Average Joes have mixed feelings on wealth

Tradition of taxing
That view is far from universal, but it does go way back. In fact, the debate over distribution of wealth has been going on since the U.S. was a brand new nation.

After years of being ruled by British royalty, the country's first political leaders argued that the U.S. must avoid creating its own aristocracy that would allow the wealthy to exert unfair power. But the party that touted itself as the true champions of economic equality was the Democratic-Republicans, led by Thomas Jefferson and James Madison.

"Of course, in actuality, many followers of Jefferson were also slaveholders and the greatest disparities in wealth concentration were right in front of their noses," said Robert E. Wright, who teaches economic and financial history at New York University's Stern School of Business.

Americans didn't face the first tax on personal income until 1861, when a Union government desperate for cash to fight the Civil War decided it had little choice. The tax was sold as a way of making sure the rich, most of whom who were not marching off to war, were bearing their fair share of responsibility, Wright said.

That tax — a flat assessment — survived until 1895, when it was declared unconstitutional.

The country's first experiments with income taxes were promoted as necessities, rather than as a way to shift wealth to where it was needed. Over time, economists came to embrace the concept of a progressive tax — one that levies higher rates in proportion to income — as a means of not just paying for government, but ensuring fairness.

And when the income tax was brought back with the passage of the 16th Amendment to the Constitution, the tax that was enacted was progressive. Rates began at 1 percent and rose to 7 percent for taxpayers with income above $500,000. Less than 1 percent of the population paid income tax at the time.

A 2003 survey of U.S. economists found most endorse policies resulting in redistribution of wealth. The strongest support came from economists who identified themselves as Democrats, said Daniel B. Klein, a co-author of the survey. But self-identified Republican economists were near neutral, offering only mild opposition to the concept.

Misgivings about wealth are pretty universal. For most of economic history, people viewed the total amount of wealth in society as finite and those with less viewed those with more as having gotten it by unfair means.

That view has shifted in modern economies, as people have embraced the idea that policies that lead to growth can improve all fortunes. Still, in much of the world, proposals to share wealth more fairly by means of higher taxes on the wealthy would win wide support.

Keeping up with the Joneses
But the U.S. is a young nation with a highly developed economy, giving rise to a uniquely American strain of thought. Those with less look at those with more and try to figure out how to catch up.

"Here we call it 'keeping up with the Joneses,'" Wright said.

Americans do strongly favor higher taxes on those with more, and back efforts to help those with less.

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 of Americans 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, Gallup's 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, Caplan says. "We're doing it because we need to raise money."

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