Father of Capitalism Said 'Burden' Rich to 'Relieve' Poor

Published on October 18, 2004 By blogic In Politics

I'm always surprised at how many people use free market theory to argue against taxing the rich more than the poor. These taxation haters scoff at economists who argue that since the wealthy benefit most from civil society, the wealthy should contribute the most to the body that maintains the infrastructure of civil society: the government.

The idea that the wealthy don't owe a debt to the government, and the poor, for their wealth is a modern one. I find the modern conservative indifference toward the poor to be deeply chilling, and I don't see how the conservatives can so easily ignore that they've benefited most from the societal infrastructure that the government has maintained.

In this quote from The Wealth of Nations by Adam Smith -- the father of capitalism -- you'll see that he defends progressive taxation, and sees it as an important way of bringing about the desirable goal of wealth redistribution:

The subjects of every state ought to contribute toward the support of the government, as nearly as possible, in proportion to their respective abilities; that is, in proportion to the revenue which they respectively enjoy under the protection of the state ....[As Henry Home (Lord Kames) has written, [a goal of taxation should be to] 'remedy inequality of riches as much as possible, by relieving the poor and burdening the rich.'

Smith also argued:

It is not very unreasonable that the rich should contribute to the public expence, not only in proportion to their revenue, but something more than in that proportion.

The next time you hear someone arguing for flat taxes, or that the wealthy don't have an obligation to pay higher taxes, or that we shouldn't use government as a means of trying to help people out of poverty -- just remember that the guy who came up with the theory of capitalism disagreed with them, and didn't share their indifference toward others' suffering.

Comments

Shulamite

on Oct 18, 2004

Blogic, just so you know, you've totally misquoted Smith in your title. I think there's something wrong with your math here, man.

You say we should tax the heck outta some rich folk (I know this can't be bitterness talking and I'm sure you're expereinced in small business entrepreneurship yourself). You then call the conservatives "indifferent" to the poor -- a charge for which I can find no basis. You say conservatives have benefited most from the social infrastucture the government has maintained. Wow. These are some audacious claims.

Let's look at what Smith said. "The subjects of every state ought to contribute toward the support of the government, as nearly as possible, in proportion to their respective abilities; that is, in proportion to the revenue which they respectively..." I'm sure you know what a proportion is. Hang on to that idea.

You then flay the idea of flat taxes -- totally contrary to the quote you just illuminated. Smith is for them. A flat tax says everyone pays the same percentage. You know, the same proportion, dependent on how much they make or "respectively enjoy." You got it. Adam said it. Flat taxes for all. It all has to proportionate. Not what we have now, where some 70, 80 or maybe eve 95 percent of our nations taxes are paid by what Kerry consideres the "wealthy." No. It has to be proportionate.

Lemme break it down for y in case you don't understand. If I make two dollars, at our current rate, the government would get one. If you make 100,000 dollars, the government would get 50,000. See? You're paying more, and you're rich, but it's a flat tax. Wowsers. "You mean conservatives are right?" You bet.

Daiwa

on Oct 18, 2004

The charge that conservatives are indifferent to the poor is simply bogus.

There are fundamentally only 2 ways to help the poor:
1) direct financial support, either from government or private sources.
2) indirect support, also either from government or private sources.

Conservatives believe that a combination of tax incentives which create an environment conducive to the poor helping themselves, along with private humanitarian & charitable activity, is the more enobling strategy, honoring the individual and rewarding work. Those truly unable to help themselves deserve the support of both government, in the broadest sense, and private humanitarian activity.

Liberals (you'll have to bear with me here since my brain has a very hard time thinking like one) favor direct subsidies to the poor, primarily through governmental redistribution of wealth.

So in general, liberals prefer the direct approach where conservatives prefer the indirect approach. Calling the indirect approach "indifferent" is not only incorrect, it is demagoguery. Most of us conservatives prefer the latter approach, not because it helps the poor less, but because it has the side effect of promoting personal achievement, self-worth and dignity

I'll offer an opinion here - many liberals, especially rich liberals, especially rich liberals with inherited wealth, whether consciously or not, prefer that the government take care of the poor so that nothing is expected or required of themselves. It takes the heat off. I'd have greater respect for them if more of their own money voluntarily followed their rhetoric into the hands of the poor. I am unaware of any law or policy that prevents the rich from giving money to or otherwise supporting the poor. And before I get flamed, I know many rich liberals support charitable causes (after all, our tax laws encourage that, right?... lowering the effective tax rate for the rich, right?) and they are to be commended for that support whatever its motivation. But, it is one thing to set an example to be followed, it is another to demand others do the work for,or even with, you.

I'll also beg to differ with this notion that the wealthy benefit the most from civil society. What is that but an empty phrase? This idea harbors unspoken envy, along with the implication that wealth is either ill-gotten or in & of itself somehow an unearned or undeserved "perk" of civil society. I don't buy that.

Cheers,
Daiwa

Daiwa

on Oct 18, 2004

Here's another way to look at it: Tereza Heinz-Kerry could easily afford to pay each of her gardeners $200,000 a year. What's to stop her?

Cheers,
Daiwa

Pete

on Oct 19, 2004

Just ask yourself ONE question, then it should all be clear.

How many poor people have created a job for someone else?

Almost ONE!

Dr Guy

on Oct 20, 2004

The subjects of every state ought to contribute toward the support of the government, as nearly as possible, in proportion to their respective abilities; that is, in proportion to the revenue which they respectively enjoy under the protection of the state ....

You just killed your whole argument. A flat tax is not arguing for a flat amount, but for a single percentage on all income. As Adam Smith stated, everyone "in proportion to their respective abilities" . Proportion means 1/2 1/3, 1/4 whatever. But that means a flat tax.

Nice argument, but usually one tries to argue his point, not destroy it.

blogic

on Oct 20, 2004

You're ignoring the final sentence: "[a goal of taxation should be to] 'remedy inequality of riches as much as possible, by relieving the poor and burdening the rich.'"

Smith also argued:

It is not very unreasonable that the rich should contribute to the public expence, not only in proportion to their revenue, but something more than in that proportion.

Not a flat tax.

Welcome Guest! Please take the time to register with us.
There are many great features available to you once you register, including:

Richer content, access to many features that are disabled for guests like commenting on the forums.
Access to a great community, with a massive database of many, many areas of interest.
Access to contests & subscription offers like exclusive emails.
It's simple, and FREE!