages ought to be within our current income tax system, as well as legitimate debates about the appropriate capital gains tax rate, and it would be great if we could actually have those debates. What we don’t need (and are nonetheless getting) is a debate that charges one side as being “redistributionist” when it is patently the case that both parties support redistribution.
A little policy honesty would be nice–of course, it is simply easier to make dramatic charges than it is to have a serious policy debate (nothing new there, of course).