The really annoying part, in this case, is that "spread the wealth around" here means "make sure middle class people can get their pipes fixed so you can stay in business."

That's not socialism. That's CAPITALISM.

I made exactly this point over a year ago as a way for Democrats to frame progressive taxation.

The left claims that economic mobility isn't what it used to be, and complain about the fairness of a system that locks people in place based on their birth status. The right claims that this is nonsense; that economic mobility is alive and well in the US.

Well, let's take the right at their word. I propose that we increase taxes on high income individuals (income taxes, payroll taxes, social security taxes) and lower them for the low income individuals since the right claims that these are just the same folks at different periods of their lives. It therefore all balances out since a single individual gets the benefits of low taxes early in life, which allows them to accumulate capital quickly so as to be more productive and engage in risk taking/wealth-generating activities earlier than they would otherwise.

And later, when they are reaping the benefits of their accumulated wealth, we raise their taxes so that we can extend the same courtesy to those coming up the ladder behind them.

If there is true mobility, no one should complain since they reap the benefit at one stage of their life and pay the costs at a later stage of life.

link

I am beginning a push for the Patriot Tax. The Patriot Tax is a special tax paid by patriots. IN this case, the Patriot Tax is a 45% tax rate paid by people who make 1 million or more every year.

The Patriots who make the big bucks need to give back, by paying their fair share. Which is much MUCH MUCH more than they are paying today.

Support the Patriot Tax today!

Steve,

The press has the "Joe the Plumber" story wrong. It's not that "Joe" will get a tax cut under Obama's plan instead of the tax increase he's complaining about - although the media has generally missed this. It's that "Joe" is an ideologue who opposes the very concept of progressive taxation - to him it's socialism. He'd probably be more happy voting for Neal Boortz than McCain. But he sure ain't no "undecided" moderate voter.

Here's what Jake Tapper wrote this morning...

"...I mean, not that I don't want to be taxed. You have to be taxed. But to -- just because you work a little harder to have a little bit more money taken from you, I mean, that's scary. You know, as opposed to other people. I worked hard for it. Why should I be taxed more than other people?"

Diane asked, "If those people should not be taxed additionally, even though they're in the top 5% of America, what about people who make $1 million? Or $5 million?"

"Well, I mean, quite honestly, why should they be penalized for being successful?" Wurzelbacher asked. "I mean, that's what you're telling me. That's what it sounds like you're saying. That's wrong. Because you're successful, you have to pay more than everybody else? We all live in this country. It's a basic right. And Obama wants to take that basic right and penalize me for it, is what it comes down to. That's a very socialist view and it's incredibly wrong.

If the revenue of the business Joe wants to buy is $250K, then he will clear only a small fraction of this as taxable income, and come nowhere near getting his taxes raised - under Obama's plan he will get a tax cut.

Whether that $250K is revenue or net is a very important question (if this foolishness has any importance at all), which apparently none of the talking heads thought of even mentioning, let alone investigating.

If McCain wins my husband and I are moving to Canada. WE are serious. I am so sick of rightwing shit and rightwingers.

"Joe the Plumber" my ass...

http://thecaucus.blogs.nytimes.com/2008/10/16/joe-in-the-spotlight/?hp

I've read the transcript & watched the video. I'm still not entirely sure what Senator Obama meant, but as you say, he certainly did NOT mean expropriation. (But hasn't that always been the right's gripe against the progressive income tax?) Two other readings seem plausible to me - (1) When the economy improves (which Obama's tax cut would help stimulate), everyone, including Joe the Plumber's thriving new business, benefits & the wealth generated by the improving economy is shared by everyone. (2)With Obama's tax cut, lots of people will have more money to spend & they may spend it at Joe's Plumbing Emporium & Fantasyland.

Remember when Sarah Palin got her talking points messed up and said that we should go into Afghanistan and upset school principal McCain? The defense was that the disagreement or screw up didn't matter because she was talking to a voter and not a reporter. Sounds like Obama has a convenient way out of the usual bullshit interpretation the Republicans are peddling.

