The Founding Fathers and the Re-Distribution of Wealth..

..or Is Alexandria Ocasio-Cortez wrong with the idea of progressive taxation?

Here’s our own Veritas Omnia Vincit, opining on the intentions of the Founding Fathers as it pertains to the accumulation of personal wealth; and what limits, if any, should be put on taxation, and if so, where. You may recall that taxation was among the main issues they had with English rule, and a sensitive issue. I’ll pay attention, as any group that will foment a revolt against, at the time, the World’s Leading Superpower over a breakfast beverage is hard core and worth listening to. Enough, here’s VoV.

Veritas Omnia Vincit
The Founding Fathers and the Re-Distribution of Wealth, or Is Alexandria Ocasio-Cortez wrong with the idea of progressive taxation?

Were the founding fathers in favor of massive wealth accumulation? Were they building the United States to become a haven for the ultra-rich?

I often see many people, when reinforcing the notion that the founders were hard core capitalists quote the following Thomas Jefferson thought;

“To take from one because it is thought that his own industry and that of his father’s has acquired too much, in order to spare to others, who, or whose fathers have not exercised equal industry and skill, is to violate arbitrarily the first principle of association — the guarantee to every one of a free exercise of his industry and the fruits acquired by it.”

Usually this quote is followed by explanations as to why this means it’s great to have less than a dozen people owning 2.5 trillion dollars worth of the United States. A precept that many people have been conditioned to accept as the natural order of things as well as something the founders believed based on that quote above.
What’s often left neglected in this quote though, as with so many other things, is context. Taken alone it does seem to indicate the founders were all for massive wealth accumulation, except in context it becomes much clearer what Jefferson really meant to convey here. Industry meant one’s individual efforts and not the massive accumulation of privileged wealth passed on through aristocratic privilege. I don’t want anyone to take my word for it though, so let’s look at some context. We should all be aware of the idea that the founders were absolutely opposed to any form of nobility along with primogeniture and entail, the three main reasons wealth was able to accumulate in the 18th century. Thomas Paine was probably the first person to propose what essentially amounts to an estate tax but he put his own spin on it as he did with all things as he called it ground rent but the concept was similar. A fee to be collected whenever property passed to the next generation and that fee distributed to every citizen upon reaching the age of 21. He called it ground rent instead of estate taxes however because for Thomas Paine land ownership was never something that should be considered ownership, but instead a tenancy or trust relationship between all citizens.

“A power to dispose of estates for ever is manifestly absurd. The earth and the fullness of it belongs to every generation, and the preceding one can have no right to bind it up from posterity. Such extension of property is quite unnatural.” — Thomas Jefferson

“There is no point more difficult to account for than the right we conceive men to have to dispose of their goods after death.” — Adam Smith

“The great object [of political parties] should be to combat [this] evil: . . . by withholding unnecessary opportunities from a few, to increase the inequality of property, by an immoderate, and especially an unmerited, accumulation of riches . . .” — James Madison

“[America] will not be less advantageous to the happiness of the lowest class of people, because of the equal distribution of property.” — George Washington

“I am conscious that an equal division of property is impracticable. But the consequences of this enormous inequality producing so much misery to the bulk of mankind, legislators cannot invent too many devices for subdividing property, only taking care to let their subdivisions go hand in hand with the natural affections of the human mind. The descent of property of every kind therefore to all the children, or to all the brothers and sisters, or other relations in equal degree is a politic measure, and a practicable one. Another means of silently lessening the inequality of property is to exempt all from taxation below a certain point, and to tax the higher portions of property in geometrical progression as they rise. Whenever there is in any country, uncultivated lands and unemployed poor, it is clear that the laws of property have been so far extended as to violate natural right. The earth is given as a common stock for man to labour and live on. If, for the encouragement of industry we allow it to be appropriated, we must take care that other employment be furnished to those excluded from the appropriation. . . . [I]t is not too soon to provide by every possible means that as few as possible shall be without a little portion of land.” — Thomas Jefferson

It’s important to note the founders all felt an estate tax was a simple way to raise federal monies and reduce deficits with a minimal social cost, John Adams in 1797 signed into law the first estate tax in order to fund the Navy. Jefferson was largely opposed to intergenerational, hereditary privilege along with the intergenerational debt that accompanied it. Jefferson wasn’t against family inheriting the land, but he often spoke about how the accumulation of wealth in the hands of a small few seemed to create much in the way of misery. James Madison’s words called it “unmerited” which fit well into the founder’s philosophy that each of us are able to pursue our success based on our own merit. They found inherited wealth “unmerited” accumulation of wealth and injurious to the success of a society of equals.

