Obviously some people think this is "fair." Obama told John McCain in the debate on Wednesday, "Well, I don't mind paying a little more." But Joe the Plumber might not feel quite the same way. As a small businessman, Wurzelbacher will likely take those earnings to invest in a bigger company -- that's what he told Obama he wanted to do when he asked his original question on the campaign trail.
By growing his business, Wurzelbacher is creating wealth. And by "redistributing wealth," as Obama wants the government to do, he's actually reducing overall wealth in the economy by taking away capital from those who can invest it efficiently in direct job creation. And the real irony is that if Obama is elected and succeeds in raising taxes on the top 5 percent, he's likely to collect less tax, not more, if history is a guide.
Obama says he wants to return roughly to the tax system in place during the Clinton years. But in 1994 (after Clinton raised the top tax rate in what was the largest tax increase in history), the top 5 percent of earners paid only 48 percent of all taxes, not today's 60 percent. Even after the boom years of the late 1990s, the wealthiest 5 percent were shouldering less of the tax burden than today's wealthy, about 55 percent. And the total revenues collected from them were less than today as well.
One of the great successes of America has been the realization of people like Joe the Plumber that one day they, too, could be "rich" if they worked hard, invested, and grew their own businesses. Now Sen. Obama and the Democrats want to replace that American Dream with a fantasy that wealth is static and must be redistributed in order to ensure fairness. If Sen. Obama's plan becomes reality, it could well turn into an economic nightmare by punishing the most productive in order to reward the least productive in our society. Spreading the wealth doesn't sound all that different from Karl Marx's famous dictum: From each according to his ability to each according to his need.