Tuesday, October 28, 2008

Progressive Tax - Socialist or Capitalist?

Link to New Yorker article

“Nobody likes high taxes,” Obama said. “Of course not.” Still, he explained:
I do believe that for folks like me who’ve worked hard but frankly also been lucky, I don’t mind paying just a little bit more than the waitress who I just met over there. . . . She can barely make the rent. . . . And I think that when you spread the wealth around, it’s good for everybody.
The principle that Obama evinced, which most economists would regard as unexceptionable, can be traced to Adam Smith. In “The Wealth of Nations” (1776), his seminal treatise on capitalism, Smith wrote:
The necessaries of life occasion the great expense of the poor. . . . 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. . . . 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.

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