I was reading an article today titled “What It Takes To Be Rich—Where You Live.” The article contains a chart giving average incomes for the top 20 percent and top 5 percent of people living in various cities.  My recommendation is that you look at those numbers, the numbers cited by economists in article links provided later in this past, and the numbers Obama has put out regarding his proposed tax plan.

In any event, once you’ve read this article, you’ll hopefully understand why both Obama and McCain call for a redistribution of wealth.  That’s what taxation is all about, after all.  The real question is, whose plan hurts the most Americans?  Whose plan helps fewer Americans?

When you consider the entire United States, the average income appears to be well below the $250,000 cut-off that Barack Obama has proposed.  A whopping ninety-eight percent of American households in 2005 made less than $250,000.  This means that under Barack Obama’s plan, approximately 98% of taxpayers will get a good-sized tax cut.  Under McCain’s plan, far fewer people benefit — and those who do benefit much less (except those already obscenely rich).  His much-vaunted cut on capital gains tax benefits almost no one making less than $200,000 per year.

As I read through the comments, I periodically noted people complaining about Obama’s comment to “Joe the Plumber” where he said he wanted to “redistribute the wealth.” A number of people I know have made the same amazing claim that this shows Obama is a socialist.

In this article, I discuss why that’s nonsense and how it demonstrates the ignorance of the electorate — not because they oppose Obama, but because they do not think.  (The condition of opposing Obama and the condition of not thinking are not necessarily related.)

To those people who believe the numbers show how Obama favors socialism:  Look closely at the numbers.  In the case of “What It Takes To Be Rich—Where You Live,” the chart says “top 20%” and “top 5%”.

What always amazes me is the people who fail to read these things accurately.  And if you look at history, you can’t help but wonder why business-minded people make the same mistake.  Looking at various studies of the issue over time, you’ll see that they range from showing that business does only slightly better under Democratic presidents all the way up to businesses do fantastically better under Democratic presidents.  (I think the one exception was the Carter presidency, and a number of factors including the Iranian revolution and its impact on — surprise! — oil, explain that.)

None of the studies show that businesses do better under Republican presidents.  So why the ignorance?  It’s the same thing that drives people to buy lottery tickets.  A few people do fantastically well under Republican presidents.  Apparently, everyone seems to believe that they will be among that group.

There is a difference, though: lotteries are fair.  And they don’t involve borrowing money so that rich people can get a tax cut.

As for the whole “redistribution of wealth” thing, that’s what tax plans do.  Money is taken from individuals in the form of taxes.  It is then spent on whatever programs the government implements and funds.  If that includes social programs which benefit people of lower incomes, then you can argue that it’s “redistributing the wealth” in a way that favors those with lower incomes.  If that includes wars and bail-outs, then you can argue that it’s “redistributing the wealth” in a way that favors the CEOs, the Keating 5, AIG, and the military-industrial complex.

For my choice, investing in social programs makes more sense. For one thing, it doesn’t just help lower income people. John McCain, for example, received $23,157 last year in Social Security benefits.  If I live long enough and we don’t have too many Republican presidents before then, I’ll probably collect them, as well.

Republican administrations also mean an increase in federal spending and federal debt. The Bush years are not unusual in that regard; they’re just extreme enough that even conservatives are finally realizing it.

Think about that when you’re worried about a “redistribution of wealth.”