I think there comes a time when you just have to call a fucking idiot, a fucking idiot. If you confuse a progressive tax with socialism with expropriation, you are a fucking idiot. And if you happen to be one of those people and are offended at what I just called you, I think you need to look up those terms in the dictionary, find examples in history and in the countries of the world today, and ask yourself if there might not be a difference between Khmer Rouge Cambodia, Sweden, and the United States in the 1960s (when we had quite the progressive tax).

I am so tired of these right wing policies. If you know your history, 1929,1987 & 2008 have been the worst economic times in history.What they all have in common is republican administrations. Historically everyone has done well under every democratic president since FDR except Jimmy Carter Democratic policy favors a level playing field.Republicans call this SOCIALISM. Republican policy favors the ultra wealthy and corporations and they call this THE FREE MARKET. We need to start remembering our history. This shit does not work!

I think Obama was right to let a lot of this stuff just go by since no one believes the Republican nonsense any more. McCain arguing about progressive taxation is like rearranging the deckchairs on the Titanic after it's sunk. We just nationalized the banks. We're WAY past the point where progressive taxation is the free market line in the sand.

The era of small government is over!

wonkie,

We'll see you there. Another couple we're friendly with will be moving to Canada as well. They have duel citezenship. the sad thing is that they're pretty much apolitical. They just don't want to raise their kids here. I had the conversation with my mother who is not very political and insists there is no way young and talented people will want to stay here under McCain/Palin.

Someone should explain to Republicans that to those tho study history, progressive taxes are a relatively cheap insurance that the rich can pay to keep from being hanged from lampposts when the Revolution comes.

Unfortunately, since present-day Republicans have decided that knowledge of any form is anathema to the "going-from-the-gut" and ideological paradigm that they now run by, this classic lesson will escape them.

By this standard, isn't even a flat tax unfair? After all, given a 15% flat tax rate, how is it fair that I pay $7,500 while Bill Gates has to pay $1,000,000,000. If we really want to be fair about this, we should divide our total current tax revenues by our population(roughly $8,500 per person). Then each household will be responsible for paying a flat rate for each person within the household.

I know it might seem unfair to charge a family of four only earning $30,000, over $34,000 in taxes, but any deviation from this would be Stalinism. And he killed over 30 million people. How is that fair?

Taxes to Beat the Axis!

One thing that is not often said is that there is a certain minimum amount that is needed to live at a comfortable level in this country. It's not like, if you have one amount of money, you are 100% comfortable, and if you have one-tenth of that, then you are 10% comfortable. Instead, if you have a certain amount of money, then you are comfortable, and if you have 10% of that, you're about dead.

I'm pretty sure that I will never see the sunny side of $250k per year. That looks to me like a lot of money, not a modest amount (yes, I know. Joe the Plummah won't actually have a quarter-million free and clear). I do know that my years of employment at state universities and national laboratories is all paid for out of tax money. I know that the interstate highway that I drive down without a second thought about its stability and safety is the result of a huge amount of tax money whose original purpose was to enhance our nation's defenses. I know that this modern digital communications system that we're using this instant was created from taxpayer-supported defense research. It is no mistake that, in the Declaration of Independence, the signers pledged their lives, honor *and* fortunes to their cause.

Those "Support Our Troops" bumper stickers should all have "Pay your Taxes" written over them.

According to McCain, taxes aren't just Socialism, they're WELFARE: http://www.youtube.com/watch?v=NmZ3o0Di7Go

America, your desire for lower taxes to help pay your bills is welfare. Lazy, good for nothing moochers.

There are a number of classic arguments for progressive taxation. One is based on the notion that one measure of fairness in a tax system is "equal pain". A tax is fair if it causes everyone equal pain.

The value of $1 to a rich person with $1M is far less than its value to a poor person with $100. This is the concept of marginal utility and it's intuitively obvious. In fact -- and this isn't quite as obvious -- even an EQUAL PROPORTION of money is worth less to the rich person. I.e., $100 is worth more to someone who only has $1K than $100K is to someone who has $1M. And if you think about it, that makes some sense. If you have $1M, $100K is a nicer house or better cars. If you have only $1K, $100 is the difference between feeding your family this month and not feeding your family this month.

