This blog is a response to a post on Facebook that simply grew too large to continue there. The original message, which was not made by me, touched on the hints of Socialism in Obama’s refundable tax credits. From there, a back-and-forth occurred with several different people, and the applicable portion of the latest comment is quoted below.

I definitely understand that Obama is not infallible and that some criticism of him is not baseless. In this case the criticism is misleading at best. All of the tax credits proposed are to go to people who work. For one, “welfare check” implies money from the government for those who don’t work. Those that do work still pay social security taxes and medicare taxes, as well as excise taxes on the gas you use or your telephone bill. These tax credits are designed to somewhat offset these taxes in particular. Currently, according to http://politifact.com/truth-o-meter/statements/813/, the government is giving nearly $53 billion in the same type of tax credits to some 57 million people who fall into the zero or negative income tax category. This has been supported strongly by republicans in the past because it helps to keep lower income people who work off of welfare and gives them more of an incentive to work.

More…

A friend sent me this wonderful tax analogy:

Best explanation to share with your congressman, and any Democrats/Republicans who might be your friends, who clearly do not understand this “complex” principle of Obama’s Tax Plan.

Suppose that every day, ten men go out for beer and the bill for all
ten comes to $100. If they paid their bill the way we pay our taxes, it
would go something like this:

The first four men (the poorest) would pay nothing
The fifth would pay $1.
The sixth would pay $3.
The seventh would pay $7.
The eighth would pay $12.
The ninth would pay $18.
The tenth man (the richest) would pay $59.

So, that’s what they decided to do.

The ten men drank in the bar every day and seemed quite happy with the
arrangement, until one day, the owner threw them a curve.

‘Since you are all such good customers,’ he said, ‘I’m going to reduce
the cost of your daily beer by $20.’ Drinks for the ten now cost just
$80.

The group still wanted to pay their bill the way we pay our taxes so
the first four men were unaffected. They would still drink for free. But
what about the other six men - the paying customers? How could they divide
the $20 windfall so that everyone would get his ‘fair share?’

They realized that $20 divided by six is $3.33. But if they subtracted
that from everybody’s share, then the fifth man and the sixth man would
each end up being paid to drink his beer. So, the bar owner suggested
that it would be fair to reduce each man’s bill by roughly the same
amount, and he proceeded to work out the amounts each should pay.

And so:

The fifth man, like the first four, now paid nothing (100% savings).
The sixth now paid $2 instead of $3 (33% savings).
The seventh now pay $5 instead of $7 (28% savings).
The eighth now paid $9 instead of $12 (25% savings).
The ninth now paid $14 instead of $18 (22% savings).
The tenth now paid $49 instead of $59 (16% savings).

Each of the six was better off than before. And the first four
continued to drink for free. But once outside the restaurant, the men began to
compare their savings.

‘I only got a dollar out of the $20 declared the sixth man. He pointed
to the tenth man, ‘but he got $10!’

‘Yeah, that’s right,’ exclaimed the fifth man. ‘I only saved a dollar,
too. It’s unfair that he got ten times more than I!’

‘That’s true!!’ shouted the seventh man. ‘Why should he get $10 back
when I got only two? The wealthy get all the breaks!’

‘Wait a minute,’ yelled the first four men in unison. ‘We didn’t get
anything at all. The system exploits the poor!’

The nine men surrounded the tenth and beat him up. The next night the
tenth man didn’t show up for drinks, so the nine sat down and had beers
without him. But when it came time to pay the bill, they discovered
something important. They didn’t have enough money between all of them
for even half of the bill!

And that, ladies and gentlemen, journalists and college professors, is
how our tax system works. The people who pay the highest taxes get the
most benefit from a tax reduction. Tax them too much, attack them for
being wealthy, and they just may not show up anymore. In fact, they
might start drinking overseas where the atmosphere is somewhat friendlier.

For those who understand, no explanation is needed.
For those who do not understand, no explanation is possible.

Author Unknown

Keep this in mind next time you hear someone grousing about how the rich get all the breaks — or even more ridiculous, that the government is actually putting money into the rich’s pockets. Taking less of someone’s money isn’t giving them anything; it’s simply taking less of it. It’s still a net loss for them. Pay attention to the rhetoric used regarding taxes by the two different parties on the campaign trail. Have you noticed that the Democrats enjoy speaking in relative terms? The rich should pay more! How much more? Who knows, but more! There’s already an inordinate burden on “the rich,” so at what point will the populists stop shouting for the rich to pay more taxes? Allow me to pose a question, and we’ll suss this out in the comments:

Why should the rich have to pay more than they already do in taxes?

Megan McArdle at the Atlantic Monthly details some economics involving the Bush tax cuts, which have effectively been demonized by Obama.

Whatever your opinion of the Bush tax cuts, it is indisputable that they made our tax base more progressive:  the rich and very rich now pay a higher percentage of the total tax take than they did before Bush took office.  That has dire implications for the budget for the next few years.

