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Where Do You Stand On “Spreading The Wealth Around”?

19 October 2008 11 Comments

It’s hard to not have heard of Joe the Plumber these days if you have had the television on at all. He is now famous for questioning Presidential candidate Barack Obama on taxes which resulted in perhaps the most important four words of this election: “spread the wealth around”. My view is that this concept is both a crucial component to this year’s election and also an economic issue much more important than a single election.

This rare moment of candor in this political season has sparked an interesting debate regarding taxes, government’s role in our economy and personal responsibility. Polls show that most Americans are against government acting as an agent of wealth redistribution. Most Americans want to choose where their money goes instead of the government telling them where it should go. Another interesting point is that many have testified that the more government redistributes money, the less people give when it comes to charity. Western Europe is typically the comparison used in this regard.

While it seems we truly may be taking steps towards more wealth redistribution, I have several fears regarding this direction our country may take. I’m a believer in the economic philosophy that was originally brought up by the now-famous plumber. Joe said additional taxes would prevent the business from growing as much as he’d like. I work for a small business and I believe there are a great number of small businesses that will be affected.

Now, maybe an increase in taxes for a business owner won’t result in layoffs, and maybe it won’t even result in not hiring additional employees; but, what about raises for current employees? Or, how about bonuses? Do you really think if the owner’s “bonus” (aka earnings) goes down that employee bonuses won’t also be lowered to reflect the decrease in company earnings? Do you rely on year end bonuses and work for a small business? Worth thinking about if so…

Another major fear of mine is the trend this might establish for our country. First, I don’t believe an extra $1000 to a poor person will do anything to raise them out of their current status. Sure, it might help putting gas in the tank a little easier temporarily, but it will not result in a long term status increase. My worry is that without a jump in the status that this wealth redistribution is intended to help, will we here more rhetoric during the next election about spreading the wealth around again? Where does it end? How high can you tax the highest income earners?

Obama has made his tax plan clear during the election. He wants to raise the taxes on the highest earners and provide a rebate to the rest of the country including those who do and don’t pay taxes. My question to you is do you know what Nancy Pelosi wants to do when it comes to taxes? The reason for my question is because Obama does not create tax policy. He signs or vetoes it. The tax policy will originate in Pelosi’s House of Representatives. I fear Pelosi and house Democrats will create legislation encompassing more tax increases than even Obama is calling for. Then, will Obama really have what it takes to veto additional increases? I doubt he would be willing to go against the powerful individuals in his party. I hope he proves me wrong if he gets the chance.

Do I think Obama possesses some qualities that would make him an effective leader? I do. But, I am one to vote based on policy. I’m amazed at how many people out there are against the concept of wealth redistribution and are believers in conservative economic policy yet are voting for Obama. I’m not one to say that my reasons for who I’m voting for are better than yours, but at least be honest why you are voting for that specific person. I have a friend who agrees with me on most policies especially these economic ones, but he believes we need a black president because it would show how far we have come as a country. Well, everyone has their reasons and if they are based on what you value, I won’t argue with it.

Conclusion

I wish our government would use tax policy to fund the necessary functions of government such as infrastructure and defense. I wish they would use policy to stimulate the economy and to incentivize giving and charity in order to help those less fortunate. While I am not in the highest income bracket, I want to work hard and eventually get there but I’m discouraged by the policy of our country to penalize success. If I make it to that income level, I’m discouraged that the government would decide that I would be making too much money and take more of it form me. Using labels such as “fairness” doesn’t change the reality of “spreading the wealth around”.

I would love to get your feedback and hear where you stand. Frankly, I would love to hear especially from Obama supporters regarding this concept. Do you think this is good for our economy? Do you think this is good for our country? What is the real impact of spreading the wealth around?

11 Comments »

  • Wess Stewart said:

    I think that taking the money someone legally earned is a bad idea. I would even call it theft. I don’t care how much someone earns, as long as they are honest, and Obama’s plan to take money from successful people and give it to others is just sad.

    Oh, hey, did I miss the contest winner announcement, or is it still coming up?

