Why progressive taxation does not equate to “socialism”

Why progressive taxation does not equate to “socialism”

Responding to the far right's latest campaign propaganda

Okay, there are less than two weeks to go until the election and so it's no great surprise that the various candidates would be lobbing wild claims at each other. In some races they're coming so fast and furious that most folks have become almost numb to the incessant mailers and the constant drone of ominous music and deep voiced TV announcers imploring voters to save the Republic from sure doom by rejecting one candidate or the other. You know the drill:

"Can North Carolinians really trust Congressman Harley Smidlap? He says he cares about traditional North Carolina values, but did you know that in 1974 he paid to attend a celebration* of illegal drug consumption? Did you also know that in his first run for office in 1986, he received a campaign contribution from an individual who served on the board of an organization** that wants to ban religion from American life? 

Call Harley Smidlap today and tell him that you oppose his radical plans to legalize drugs and to ban the celebration of Christmas. Harley Smidlap too radical and dangerous for North Carolina.

* Source: "My Life" by Harley Smidlap – p. 34 "At age 19, I attended my first and only Grateful Dead concert."
** Source: Smidlap for Congress campaign finance report showing that he received $25 contribution from next door neighbor who once was active in group Americans United for Separation of Church and State.

Paid for the by Committee to Swiftboat Smidlap"

Alright, this example may be a little inaccurate. Most such attacks wouldn't actually include legible sources at the bottom or say who paid for the attack. But you get the point. Now is the period in which we must endure the craziest of the crazy ads – most of them, of course, produced in support of the most desperate candidates who figure they have little to lose in dragging the campaign into the thickest and nastiest mud available.

Perhaps the worst thing about these kinds of attacks is not so much their impact on actual elections as it is in distorting the public's long run view of certain issues. Say that civil rights groups want to ban Christmas celebrations or that some doctors and elected officials want to kill premature babies enough times and pretty soon some measurable chunk of the voters will actually begin to believe that it's true. 

The "socialism" smear

A classic real world example of this brand of absurd and depressing campaigning has been taking place of late in the presidential race. According to a drumbeat of talk radio loudmouths and party hacks, Senator Barack Obama is a closet "socialist" who plans on turning the U.S. into some kind of Soviet-style people's republic. The only thing missing from these attacks is the allegation of a secret plan to introduce the Mao suit as required national attire.

Here's what one semi-prominent North Carolinian said on the topic earlier this week:

"Barack Obama's tax policy is rooted in socialism and would be a disaster for North Carolina jobs and families.  Senator Obama wants to place a cap on the American Dream by saying that families should only be so successful and then they should be punished by government if they exceed a certain threshold.  If you earn too much money in Obama's view, it should be taken away and given to others.  He believes that the wealth and property of Americans is really the possession of government to be redistributed as he and his liberal colleagues in Congress see fit.  The philosophical underpinnings of these arguments are rooted in socialist thinking.  'Spreading the wealth around' has never before represented a fundamentally American belief system and has never before represented the values of hardworking North Carolinians."

Although there is no source cited in the attack for the conclusion about Obama's beliefs and plans, the only potential real world basis (assuming the attack wasn't simply crafted out of whole cloth) would be Obama's tax plan. As most people are aware by now, Obama has repeatedly stated that he would allow the taxes on the wealthiest Americans (those making $250,000 per year or more) to rise even as he would cut taxes on "98% of taxpayers." In other words, according to these attacks, by favoring progressive taxation Obama promotes "socialism."    

Setting the record straight

In a way, there's something almost poignant about these absurd claims. For while "socialism" was certainly a bugaboo for many Americans during the Cold War period (a time in which a large section of the world actually believed in and promoted the idea of public ownership of the means of production), no one is seriously arguing for that today – except perhaps George W. Bush and Henry Paulson. But that's another story.

Heck, even the officially "socialist" parties of Western Europe like the British Labour Party long ago embraced the capitalist model. Interestingly, according to some observers, one of the reasons that the "Obama is a socialist" attacks have largely been falling flat thus far is that many 21st Century Americans don't even know what "socialism" is (or was)!

But to return to the main point, it is important that we address these kinds of scurrilous attacks on progressive taxation lest we Americans begin to gradually lose our appreciation for its critical importance in making our capitalist economy work for as broad a segment of the population as is possible.

Progressive taxation, of course, is the simple and common sense idea that those with higher incomes should pay a higher tax rate. One of its chief proponents was President Teddy Roosevelt – hero to John McCain.

To put things in crude terms, a poor person who pays 10% of their $15,000 income in taxes will feel a much greater pinch than a person who makes $1 million and pays 20%. Moreover, all parties will be better off under such a system because public services (e.g. schools, law enforcement, the environment, infrastructure, the safety net) will be adequately funded. This will, in turn, enrich the overall quality of life for all (rich and poor) and save all individuals from the need to fend for themselves for every necessity in the dog-eat-dog market.

(It should be noted that the state of North Carolina actually employs a regressive tax system that applies higher rates to people at the bottom and that has been "redistributing" wealth upwards for decades. Hence, many of our current problems in funding necessities like schools and roads). 

As study after study confirms, markets love stable, educated, appealing communities with vibrant, adequately funded public structures. They abhor dysfunctional, divided "banana republic" societies that lack the kind of basics that only adequately funded public systems can provide. Those needing proof should only look at the companies that have chosen Canada over the U.S. in recent years to take advantage of its public health care system.

As that old socialist Adam Smith said in The Wealth of Nations:

"The necessaries of life occasion the great expense of the poor. They find it difficult to get food, and the greater part of their little revenue is spent in getting it. The luxuries and vanities of life occasion the principal expense of the rich, and a magnificent house embellishes and sets off to the best advantage all the other luxuries and vanities which they possess. A tax upon house-rents, therefore, would in general fall heaviest upon the rich; and in this sort of inequality there would not, perhaps, be anything very unreasonable. It is not very unreasonable that the rich should contribute to the public expense, not only in proportion to their revenue, but something more than in that proportion."     

In short, rather than being rooted in or serving as a precursor to "socialism," progressive taxation is in fact the opposite – a guarantor for the continued health and success of a thriving market economy. It's a sad commentary on the modern conservative movement that so few of its members actually understand this critical component of the economic system they profess to believe in. It's sadder still that they feel compelled to display this ignorance in such ridiculous and counter-productive ways.      

About the author

Rob Schofield, Director of NC Policy Watch, has three decades of experience as a lawyer, lobbyist, writer and commentator. At Policy Watch, Rob writes and edits daily online commentaries and handles numerous public speaking and electronic media appearances. He also delivers a radio commentary that’s broadcast weekdays on WRAL-FM and WCHL and hosts News and Views, a weekly radio news magazine that airs on multiple stations across North Carolina.
[email protected]
919-861-2065