So to cause equal pain, a tax system MUST be progressive.

This principle has been understood for at least 200 years. Steve Forbes and his ilk understand it quite well; but they're happy to pretend otherwise, and to disingenously claim that the flat tax is fairer when they know it isn't.

But as long as they can dupe guys like Sam, they'll keep doing it.

---
There are a number of classic arguments for progressive taxation
---

Yes, but they are all vulnerable to the argument that you're 'stealing' from one person to give to another.

My framing makes the argument that you're giving young people (who earn less) a tax break so that they can accumulate capital quickly, be more productive, and increase their lifetime earnings as a result. The higher rate kicks in later on when they're more established and earning more money.

If any change in people's proportionate tax burdens counts as expropriating the money of those who end up paying a greater share and giving it to those who pay a lower one, then any President who has ever enacted changes in the tax code has expropriated people's wealth.

And yet that's what those who have bought into the Church of Tax Cuts really believe. Economy doing great? Tax cut! Economy going into recession? Tax cut! Martians invade? Give 'em a tax cut!

When you solution to every single problem is "Tax cut!" you've gone far beyond the utility of an actual tax cut and descended into the realm of faith, where they Holy Tax Cut will fix everything.

So progressivity isn't aimed at moving money from one person to another, this framing shows that progressive taxes even out since each individual gets the benefits of lower taxes starting out and paying more when they move up the ladder.

So Joe the plumber isn’t a licensed plumber, doesn’t pay his state taxes, and isn’t named Joe. He doesn’t make $250k, more like $40k. He neglected to mention to his boss, who is in trouble for employing an unlicensed plumber, that he wanted to buy the company. The company doesn’t make $250k, more like $100k, and would probably receive a tax break under Obama’s plan, as would Joe aka Sam. Typical of the Republicans and McCain to adopt an arrogant lying shitball as their hero de jour.

There are several good arguments for progressive taxation mentioned here in comments, but several others that haven't been brought up.

1. Wealthier people pay more in taxes under a progressive system, but they also consume more in terms of government services. Now, this would make your average wingnut start screeching about "welfare mooches", but consider the example of a guy who owns a trucking company that nets a couple million per year and employs 20 drivers each making $30K per year. The owner of the company is paying himself a million a year and with all the tax loopholes at his disposal pays a rate equal or lower than his drivers do. Still, he's shelling out some $300K of his income in taxes, while the lucky duckies who drive for him are only paying $6,000 in taxes. Now, the classic winger argument is that the owner is some kind of benevolent daddy figure who is "giving" people jobs. Never mind that he could never pull down $1 million per year if he wasn't profiting from the labor of others. But the real rub comes in when you consider that each of his trucks is generating a half million dollars' worth of damage to the publically owned road system - a total of $10 million in damage that we all pay for. The owner is getting a subsidy of $9,700,000 from the rest of us, while the wingers cry about how unfair it is that he has to pay any taxes at all. There are examples of this everywhere you look - whole agencies and areas of law and courts that serve only the well-to-do. Who uses the FTC as much or more than phone or cable companies? Who utilizes the patent office or the laws and courts protecting intellectual property? I could go on and on.

2. One of the goals of a progressive tax system is to slow down the concentration of wealth into fewer and fewer hands. GOP fantasies notwithstanding, consumer economies cease to function when one guy owns everything and everyone else has nothing. It's no big secret that the worst economic crises - like the one we're seeing now - happen when concentration of wealth becomes so lopsided that a significant percentage of the population is only minimally participating in the economy. Consumer economies don't work when half or more of the people involved have no discretionary spending power. That's the true root of the 1929 meltdown and the one we're seeing now, and it can only be fixed in one or both of the following ways: raise taxes on the wealthy, and/or raise wages for everyone else. Just to give you an idea of how out of whack things are right now, the top 10% own 70% of all assets, while the bottom 40% own 2/10ths of 1% of all assets - and those figures are from 1998. It's gotten worse since then.

In short, "redistribution of wealth" is required to keep an economy functioning. It either gets done voluntarily through more generous wages, or it has to get done through taxation. But one way or another, it has to happen, or everything stops working. Wingers are such cheerleaders for capitalism that you would think they'd embrace principles that allow it to function...but you'd be wrong.

