Obama Joins Adam Smith, Eisenhower, Nixon, Ford, and All Those Other Damned Socialists

By Lee Russ

Wednesday, October 22, 2008 at 08:54 PM

John McCain and Sarah Palin--and the countless campaign surrogates who pepper the airwaves and print media--have taken to saying and/or insinuating that Obama's policies are "Socialist." It's pretty obvious that the McCain campaign made a conscious decision that the only remaining chance for McCain & Palin is to brand Obama with some label that makes voters jerk their voting hands back: he's a "Socialist," he's a "terrorist," he's a Muslim," he's a "traitor."

Now it's nice to see some of the old German rhetoric and scare theories being recycled, but how do the media people live with themselves for not pointing out the obvious--that McCain and Palin and the infinite number of surrogates are all painting a boatload of mostly respected historical figures with the same brush? Is it possible that Wolf Blitzer and all the folks at the networks are unaware that Obama's income tax plan imposes far lower taxes rates than were imposed under the regimes of FDR, Truman, Eisenhower, Kennedy, Johnson, Nixon, Ford, Carter, and even the first term of Saint Reagan? Is that even remotely possible?

Obama's proposing a top marginal rate of 39% for people earning $250,000 or more. Folks, the top marginal income tax rate in the United States was 50% or (usually) higher every single year from 1932 through 1986. Democrats, Republicans, liberals, conservatives.......Every. Single. Year. But maybe that's nothing more than that "pre-9/11 thinking" that the current crop of Washington scoundrels wants to banish from our skull cavities.

It was over 90% for 1944-45, and 1950 through 1963. Note that the years during which we were at war the top rate exceeded 90%. Note that we are currently involved in two wars, in massive public debt, and operating with the lowest top marginal income tax rate since before the depression.

Is it really asking too much for the people who interview the candidates to bring this up? Do these people actually think the US was "Socialist" during the entire time that we were fighting the cold war to restrain Communism?

Then there's Adam Smith, the man that free marketeers love to quote. The man whose major work, An Inquiry into the Nature And Causes of the Wealth of Nations indicates that Smith had no problem with the idea of progressive taxation (though he preferred that the taxes be levied on something other than income). Try on this thought about the first fundamental precept of taxation:

The subjects of every state ought to contribute towards the support of the government, as nearly as possible, in proportion to their respective abilities; that is, in proportion to the revenue which they respectively enjoy under the protection of the state.

That's from the section of the work addressing "the Revenue of the Sovereign or Commonwealth," in particular, the "Sources of the General or Public Revenue of the Society." Smith explains the basis for this rule of taxation as follows:

The expense of government to the individuals of a great nation is like the expense of management to the joint tenants of a great estate, who are all obliged to contribute in proportion to their respective interests in the estate. In the observation or neglect of this maxim consists what is called the equality or inequality of taxation.

Later, addressing taxes on "house rents," Smith explicitly endorsed the idea of those with greater revenue paying a higher proportion of tax (emphasis added):

The proportion of the expense of house-rent to the whole expense of living is different in the different degrees of fortune. It is perhaps highest in the highest degree, and it diminishes gradually through the inferior degrees, so as in general to be lowest in the lowest degree. The necessaries of life occasion the great expense of the poor. They find it difficult to get food, and the greater part of their little revenue is spent in getting it. 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. A tax upon house-rents, therefore, would in general fall heaviest upon the rich; and in this sort of inequality there would not, perhaps, be anything very unreasonable. 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.

Smith explains this view by noting that (emphasis added):

...The rent of land is paid for the use of a productive subject. The land which pays it produces it. The rent of houses is paid for the use of an unproductive subject. Neither the house nor the ground which it stands upon produce anything. The person who pays the rent, therefore, must draw it from some other source of revenue distinct from the independent of this subject. A tax upon the rent of houses, so far as it falls upon the inhabitants, must be drawn from the same source as the rent itself, and must be paid from their revenue, whether derived from the wages of labour, the profits of stock, or the rent of land. So far as it falls upon the inhabitants, it is one of those taxes which fall, not upon one only, but indifferently upon all the three different sources of revenue, and is in every respect of the same nature as a tax upon any other sort of consumable commodities

I doubt that Sarah Palin knows much more about the tax history of this country than Michelle Bachmann knows about Joe McCarthy. And if Sarah Palin has any idea at all what Adam Smith thought, wrote, or did, I probably owe her an apology for several things I've said mentally. But John McCain should certainly know something about our tax history, and is certainly surrounded by advisors who know, or ought to know, Adam Smith's writings far better than I do. So what's his excuse for equating the very period in our history when we rose to be a world power with Socialist tax policy?

As for the media......why bother? Why bother doing even a Google search, let alone library research, when you can show an inflammatory clip from the political rally of the day and follow that with half an hour of inflammatory and partisan discussion of what the inflammatory clip means for the election prospects of the people who made the inflammatory comments? Why bother getting a professor with knowledge of actual history to come on and give a dry talk about a bunch of facts with nothing to inflame the audience, when you can interview "Joe the I'm not really a plumber" and--if you somberly point out that, just like some blogs wrote yesterday, "Joe" lied about wanting to buy a business and misrepresented his income--you can walk away feeling like you just did some real investigative journalism?

It's enough to inflame you. And enough to bring us all down in flames.