“I asked myself what could be the reason so many should be permitted to beg who are willing to work, in a country where there is a very considerable proportion of uncultivated lands? These lands are undisturbed only for the sake of game. It should seem then that it must be because of the enormous wealth of the proprietors which places them above attention to the increase of their revenues by permitting these lands to be labored. I am conscious that an equal division of property is impracticable, but the consequences of this enormous inequality producing so much misery to the bulk of mankind, legislators cannot invent too many devices for subdividing property, only taking care to let their subdivisions go hand in hand with the natural affections of the human mind. The descent of property of every kind therefore to all the children, or to all the brothers and sisters, or other relations in equal degree, is a politic measure and a practicable one. Another means of silently lessening the inequality of property is to exempt all from taxation below a certain point, and to tax the higher portions or property in geometrical progression as they rise. “ — Thomas Jefferson

Which brings me to the aforementioned Ms. Cortez and her proposed 70% marginal rate. It’s making some noise and ruffling some feathers in a great many circles. It’s being called everything from regressive to outright socialist. But is it really? The founders themselves never wanted a Jeff Bezos and Bill Gates to own more wealth than 100 million people combined and their words often proclaimed as much. The United States from 1932 until 1986 never had a top marginal rate below 50%, and between 1936 and 1980 the top rate fluctuated from 70%-94% on income in the top tier of the brackets. For many people those years include the Make America Great Again years. I understand that for many of these years that top rate had a 50% cap on actual earned income versus unearned income. The question becomes once again as a great nation and a great society what are the obligations due from each of us according to our means? The founders had some ideas as you can see from the quotes.

It’s always interesting to me to see how just how well propaganda works to change the mind of the public with respect to taxation and what’s “fair” or not fair. Don’t misunderstand my words here, Ms. Cortez has a great many laughable moments to be sure, but a marginal rate of 70% with respect to unearned income at the top bracket is not one of them. The dreaded “death” (estate) tax that many Republicans decry was something the nation felt appropriate since John Adams first signed it into law to fund the common defense and is also not a thing the founders were against.

Ms’ Cortez should be rightly mocked for many of her ideas on “free” stuff. Much of that free stuff is nothing more than borrowing against the future of our children to fund some dipshits today. Much of that free shit is not only not free but cost prohibitive. On those counts she should rightly be mocked and called to account. However, asking those who benefit the most to also contribute the most to continue those benefits hardly seems unreasonable, as taxes are inevitable we should all be paying the appropriate scale based on our incomes as per Jefferson’s ideas on “tax the higher portions or property in geometrical progressions as they rise”. Some of the most productive 50 years of progress and economic power occurred during that heavy marginal rate taxation. We the people must stop looking for gratification today at the expense of our future.

No one, Ms. Cortez included, is suggesting confiscation of all wealth. The suggestion is simply an ever widening gap between the top 1-10% and the bottom 90% should never equal that of third world nations without risking the economic result of third world nations. When the vast majority of middle class workers become lower middle class workers the economy suffers. In every country and in every age the accumulation of wealth in the hands of a few never bodes well for the nations where it occurs. The founders saw this in England, in France, and in many aristocracies. We’ve seen it ourselves in so many third world shitholes, massive wealth and opulence next door to abject poverty and misery. Capitalism is a great economic force, but the founders knew and Eisenhower repeated that knowledge when he said, “Another factor in maintaining balance involves the element of time. As we peer into society’s future, we — you and I, and our government — must avoid the impulse to live only for today, plundering, for our own ease and convenience, the precious resources of tomorrow. We cannot mortgage the material assets of our grandchildren without risking the loss also of their political and spiritual heritage. We want democracy to survive for all generations to come, not to become the insolvent phantom of tomorrow.”

It’s time we all pay for the wars, the programs, and the government we’ve allowed to run wild with spending and the offerings of free shit. The average worker, and the ultra-rich all have to pony up their share of the load. That includes me and my family as well. If I’m to leave something of real value to my children and grandchildren it should be a nation where I’ve paid my debts and not one where I’ve bankrupted their future to fund stadiums for rich men without demanding those rich men step up and contribute what’s fair for society giving them such benefits.

No doubt this will be a far less popular opinion than some others I hold, that’s as it should be. Feel free to let me know just how wrong I am.
VoV

It’s been my experience that taxation WITH representation isn’t all that great, either. Agree or disagree, this is well worth the time spent reading. Thanks, VoV. And keep ’em coming, buddy.

Category: "Your Tax Dollars At Work", Guest Post, Historical, Politics, Society