I am sorry but lets be real it was really stupid of Obama to say "spread the wealth". It plays into the idea that he is a tax and spend liberal. Just because the Republicans have messed doesn't mean that this nation is suddenly liberal.

Joe the Plumber?

Gee, I was wondering where Jeff Gannon/Jim Guckert was nowadays.

Well, they're both bald, both spouting the same Republican in.s.anities, both are Republican plants...and with just a little plastic surgery, very little, one could almost mistake Joe the Plumber for being a replica of Jeff Gannon/Jim Guckert..

This comes back to a discussion of supply side vs demand side economics. The Republicans since Reagan have been pitching the idea that wealthy people create jobs. Therefore, no matter what the problem is we should give more money to wealthy people and they will create more jobs. This is clearly nonsense but that is their philosophy and this is how they rationalize it. Rich people don't create jobs. Before Reagan we all believed in demand side economics. A market existed for a product. A business person organized a company. They hired workers to produce a good or service that could be sold and paid them less than was earned. The difference was the profit. You could stimulate markets by putting more money in the hands of the general population (minimum wage, higher wages, etc.) but you couldn't create markets out of thin air.

Obama only touched on the idea of investment, I wish he had expanded on that. Taxes are the price we pay to live in a civilized society. This is what pays for the roads, hospitals, schools, firefighters, police, etc. Some people complain that taxes in the San Francisco Bay area are high yet somehow lots of people still live there and others are trying to get in. It is partly because of the investment in taxes in roads, clean air and water, universities, museums, and on and on that it is a desirable place to live.

As was pointed out above wealthy people benefit much more from civil society than poor people do and so it is reasonable that they be taxed somewhat higher. It is fair to have a continual tug-of-war about how much higher. They also have the benefits of an educated populace, stable currency (used to be), a court system, etc.

Oracle: Did you ever notice that in the movie Teacher's Pet the newspaperman played by Clark Gable was called James Gannon? I wonder if that was a coincidence or if he took that alias from that movie?

Don't know why you couldn't cut and paste the text, but here it is.

"This weekend," Sen. John McCain, R-Ariz., said today, "a plumber concerned that Senator Obama was going to raise his taxes asked him directly about his plan. The response was telling. Senator Obama explained to him that he was going to raise his taxes to quote 'spread the wealth around.'"

Is that what happened?

Judge for yourself -- here's the exchange.

Outside Toledo, Ohio, on Sunday, Sen. Barack Obama, D-Ill., was approached by plumber Joe Wurzelbacher, a big, bald man with a goatee who asked Obama if he believes in the American dream.

"I'm getting ready to buy a company that makes 250 to 280 thousand dollars a year," Wurzelbacher said. "Your new tax plan is going to tax me more, isn't it?"

Obama said, "First off, you would get a 50% tax credit so you'd get a tax cut for your healthcare costs….. if your revenue is above 250 – then from 250 down, your taxes are going to stay the same. It is true that from 250 up – from 250 – 300 or so, so for that additional amount, you’d go from 36 to 39%, which is what it was under Bill Clinton. And the reason why we’re doing that is because 95% of small businesses make less than 250. So what I want to do is give them a tax cut. I want to give all these folks who are bus drivers, teachers, auto workers who make less, I want to give them a tax cut. And so what we’re doing is, we are saying that folks who make more than 250 that that marginal amount above 250 – they’re gonna be taxed at a 39 instead of a 36% rate.”

Responded Wurzelbacher, "the reason I ask you about the American dream, I mean I've worked hard. I'm a plumber. I work 10-12 hours a day and I'm buying this company and I'm going to continue working that way. I'm getting taxed more and more while fulfilling the American dream."

"Well," said Obama, "here's a way of thinking about it. How long have been a plumber?"

Wurzelbacher said 15 years.

Obama says, “Over the last 15 years, when you weren’t making 250, you would have been given a tax cut from me, so you’d actually have more money, which means you would have saved more, which means you would have gotten to the point where you could build your small business quicker than under the current tax code. So there are two ways of looking at it – I mean one way of looking at it is, now that you’ve become more successful through hard work – you don’t want to be taxed as much.”

