The heart of Obama’s tax plan is taking from the “rich” and giving to the less rich. Yet Obama’s tax plan is based on a fallacy that the “rich” will not change their economic behavior in reaction to higher tax rates.
History tells us, however, that economic redistribution plans fail because the producers of society would rather not produce, than have the fruits of their production taken away and given to others. Obama can raise the tax rates on income, but he cannot force people to generate income to be taxed. The people may just say “no.” This resistance will not come from evading taxes, but from evading income. In the end, as must all economic redistributors, Obama either will have to resort to repressive measures, or will have to abandon his tax plan. Regardless, the economic damage will be deep and long lasting.
The best example of this phenomenon is the forced collectivization of farms in the Soviet Union from 1928-1932. During these years, Stalin forced the collectivization of much of Soviet agriculture. In some circumstances, peasants lost the private ownership of land to the collective, in other instances land owners where forced to give most or all of their production to the state or collective. The forced collectivization was more violent at some times than others, but the consistent theme was the use of government power to force the successful farmers (the so-called “Kulaks”) to subsidize less successful farmers and the state.
“Stalin wanted to transform individual farms into large collective farms because he saw that the government was losing money to private traders. This required that the majority of farmers would have to work and live together on large state-run farms. Through these farms Stalin hoped to increase agricultural productivity, create grain reserves for Russia, and free many peasants for industrial work in the cities. In some cases the collectivization took the form of collective farming, in others forced reallocation of crop production.” (Cite)
But the peasants, particularly the Kulaks, refused to submit willingly, despite the promise that the contribution of their property would increase the collective good. “How did peasants initially respond to the idea of collectivization? Party agitators sent to the villages to persuade peasants of the benefits of collectivization often met with skepticism and mockery. Peasants who resisted the pressure of regional party officials to enroll in collective farms were labeled as kulaks; those who feared confiscation sold off their property as quickly as they could, in effect self-dekulakizing.” (Cite)
In response to resistance, Stalin turned to terror. Yet resistance continued. Most significantly, peasants preferred to burn their crops and destroy their property rather than have it taken over by the government. “But the peasants objected violently to abandoning their private farms. In many cases, before joining the kolkhozy they slaughtered their livestock and destroyed their equipment, The losses, as well as the animosity toward the Soviet regime, became so great that Stalin decided to slow down the collectivization process.” (Cite)
The results of collectivization were food shortages and famine. Peasants preferred starvation and death to property confiscation. “Peasant resistance to collectivization took many forms: wanton slaughter of livestock, women’s riots (bab’i bunty), theft and destruction of collective farm property, and, perhaps most widely spread, an intentionally slow pace in carrying out directives of the kolkhoz administration. The tremendous loss of livestock through slaughter, inadequate fodder, and simple neglect made it virtually impossible for kolkhozes to fulfill their procurement quotas for meat and dairy products.” (Cite)
Should Obama win, and hold sway over a Democratic-controlled Congress anxious to raise income taxes on the “rich,” Obama will be in for a rude surprise. There is nothing Obama can do about people who would rather not work than have the fruits of their labors confiscated. Even Obama cannot change human nature.