It’s an enlightening read. I like reading Megan. Anyone who’s familiar with her knows she doesn’t toe a party line.

Megan over at her corner of The Atlantic suggests that outrage has lost it’s meaning in the blogosphere. While there certainly is the opportunity to apply a check against the mainstream media, there is also the potential to have ideologues from any part of the political spectrum all group together and really just let the “other side” have it. And of course it happens. But to follow through with such polarizing rhetoric really requires a dedication to the art of ignoring facts or any kind of real debate.

Case in point, one of my closest friends is a liberal, and admittedly so. We routinely– to the chagrin of his wife I’m sure– have political “discussions” that are usually somewhat lengthy, but never end on bad terms. That’s because, while we disagree a solid portion of the time, we also take the time to listen to each other rather than spitting party talking points or throwing around the expected retort against the politician or issue on hand.

Even tonight, I mentioned how the Carter Administration employed a windfall profits tax on “Big Oil”. The results?

The law produced nowhere near the revenue it promised, made the country more reliant on foreign oil, and generated reams of red tape, according to a 2006 report by the nonpartisan Congressional Research Service.

This, of course is one of the brilliant “new” ideas that Obama is bringing to the table. Not new, of course, and certainly not a good idea, but it does play to the average American’s tendency towards stick-it-to-the-man-itis. My mention of it to my liberal friend produced a somewhat disappointed look accompanied by merely, “Yeah…”

But see, that is the result of real, honest dialogue, something so many in this country, news media, and yes, even blogosphere fail to appreciate. There are a lot of complex issues at which we should direct our attention. There won’t be many quick fixes. And as much as the two-party system seems to force the unintended consequence of seeing only two sides to every issue, we really need to stop and think. (Or maybe even actually read the legislation. Yeah Congress, I’m looking right at you.) And if you don’t know enough about an issue, don’t be afraid to ask someone, keep your mouth shut, and listen. Incessant rambling doesn’t well up any sense of respect in me for you. As Megan says,

It’s hard to generate intellectual respect for someone who believes that life is an exam composed entirely of multiple choice questions.

I wish I could honestly write like great writers of generations before me. I admire so much writers like C.S. Lewis, Thomas Jefferson, and James Madison.

Those last two, I have been reading a lot of lately. I came across this line just now in The Federalist #10:

But the most common and durable source of factions has been the various and unequal distribution of property. Those who hold and those who are without property have ever formed distinct interests in society.

“Wow. Yes. Absolutely,” I thought. I couldn’t agree more. In this paper, Madison is describing the natural and immovable existence of factions within a free society. Liberty is to faction what air is to fire, an aliment without which it instantly expires, he says. But just as ridiculous as it would be to try to be done with air simply to extinguish a fire, one cannot get rid of the liberty that is required for a faction to exist just to rid a society of factions. What is a faction? Glad you asked. James, tell us:

…a number of citizens, whether amounting to a majority or a minority of the whole, who are united and actuated by some common impulse of passion, or of interest, adversed to the rights of other citizens, or to the permanent and aggregate interests of the community.

Which, I believe, is why the Democrats ultimately fail in their efforts to secure power in the government and are replaced by Independents and Republicans when the citizens realize what they’ve done. The Democratic Party, to me, and ironically considering Obama’s campaign of unity, seems very much unlike a group of people with a common message and purpose. I’ve written about this before. Instead, it really seems like a collection of factions; a collection in which it appears the Democrats want to include everyone except the Religious Right. The problem, of course, is that because these factions do not share a strong enough message of common good for the entire population of this country, their message ultimately fails.

Over 200 years ago, Madison attributed the most long-standing source of animosity between groups to the amount of property, or lack thereof, each individual can claim as his own. And of course he’s right. It’s the battle cry of the “people” in every communist revolution. And almost frighteningly, it’s also the battle cry of the Democrats. On the stump, you’ll constantly hear Democrat candidates remind their audience of “the rich”, chiding those with money as if it were a foregone conclusion that they’d done something evil to achieve such fortune. (Nevermind the overwhelming hypocrisy behind such a notion, coming from political candidates. Don’t look behind the curtain.) I’ve heard this sentiment in my own experience. I have almost no money. Why do I not join them in the deriding of those who have it? Because some day I want to join them. And I don’t see America as a land where I’m kept from doing so. I see it opportunistically, and once I get there, I don’t want a larger chunk in terms of percentage taken from me just because I’ve achieved more than the have-not’s, content their entire lives with complaining that they don’t have what they want.

And it is exactly this sentiment, this passion, that leads to excessive taxing on the wealthy. Yes, I said it. It’s unfair. Because the tax code as it stands currently is, essentially, a giant, collective attempt to “stick it” to the man. And it’s wrong.

The apportionment of taxes on the various descriptions of property is an act which seems to require the most exact impartiality; yet there is, perhaps, no legislative act in which greater opportunity and temptation are given to a predominant party to trample on the rules of justice. Every shilling with which they overburden the inferior number, is a shilling saved to their own pockets.