I found a curious article on the bottom front fold of the newspaper this morning. The headline read “Spreading the Wealth Tradition in U.S.” Charles Babington of the A.P. wrote the piece in an apparent attempt to justify Barack Obama’s recent comment that “spreading the wealth” was a cornerstone of his economic theory. Babington, a frequent contributor to the PBS “news show” Washington Week, does not understand American history, let alone American tradition.
According to Babington, McCain’s attacks on Obama’s socialist inclinations “ignore the nation’s long tradition of redistributing huge amounts of wealth through tax-and-spending policies.” This is true, but only to a point. As Babington correctly states, since the adoption of the 16th Amendment in 1913, Americans have become accustomed to a “progressive” income tax. The first “legal” income tax rate in 1913 was 1% on all income from $3000 to $500,000 and 7% on all income over $500,000. In current dollars, this would place a 1% tax on all income from $66,000 to $11,000,000 and a 7% tax on all income over $11,000,000. Currently, an individual making $66,000 a year is going to pay roughly 15% in income taxes before deductions. Clearly, tax rates have been on a steady climb in the last ninety years—the top rate was 94% during World War II—and the wealthy have contributed more to the government tax coffers than any other group. Babington does not dispute that fact.
The problem is in his insinuation that taxes are the “American tradition.” Babington studied Islamic history at the University of North Carolina. Maybe he ignored American history in the process. The American tradition I have studied exemplifies a resistance to oppressive taxation. Without question, the Founding Fathers would consider current American taxation to be oppressive. Light taxes by comparison to current American taxes contributed to the call for independence between 1765 and 1775, and the original governing document of the United States, the Articles of Confederation, prohibited the Congress from directly taxing the people. After the adoption of the United States Constitution in 1788, Congress implemented a series of excise and sales taxes on various commodities. These taxes were eliminated in 1802, and while the government resorted to higher taxes during the War of 1812, from 1817 to 1862, the United States relied on tariffs to fund the government. These tariffs were often in dispute, oppressively high, and almost always favored one section (the North) over another (the South), but most Americans paid little in taxes.
That changed in 1862. The Union government needed money to finance an expensive war, and most importantly expand government power, and after authorizing the treasury to print inflationary paper money, it resorted to the first income tax in American history. Revenue exceeded expectations and led to a call for a permanent income tax (thank the “low tax” Republican Party for that). The tax was eliminated in the 1870s, but a call for the tax again resurfaced in the 1890s. The Supreme Court declared the income tax unconstitutional—one of the few times the Court was beneficial for individual liberty—and until the 16th Amendment, Americans were free from the teeth of government redistribution. Thus, for the first 148 years of United States history, and this does not include the anti-tax Confederate States of America Constitution—Americans only reluctantly accepted taxes during pressing periods of war. Even the father of the American state capitalist system, Alexander Hamilton, believed direct taxes on the people were too oppressive to consider at the federal level.
Babington’s goal was not to suggest that Americans pay too many taxes; by rewriting history, and he does just that, he softens the Marxist nature of the “progressive” income tax. Most of the tenants of progressivism can be found in the Communist Manifesto. In fact, Babington applauds income redistribution for the “benefit” of the poor by quoting liberal “economist” Chad Stone: “We still have too much poverty….And if it were not or the progressive nature of our tax system, it would be much worse.” If Americans remained true to the Founders and the original republic, they would call for the elimination of the income tax and a corresponding reduction in federal power. That is the American tradition Mr. Babington. You cannot erase the Founders. People like me won’t let you.