Friday, October 24, 2008

McCain is So Wrong About Socialism and "Spreading the Wealth." Cato Institute and Adam Smith Chime In

John McCain knows what his base wants, and he knows how to stir them up. Are they as curious about the factual nature of McCain’s talking point speeches as they are about having a mooseburger with Sarah Palin?

This section of speech taking a poke at Barack Obama’s statement about spreading the wealth, has so many flaws, a simple google search turned up a number of good arguments refuting McCain’s biggest issue. McCain talks about getting rid of the AMT. One problem: An opening for nlimited tax dodges for the wealthy, the very reason the AMT was established in the first place. How many people in the audience could have been affected by the alernative minimum tax. I doubt many.

Let’s start with author and the father of market capitalism Adam Smith:

The necessaries of life occasion the great expense of the poor. . . . 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. . . . 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.

AP: John McCain is pouncing on Barack Obama's call for shifting more wealth from richer Americans to poorer ones, likening it to socialism. His remarks win applause at campaign events. But they ignore the nation's long tradition of redistributing huge amounts of wealth through tax-and-spending policies. Placing a heavier burden on the wealthy has been a cornerstone of the federal income tax since its inception in 1913. Under its "progressive" formula, in which the wealthy pay higher tax rates, the richest 5 percent of Americans now pay well over half of all federal income taxes.

For most Americans, the biggest tax burden is the payroll tax that funds Social Security and Medicare. The tax rates are the same for everyone, and the Social Security levy does not apply to incomes above $102,000, a boon to the wealthy.

Moreover, Social Security benefits go to rich and poor retirees alike. That means low-income workers' payroll taxes are partly shifted to wealthier people, a reverse of the income tax's topdown construct.

Federal excise taxes on products including gasoline and cigarettes are more regressive still, as are sales taxes levied by many states.

For several years, a strong economy and social safety net programs helped many families avoid poverty.

Gov. Sarah Palin increased the tax on big oils profits and redistributed that wealth back to the citizens of Alaska.

American Public Radio: Commentator Will Wilkinson (The Cato Institute) said this in an interview:

Joe the plumber, did you, like John McCain but unlike Barack Obama, support the invasion and occupation of Iraq? Well, that's cost taxpayers over a trillion dollars so far, and has, like it or not, spread a whole lot of wealth to defense contractors.

What do you think of McCain's proposed $5,000 family health care tax credit? It might be a great idea, but it's not a way of not spreading wealth.

And if you're sniffing around for socialism, why not try Gov. Sarah Palin's Alaska, where every year the state pays residents equal shares of state-owned oil revenues? The one thing McCain and Obama seem enthusiastically to agree on, "energy independence," would spread wealth from consumers and taxpayers to politically favored energy firms. The big difference is which companies gets the subsidies.

One commentor added: Did farmers enjoy farm subsidies, or wealth redistribution?

At, this opinion by Tula Connell

Last week, Treasury Secretary Henry Paulson mailed $150 billion in checks to the big banks. From that point forward, the CEOs and all the other top executives of these banks are now our dependents. They are living off the tax dollars of schoolteachers in Iowa, truck drivers in Montana and even Joe the Plumber. But, if redistribution from the rich to the rest of the country is socialist, what do you call the upward redistribution that Congress approved in the bailout package? It’s hard to justify taxing people who make $40,000 a year to benefit bankers who make more than 100 times as much.

Spreading the wealth—our wealth as taxpayers—through Wall Street socialism, means exacerbating the nation’s massive income inequality. Which, in turn, means an end to the American Dream of economic mobility. Just like in socialist countries.

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