Wealth Already Redistributed

Judging from the clamor found at many a right-leaning website, the biggest remaining gripe that hard-core Republicans have with Barack Obama is what they see as his plan to "redistribute the wealth." Such a move, as his critics see it, smacks of socialism, and socialism is, by definition, a bad thing.

Lost in the "Obama is a Socialist!" argument, however, is the basic fact that over the Bush and Clinton years, America has already witnessed a very marked redistribution of the wealth in the other direction. In fact, as BusinessWeek reported back in '04, the income gap between rich and poor is greater now than it has been since the 1920's. Truly, under W. in particular, the rich got richer and the poor got poorer:

Today the top 1% of households receives more pretax income than the bottom 40%. And the distribution of wealth is even more lopsided. The top 1% of households owns nearly 40% of total household wealth--more than the bottom 90% of households combined--and earns half of all capital income. Income and wealth are more unevenly distributed among Americans than at any time since the Jazz Age of the 1920s. On measures of income and wealth inequality, the U.S. tops the charts among the advanced industrial nations.

In other words, America is a great place to be rich. Of course, those who argue against a corrective to the growing disparity between rich and poor do have a philosophical point. Why should rich people have to pay higher taxes so that the poor can catch a break? Fair is fair, right?

Well, the fact is that our tax code already provides plenty of big breaks to corporations and the very wealthy, giving rise to the following equation:

The income gap is growing faster in the United States than any other developed nation. Between 1990 and 2000 in the U.S., worker pay and inflation remained approximately equal, while corporate profits rose 93% and CEO pay rose 571%. Meanwhile, the portion of federal revenue derived from corporate income tax has decrease from 33% in the 1950s to 11.9% in 2005, reaching a low of 7.4% in 2003. Hundreds of companies have avoided taxes by relocating to tax havens such as Bermuda and Cayman Islands. Eighty-two of our largest corporations paid no tax in at least one of the first three years of the Bush administration.

In fact, a recent study by the Government Accountability Office showed that most corporations doing business in the United States pay no income tax at all. Now, you may believe that no one should pay taxes period. That we should abandon the notion of public education, fixing roads, and defending the country with a military force. We might also discontinue vaccination programs, medicare, and social security. Homelessness among children is on the rise, so let them find jobs. Bailout for the financial and mortgage industries? You must be kidding. What could be more socialist than that?

The return to a pure, free-market approach might sound like a good idea to a few people who actually believe that corporations have our best interests at heart. Those CEO's whose pay has risen 571% have earned every penny of it, the argument goes, and no one should tell them that because our system has worked in their favor, they are obligated to pay higher tax rates. That, too, would be socialism.

Well, not everyone agrees with this assessment. Least of all the people who have been getting the shaft all these years. And when one considers Barack Obama's plan to raise taxes on those households and businesses earning more than $250,000/year, it is worth considering the following statistics:

The average income of the bottom fifth of families was $18,116; the middle fifth, $50,434; and the wealthiest fifth, $132,131.

Just as Sarah Palin imposed windfall profits tax on oil companies to line the pockets of Alaska's residents, and John McCain proposed the federal government buy up bad mortgages to artificially inflate housing prices, the signs that capitalism has become intermingled with socialism are not difficult to find. That's one reason all the talk of ideological purity is so laughable. To truly dismantle the progressive structure that our government has, over time, embraced to help protect its citizens would spell the end of the social fabric as we know it. If you really want to see what socialism looks like, try letting the banks fail. Abolish the I.R.S., and cut all social programs. Let people fend for themselves. It's only fair, after all. How long do you think it would take for the masses to violently rise up? Yes, there is a breaking point to income disparity. Let's hope we never find it.