Isn't All Taxation Income Redistribution?

I think the most interesting issue of this year's presidential campaign has been taxation. While both John McCain and Barack Obama have presented themselves as being tax cutters, McCain has consistently supported across the board tax cuts whilst Obama has emphasized that tax cuts should be geared towards those who need them the most and, at the same time, taxes should be increased for those who can afford to pay more in his view. On a number of issues, Obama and McCain hold similar views, but there is a real difference in their attitudes towards taxation.

The McCain position is essentially that taxes are a necessary evil and that America's current tax rates are too high. Though no one will ever able to agree on the perfect tax rate, I think it's indisputable that high tax rates make things difficult for a lot of people, from the middle class family trying to eek by to the small or large business that needs money to expand and hire new workers. McCain, like President Bush, sees cutting tax rates as one of the best ways to spur new growth. Compared to Obama, McCain is more concerned with getting past the recession, not surviving it. Ideally, McCain's tax policies would help the American economy zoom through the recession and start thriving again quickly, but there's certainly no guarantee this will happen. There is also a philosophical component to McCain's position which is based on the idea of America being a land of the free and also a land of limited government. Reducing taxes reduces the imposition of government on the people; at the very least, it gives people with money more freedom to spend that money as they will. Furthermore, reduced tax revenue puts pressure on government to slim down which jives well with McCain's call for a government spending freeze and his long-running crusade against wasteful government spending. It doesn't necessarily go so smoothly with certain of McCain's other positions, however, notably when it comes to foreign policy: one indisputable lesson of Iraq is that wars cost a lot of money.

For Barack Obama, the end justifies the means when it comes to taxation. No one likes paying taxes, but there's a difference between the pang an American taxpayer feels when writing a check out to the IRS and the pain a burn victim feels as he is pulled out of the flames. Obama thinks that the good that can come out of government spending outweighs the ills of taxation; he believes that increasing access to health insurance and health care, cleaning up the educational system, and otherwise aiding the masses is more important than the free spending of the wealth one has earned. Furthermore, he doesn't seem to think that the ills of taxation are quite so severe as McCain believes. Lower taxes may encourage companies to expand, but big companies have also made the "golden parachute" into a household phrase. It's not only government that engages in wasteful spending; it's rife in the corporate world and among the wealthy as well. Obama essentially makes the argument that the rich and businesses should pay more in taxes because they can afford to do so -- profitable businesses will still be able to expand and make more profits and the rich will still be able to invest because there is so much wealth floating around, but by trimming the fat of the wealthy the country as a whole can benefit. I think whether this is really true or not is very situational. Some businesses and some people really probably can afford higher taxes without cutting back too much , but not everyone will be able to bear the increased burden so lightly. The recent financial crisis has demonstrated how easily even huge businesses can fail quite suddenly so we shouldn't treat a change in tax policy in any way but seriously. Let's also not forget that Obama is an anti-tax crusader himself when it comes to the middle class. First and foremost, I think Obama's tax cuts will make it easier for folks to survive the recession even if they have been hit hard by the mortgage crisis and credit crunch; I think it's more of a humanitarian gesture than an economic one. At the same time, those tax cuts should encourage consumer spending which is good for the economy and could help keep a lot of businesses afloat. Obama also seems to believe very much in the power of government spending to create jobs and boost the economy; for instance, he wants the government to take a leading role in the drive towards alternative energy sources and he also supports increased government spending on infrastructure (public works projects can create a lot of jobs and give a nice boost to the construction and related industries). To an extent, Obama wants to use government to provide the economic boost that McCain hopes his tax cuts will encourage the wealthy and businesses to provide. Personally, my biggest beef with Obama is that he is not more focused on the most important goals he wants to achieve when it comes to spending -- for instance, I really don't believe spending money on encouraging community service is something the government needs to be worried about right now.

Clearly, McCain and Obama aren't on the same page when it comes to taxation. On the other hand, they're not quite as different from one another as the McCain campaign wants people to believe. Obama has been repeatedly branded an income redistributor and a socialist (and perhaps by extension "un-American") of late because of his tax policies, but we've had the progressive income tax in America for a long time now. I don't think it's fair to call someone who wants to make an adjustment within a system of taxation that has existed through many such adjustments over many years an agent of radical change. In fact, McCain also wants to make adjustments to that system but in the opposite direction. McCain certainly doesn't seem to mind disproportionately relying on the taxation of the wealthy to fund the wars in Iraq and Afghanistan; he probably won't mind relying on it again if another war or two starts under his watch. Granted, McCain has spoken of the flat tax sympathetically in the past, but it doesn't seem to be a part of his current platform. As I see it, ALL taxation is income redistribution -- it always involves the government taking money away from individuals, away from families, and away from businesses and spending it in a way that the previous holders of the money can generally only influence indirectly. McCain may want to reduce the amount of income redistribution rather than increase it as Obama wants to do, but both presidential candidates are redistributers. I don't understand why the social spending advocated by Obama is often treated as if it was in some way worse than other government spending. Perhaps taxation for war spending seems less like income redistribution to some because the troops are fighting for everyone, but the fact remains that all war funds raised by taxation were taken forcibly and spent without the explicit approval of the taxpayer. While Obama does want a bigger government, I don't think any of his policies are really more socialistic in nature than some of the government's recent attempts to address the financial crisis -- AIG, for instance, has essentially been nationalized...a really, really, REALLY socialistic thing to do. I think Obama and McCain both make superb arguments for their respective views on taxation; I'd even go so far as to say their arguments have raised the level of discourse on this subject in American society for the time being. At the end of the day, though, they're both essentially income-redistributin', reluctant socialists, just like FDR and Ronald Reagan. McCain is being disingenuous by claiming to be something else.