“Exactly," Wurzelbacher said.

Obama continued, “But another way of looking at it is 95% of folks who are making less than 250, they may be working hard too, but they’re being taxed at a higher rate than they would be under mine. So what I’m doing is, put yourself back 10 years ago when you were only making whatever, 60 or 70. Under my tax plan you would be keeping more of your paycheck, you’d be paying lower taxes, which means you would have saved…Now look, nobody likes high taxes."

"No," said Wurzelbacher.

"Of course not," said Obama. "But what’s happened is that we end up – we’ve cut taxes a lot for folks like me who make a lot more than 250. We haven’t given a break to folks who make less, and as a consequence, the average wage and income for ordinary folks, the vast majority of Americans, has actually gone down over the last eight years. So all I want to do is – I’ve got a tax cut. The only thing that changes, is I’m gonna cut taxes a little bit more for the folks who are most in need and for the 5% of the folks who are doing very well - even though they’ve been working hard and I appreciate that – I just want to make sure they’re paying a little bit more in order to pay for those other tax cuts. Now, I respect the disagreement. I just want you to be clear – it’s not that I want to punish your success – I just want to make sure that everybody who is behind you – that they’ve got a chance at success too.”

Wurzelbacher said it seemed as though Obama might support a flat tax.

Obama says, “you know, I would be open to it except here’s the problem with a flat tax is that if you actually put a flat tax together, in order for it to work and replace all the revenue that we’ve got, you’d probably end up having to make it like about a 40% sales tax. I mean that’s the value added, making it up. Now some people say 23 or 25, but in truth when you add up all the revenue that would need to be raised, you’d have to slap on a whole bunch of sales taxes on. And I do believe for folks like me who have worked hard, but frankly also been lucky, I don’t mind paying just a little bit more than the waitress that I just met over there who’s things are slow and she can barely make the rent."

Obama said, "My attitude is that if the economy’s good for folks from the bottom up, it’s gonna be good for everybody. If you’ve got a plumbing business, you’re gonna be better off if you’re gonna be better off if you’ve got a whole bunch of customers who can afford to hire you, and right now everybody’s so pinched that business is bad for everybody and I think when you spread the wealth around, it’s good for everybody."

That's the key moment McCain is jumping out…"when you spread the wealth around it's good for everybody."

"But listen," Obama said, shaking Wurzelbacher's hand, "I respect what you do and I respect your question, and even if I don’t get your vote, I’m still gonna be working hard on your behalf, because small businesses are what creates jobs in this country and I want to encourage it.”

"Guys I gotta get out of here and go prepare for the debate," Obama said, "but that was pretty good practice right there."

-- jpt

When I watched the video of this encounter, little knowing that it would later be brought up in the debate, what just bowled me over was how impressive Obama can be in situations like this. He's moving rapidly through a small crowd at a campaign stop, and yet he can pause, off the cuff, in response to a guy who obviously disagrees with him, and articulate with great clarity and persuasiveness not only the rationale behind the particulars of his own tax plan, but the main arguments for progressive taxation more generally. And he does so in a friendly way that is respectful of, and responsive to, the other guy's point of view while still making the case for both the fairness (you and I should pay more than the waitress) and the practical benefits ("it's good for everybody") of his proposed policy. People who are looking up this video after hearing about "Joe the plumber" will be getting a short course in what has made Obama such an impressive and appealing political figure.

When George Bush came into office, the richest 1% of Americans made 17% of the total income in the US. The richest 1% now makes close to 25% of the income in the US.

We've witnessed the largest transfer of wealth in the history of the USA.

It's time to respread the wealth around

When George Bush came into office, the richest 1% of Americans made 17% of the total income in the US. The richest 1% now makes close to 25% of the income in the US.

We've witnessed the largest transfer of wealth in the history of the USA.

It's time to respread the wealth around

I do not think most voters care what Obama meant by the "spread the wealth around" remark. I think McCain's outrage makes him appear more concerned about welfare of the rich than of the middle class.

