Americans hold mixed opinions on issue of redistributing wealth

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NEW YORK --- The war of words waged by John McCain and Barack Obama for the votes of plumbers and other average Joes is a reminder of the nation's long-standing doubts about concentrated wealth -- and its qualms about doing something about it.

Americans have voiced concerns about putting too much wealth in to too few hands since the country was founded, but the public's views also come with contradictions.

Now it's clearer than ever -- thanks to Mr. Obama's much scrutinized talk about taxes with a certain Ohio voter and Mr. McCain's dogged criticism -- that these mixed feelings about income inequality are a long way from being resolved.

"I think that when you spread the wealth around, it's good for everybody," Mr. Obama told the man -- maybe you've heard of him -- Joe the Plumber.

The remark might have sounded innocuous. But Mr. McCain has lambasted his rival's words as sounding "a lot like socialism" and turned the criticism into a central theme of his campaign's final round.

Mr. Obama's remarks, Mr. McCain says, are emblematic of a tax plan to confiscate wealth and give it to the poor that would make the IRS "into a giant welfare agency."

The comments of both candidates touch nerves in American politics -- longtime concern about too much concentration of wealth, but also about the role of government and the individual. More than two centuries after Alexander Hamilton, Thomas Jefferson and other leaders warned about the hazards of too much in the hands of too few, Americans have developed complex views on the intertwining issues.

A substantial majority of Americans say the rich don't pay their fair share of taxes, polls show. A growing number say the U.S. is becoming a nation of haves and have-nots.

The concerns reflect a shifting dynamic in recent years, as an increasing share of the wealth has gone to people at the top of the income scale.

The top tenth of U.S. households now earn an average of 11.2 times what those in the bottom tenth make, according to the Census Bureau.

That's up from a ratio of 8.7 three decades ago. The wealthiest fifth now take in 50 percent of all income, up from 44 percent in 1977. The differences are even more pronounced in analyses of incomes for the top 1 percent of households.

"The income gap between the rich and the rest of the U.S. population has become so wide, and is growing so fast, that it might eventually threaten the stability of democratic capitalism itself," then-Federal Reserve Chairman Alan Greenspan said in 2005.

But Americans are divided on whether government should be heavily taxing the rich to benefit those with less.

"It's a complicated area to try to understand American attitudes," said Frank Newport, the editor-in-chief of the Gallup Poll. "It's kind of like, in some instances, conflicting medical research ... There's no one answer."

A majority of Americans -- 51 percent in a poll by Gallup in April -- said they support "heavy taxes" on the rich to redistribute wealth. That is much higher than when that question was asked in 1939, at the tail end of the Great Depression, when 35 percent agreed.

But support for higher taxes on the wealthy is tempered by people's own aspirations.

"Most Americans hope to some day be wealthy and as a result, the idea of kind of redistributing income is not as popular as (government policies resulting in) making a bigger pie so everybody does better off," said Dennis Jacobe, the chief economist for Gallup.

The tension between those ideas runs through politics in ways that don't always seem logical. Even many wealthy people support higher taxes on the rich. Yet, there's a certain wariness of taxes that might discourage hard work.

Mr. McCain's criticism of Mr. Obama's tax plan is "trying to go for this idea that, in the U.S., is much more popular than in other countries ... that you get ahead through your own efforts," said Bryan Caplan, the author of The Myth of the Rational Voter: Why Democracies Choose Bad Policies , and an economics professor at George Mason University.

When Americans were polled by Gallup in April, 68 percent said they believe money and wealth should be distributed more fairly. In a survey in July, 49 percent said the U.S. has become a nation of haves and have-nots, up from 37 percent who felt the same way four years ago.

But a majority also say the government is doing too much and should instead be leaving more to individuals and businesses.

And when asked how government should fix the economy, people overwhelmingly said they favor policy to improve overall economic conditions and the jobs situation, rather than steps to redistribute income.

In retrospect, though, the question forced people to make a choice that now seems obvious, Mr. Newport said. Who wouldn't favor policies to improve the total economy?

To him, the poll showing more than half of people favor "heavy" taxes on the rich is more revealing, given the strong wording of the question.

But even with such support, politicians have learned to walk a careful line in explaining the need for higher taxes.

"It's not like, 'Look, we're raising your taxes to (more evenly) distribute" income, Mr. Caplan says. "We're doing it because we need to raise money."

SOURCE: INTERNAL REVENUE SERVICE


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