OVERTAXED

by Steve Coll
The New Yorker
OCTOBER 27, 2008

The rise and fall of Joe the Plumber as a symbol of the American self-made man’s resistance to progressive taxation began on October 12th, outside Toledo, Ohio. As Senator Barack Obama campaigned for the Presidency in a neighborhood of modest homes, a man named Samuel J. (Joe) Wurzelbacher approached. He said that he was getting ready to buy a company that earned about a quarter of a million dollars a year, and he asked if his taxes would rise under Obama’s economic plan. The Senator acknowledged that they might. “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.

(Continued here.)