  • Chris said:

    These calls of socialism are rediculous. Did I miss something, is McCains tax policy not to tax those who make more a higher percentage of income? We have already decided that a progressive income tax is what is in effect in this nation, so without complete revolution that is where we stand. Now it is just a matter of determining how much MORE wealthy should pay than the middle class. Obama says wealthy should pay more, McCain says middle class should pay more. Historically, we expanded the gap between the median income in America and the top 5%, so I have no problem with shifting the tax burden accordingly. I do believe a tax cut for middle class would benefit the economy more than one for the rich because the middle class will actually spend the money and our nations GDP is highly tied to consumerism. Either way, recognize BOTH candidates are saying the rich should pay more, they just argue about how much more.

  • kevin duffey said:

    Chris, good points. We do have a progressive income tax system, however Mccain wants to keep the system as is. Obama wants to raise the taxes of the highest bracket.

    I disagree that a middle class tax cut helps the economy. It is the equivalent to a once a year stimulus check which may create a spike in consumer behavior, but does not do anything to create long term sustained growth in our economy.

    Now, you must understand, I am all for helping those less fortunate. I think more needs to be done. Raising taxes on the rich to redistribute wealth is not the way to go in my opinion; and saying it’s good for the economy is incorrect.

    I think that taxes should be low across the board to encourage economic growth and i think we should do more to encourage aid to those who need it. Wealth redistribution only creates dependence on government. Increased dependence on government is the opposite of economic growth.

    Lastly, you mention the tax burden… What if we decreased the tax burden by decreasing the size of government? What a concept that would be.

  • kevin duffey said:

    BTW, just so we’re clear… I’m in the middle class.

  • Chris said:

    I know you are middle class, as am I, and I agree we should reduce government and decrease taxes for all, but unfortunately I do not see that happening. I think both McCain and Obama are making false promises to us about tax policy. I am fine with tax cuts as long as they are done at a dollar for dollar spending cut, but I am not OK following the Bush example of cutting taxes and increasing spending. Remember McCain was against the Bush tax cuts which he now wants to keep because they were “irresponsible.” The economy has not boomed with the reduction of taxes on the wealthy done under Bush, so why would it be different this time around? That was the McCain that I would have voted for, not this illogical McCain that claims he will balance the budget in 4 years.

  • kevin duffey said:

    Chris, very valid points. Bush did a good job with taxes and a terrible job with spending and thus got away from the conservative stance many Americans agree with. The result is the Republican party getting killed this election.

    Interestingly, what most forget to mention is the president doesn’t create tax policy, they sign or veto it. What does Nancy Pelosi’s house have in store for us with an obstacle free government? I’m willing to bet that more than just those who make above 250k have their taxes raised. We’ll see.

    Either way, there are still ways to make money. I hope to find more of them.

  • Kevin Wright said:

    I actually blame the Republicans for where we are. When they first took over with the ‘Contract with America’ they did some great things. They forced Clinton’s hands and balanced the budget. But they got away from what they went to Washington to do. They got comfortable in their jobs. That is one of the reasons I am for term limits.

  • kevin duffey said:

    Kevin, I would definitely agree the Republicans got away from the Contract w/ America. I would support the concept of Term Limits also. Maybe then some real long term good policy would be enacted.

  • Alex Fisher said:

    You’re exactly right in your conclusion. Who is to decide what is fair? Barack? As soon as other people in government start deciding what my money should be spent on it’s gotta be kept in check. Taxes are necessary and I pay them all the time, but what makes me more responsible than the guy down the street or in the city next to mine?

  • IAmDebtProject said:

    I have been reading your blog for a few months now, and have always found your reasoning and logic to be excellent. But in this case, your ideas on tax policy affecting small businesses is just too simplistic. I work for a small business too. Do you know what is our BIGGEST cost and the one that continues to rise at disproportionate rates and worries our CEO? Healthcare. That's the issue affecting more small businesses and more likely to affect their hiring decisions as well (for example, they might find a great worker but decide to only offer him contractor status since they can't afford his/her healthcare and now they might lose this worker in 6 months to a bigger company with benefits). 20smoney, you're an amazing writer and analyst. You should have dug deeper on this question rather than presenting the trite so-called conservative answer that is disingenuous at best.