I think McCain makes a big mistake by focusing on taxes. Rightly or wrongly, most people are not troubled at the thought of those making over $250,000 paying higher taxes. They care about the taxes people like themselves will pay, and Obama has the advantage there.

The BIGGEST reverse the tax burden came from our friend Greenspan. His 1985 commission on social security reform increased the payroll tax in order to provide a cushion for when the baby boomers started retiring. However, that extra money was just used to hide the true cost of the deficit in the intervening Republican year. Clinton balanced the budget in part to allow the social secirity surpluses to accummulate. Greenspan supported the Bush tax cuts which wiped out the surpluses and ran up new huge debts. Now, with the date for the Treasury having to pay social security back fast approaching, it is clear that the Rep's will fight the increase in taxes needed to repay that debt. Their plan is to lower benefits the Greenspan increase in the payroll tax funded. Net effect -- midddle class taxes increased 2% a year, social security benefits decreased and taxes for the top 1% reduced. No one has hurt the middle class more than Greenspan (note: his low interest policy since 2001 also destroyed the remaining defined benefit pension plans leaving middle class retirements to the mercey of Wall Streets 401k accounts).

Good post, and to top it off, we're talking about going from 36 to 39% as the marginal rate above $250K! Boo hoo...this is supposed to discourage people from working hard to succeed? Didn't we hear all this crap in 92, before Clinton ushered in the greatest expansion in history?

most people are not troubled at the thought of those making over $250,000 paying higher taxes. They care about the taxes people like themselves will pay, and Obama has the advantage there.

That is certainly true, but McCain in particular and Republicans in general have been fairly successful in convincing those same people that Obama and the Democrats can't wait to raise their taxes.

I agree with AJB. I don't fault Obama for making the statement when meeting voters. But he should have a strong response to this insinuation that he is just licking his chops to raise taxes. He can't wait for the media to point out that Joe will pay three times more in taxes under McCain's plan. If Joe wants to save up to be able to buy that business (which still wouldn't be taxed more under Obama because, like most small businesses, it doesn't make nearly that kind of money), then he should be voting Obama. McCain wants to take Joe's tax money and pass it right on to the wealthiest Americans. Doesn't Joe think he deserves to keep his hard-earned savings?

Why can't the Obama campaign get this message out? It's relatively simple. Can we get Barney Smith to do an ad?

I may be wrong, but I think we need to focus on another facet of this. When Obama described the second way of looking at the proposed tax rates, "...under my plan, you would have gotten more money then, and .. you would have gotten to where you are today more quickly", he described something that scares the "small businessmen" that buoy the Republican Party.

In their minds, they worked hard and deserve everything they can get - and keep. They DO NOT want another "Joe Plumber" to be able to get there also; he would just be competition.

As a (much smaller) businessman, I have to deal with these types all the time. They want the path to a successful, thriving business to have as steep a path as possible because now that they've made it there, they don't want any 'up-and-comers' to challenge them. To pay taxes while the 'little guys' get a break galls them no end. Most of these people either cannot grasp or will not risk spreading the wealth so that they can have more customers with more money to spend.

Just my $0.02.

Don't forget the huge transfer of the tax burden from this generation to the next couple of generations through deficit spending and accumulation of debt due to tax cuts.

"Consumer economies don't work when half or more of the people involved have no discretionary spending power. That's the true root of the 1929 meltdown"

Indeed, and in both cases, now and 1929, we have consumers that have very low levels of disposable income coupled with high levels of debt. It's a double-whammy, because every extra dollar of disposable income must be used to pay down the debt instead of being used for purchasing consumer goods. Until we see wages increase, this problem will continue. This is why things like the minimum wage are beneficial to business. It forces them to do things like increase wages that they normally would not do themselves, but in the end is beneficial to them. 100 million sales of a $12,000, fuel-efficient vehicle, is more beneficial to GM than 100,000 sales of a $40,000, gas-hog SUV, for the simple fact that it employs more people. More employment, more customers. It's a virtuous cycle. As we've seen, the $40,000 SUV may bring in more profit in the short-term, but in the long-term it can literally kill the company if no one can afford such a vehicle without taking on huge amounts of debt.