Neither capitalist nor socialist we

In the just completed election, much was made of liberal versus conservative ideology and the principles of capitalism versus socialism. Near the end of the campaign, the issue of redistribution of wealth became a focus of the campaign rhetoric from one party.

It seems to me that the United States of America is neither pure capitalism nor pure socialism. Rather, it is a blend of the two systems. Since the time of Theodore Roosevelt, business has been regulated by government. Such regulation is an inherent restriction on ultimate freedom of private property rights. At the same time, government has not assumed the complete ownership of any sector of the economy.

We must also acknowledge that "redistribution of wealth" has been with us for almost a century. The 16th Amendment to the Constitution (1913) implanted the income tax as a basic element in our economy. The Social Security program (1935) has a benefit formula that intentionally favors the low-income worker. Similarly, many government funded programs do the same in health care and other services. Where do these funds derive except mostly from those who have higher incomes?

Specifically, the income tax has always been progressive in nature. In 1918 and 1936, the marginal rate (that paid on the last dollar of income) was 77 percent and 79 percent respectively. This marginal rate peaked at 91 percent in 1964. Still, in 1939 only 4 million people paid income tax. Many millions do not pay income tax today. These data clearly demonstrate that we have historically favored a progressive tax and a "redistribution of wealth."

Legislation in 1981 and 2001 cut into this progressive tax concept in substantial measure. While not the singular reason, these cuts helped lead to major budget deficits and a rapidly increasing national debt after each was passed.

Lastly, the current activities of the federal government, done in a largely bipartisan manner, are the very opposite of pure capitalism. The involvement of government in businesses ranging from finance to automobiles clearly inserts government into the private sector in a manner that further controls private property. Let us now declare an end to the rhetoric of the ideologue and work together to continue to blend the better outcomes of capitalism and socialism. We must also move toward matching income and expenditures. This is the better path to the economic future that will "promote the general Welfare."

Royce M. Blackwell

Elgin