“Redistribute Wealth By Heavy Taxes”? It’s Already Been Done

A recent Gallup poll found that Americans agreed by a record 52-45 margin that the government “should… redistribute wealth by heavy taxes on the rich” (Matt Yglesias, “Americans want the government to ‘redistribute wealth by heavy taxes on the rich,'” Vox, May 5). The nos consistently outnumbered the yeses since the question was first asked in 1940, until the trend lines finally crossed in 2005. The below-34 demographic is much more heavily in favor — 59 to 38.

It’s good that more people than ever before perceive, in however distorted a fashion, that the system is stacked in favor of the rich and they get most of their wealth at everybody else’s expense. The problem is that the framing in the question and response assumes that the present concentration of wealth is something that’s inevitable, unless the government adopts policies specifically aimed at preventing it.

But the truth is, the system we have right now is already the result of heavy taxation and redistribution — but it’s heavy taxation on us, and upward redistribution towards the rich. Most of the plutocracy’s wealth is a form of welfare, paid for by taxes on the working majority.

This is not, for the most part, the kind of taxation that comes to your attention when you send off your 1040 on April 15, or pay sales tax at the grocery store — although some of it does take the form of direct government subsidies to big business and the rich out of tax revenue. Most of this tax takes the form of inflated prices on the goods and services we consume. But when we pay more for the things we need because the government enforces monopolies that enable the providers of those things to charge higher prices, it’s just as much a tax — and welfare — as if we paid it directly to the IRS and they gave it to the corporations that sell the stuff.

When you make artificially high rent or mortgage payments because the state enforces absentee title to enormous tracts of vacant, undeveloped land that the rich have fenced off just to hold out of use, you’re paying a tax to landlords. When you pay 18% credit card interest because of legal tender laws or bank licensing regulations that restrict free competition in the supply of credit, you’re paying a tax to usurers. When these restrictions on the supply of credit, or other regulatory barriers to self-employment, artificially shift bargaining power from labor to capital so that workers compete for jobs instead of the reverse, the hit you take in your wages is a tax you pay to capitalists. When the price you pay for drugs under patent, or copyrighted music or software, is marked up 2000% over the actual cost of production, that’s a tax collected by the owners of “intellectual property.” And when regulations mandate less efficient forms of production or “intellectual property” enables manufacturers to design products to wear out quickly and be thrown away, the extra cost of that waste production is a tax you pay to create artificial demand for overbuilt productive capacity.

The extra hours we have to work to pay for these embedded rents on artificial property rights or waste, in all the things we buy, probably amount to a majority of our labor time. Even the highest marginal tax rate paid by the super-rich pales in comparison.

The main thing governments have existed for, since the beginning of history, is to levy taxes on workers and producers in order to provide rents for the economic ruling classes that control the state. Short of taxing the rich at the same rate they tax us — which would be basically everything they make — they’re going to come out ahead. The “progressive” tax agenda just amounts to slowing the rate at which the rich rob us. It would make a lot more sense to abolish all the legal monopolies by which the rich rob the poor in the first place.

Translations for this article:

Anarchy and Democracy
Fighting Fascism
Markets Not Capitalism
The Anatomy of Escape
Organization Theory