Ending the “evil” of income inequality is the centerpiece of the radical left’s crusade to achieve “social justice” in our society through government mandates on wages and sweeping tax increases. the non-poor and businesses. (And not just on the “rich!”)
But income inequality is not a bad thing, it is a fundamental element of a market economy where excellence, competence and ambition are more rewarded than mediocrity and laziness. The prospect of higher after-tax income serves as an incentive. A clear example is the income disparity between elite professional athletes, rock stars, actors and successful entrepreneurs compared to those of average or less ability in these fields.
For the vast majority of Americans, income disparities are primarily related to varying levels of education, market value skills, health, physique, dedication, ambition, and work ethic. In America we have relative poverty in a prosperous country, a condition far better than the abject poverty found in truly impoverished countries. America’s poor have cars, big-screen TVs, computers, appliances, $ 200 basketball shoes, and even property. And they also benefit from abundant government programs that redistribute the income of others, provide for themselves and significantly reduce income inequalities.
Political demagogues and media liberals trumpet deceptive economic statistics to inflame, not inform, public opinion. Yes, some Americans have fallen victim to the global economy and its impact on traditional industries, while others have thrived. But it is simply not true that the middle class as a whole has been devastated, the temporary effects of COVID-19 aside.
According to the US Department of Commerce, 59% of all families in 1970 had incomes between $ 35,000 and $ 100,000 (in 2019 dollars adjusted for inflation). By 2019, this cohort had fallen to 40%. But it wasn’t because they were getting poorer. The percentage of families earning less than $ 35,000 actually fell from 25% in 1970 to 17% in 2019. During the same period, the percentage of families with income over $ 100,000 rose from 16%. at 43%. Most of the middle class have evolved up, not down!
It is true that millions of legal and illegal Latino immigrants have taken low-paying jobs during these years and are reported, statistically, as working poor. Mathematically, this had a downward influence on the average national income. But this is misleading, because these same immigrants have dramatically improved their own standard of living compared to what it was in their country of origin. Being relatively poor here is much better than being extremely poor or even middle class in Mexico, Guatemala or Venezuela.
Income inequality is also distorted in government statistics that omit non-wage compensation such as employer-provided health insurance and deferred compensation, such as the very generous defined benefit pension plans for teachers and others. government employees. On top of that, the reported income gap between the rich and the poor is exaggerated using their pre-tax income.
This ignores the fact that the richest 1% alone pay around 40% of federal personal income tax, while the share paid by the poorest 50% is only 3 %.
This distortion is further compounded by ignorance of government cash transfers to low-income recipients and the value of their federal and state government services and grants, amounting to billions of dollars per year. It is as if the taxes paid by the rich and the government benefits received by the poor did not exist.
Bernie Sanders’ repeatedly stated claim that “our economy only works for the richest 1%” is an outright lie. The richest 1% are those with an annual income over $ 540,000. The bottom 99% include the rest of the 330 million Americans who earn up to $ 540,000, where the top 1% start. The median income for this group is around $ 70,000 and includes plumbers, electricians, government bureaucrats, college professors, teachers, doctors, lawyers, white and blue collar workers, cops, firefighters, middle managers, executives, engineers, salespeople, construction workers, politicians, and many other ordinary Americans.
It’s considerably better than most of the other 8 billion people on this planet. Our free market economy is the source that generates trillions of dollars a year, redistributed to the multitudes of Americans who are beneficiaries of dozens of government social spending programs.
All of this goes beyond the concern or understanding of Bernie, AOC, Betsy Warren and their utopian socialist cronies, who are oblivious to the consequences of excessive taxation and regulation that undermine incentives and capital formation. These economically meaningless ‘warriors of social justice’ are blind to the destruction caused by unlimited government spending and the redistribution of income and wealth that breeds dependency, stifles industry and destroys a society’s economy. .