The Exaggeration of Inequality in the USA

See: https://www.wsj.com/articles/the-myth-of-american-inequality-review-believe-your-eyes-not-the-statistics-11672095284?st=h84kx5s9i06ripe&reflink=desktopwebshare_permalink

I have always been a “high tax” guy.  But I have also objected to the common and widespread deceptions regarding tax rates and income equality, advanced by the political left with the eager support of mainstream media. 

This article does a good job of quantifying the ridiculous practice of comparing pre-tax earned income and ignoring the value of transfer payments.  We do the transfer payments to help others, then leftists totally ignore the benefits by looking only at earned income.  Consider the math:

• If everyone paid $1 more in taxes and the money went to the poorest families, the leftists’ methodology would label that “obscene” because it is a regressive tax.  In their math, it doesn't matter where the money goes.
• Assume half the people earn $100,000 and the other half earn nothing.  So, the government taxes the earners 50% and gives that $50,000 to those who earned nothing.  Does that solve the problem?  Not a bit according to leftist math.  

Reducing inequality in earned income is a good goal (as long as merit is adequately rewarded), but that requires encouraging, not discouraging, productive work.  Fundamentally, the more socialistic a country becomes, the flatter the tax burden should be.  Leftists don’t want to be “put out of business” by acknowledging even partial success, so their math must support a conclusion that their goals are never met. 

The authors observe that we have reached a point where poor people don’t have to work, undermining the satisfaction of middle-class or lower-middle-class people who work hard but find that they have little advantage over people who choose not to work.

The poor in the USA and in the world have hugely better lives than in the past.  But it is fashionable to criticize Norman Borlaug, the father of the green revolution in farming.

Public Education is the best way to narrow income gaps, but during the entire history of the “War on Poverty”, the teachers’ unions have foisted a poor public education system on the poor.  People exaggerate systemic bias in police departments and other elements of our society while turning a blind eye toward our most systemically biased institution --- public education.  We lack academic standards for graduation and discipline in schools, and we denigrate merit.

The authors say we should trust our eyes.  I’m not sure our eyes will tell us that only 1.1% of people in the USA are living in poverty, as they claim.  But, even if that statistic were to be inaccurate or misleading, would more transfer payments help people living on the street because of drug and mental problems?  We used to house such people in institutions, but that support was discontinued because it impinged on their freedom.

The distortion goes way beyond what these authors cite.  There are significant amounts of hidden taxes throughout our society.  More affluent people pay unnecessarily high college tuition rates, high nursing home costs, motor vehicle costs, and hospital fees because of cost-shifting to subsidize government programs.  Their higher costs for Medicare Part B are also ignored.  Businesses are required to incur cost to implement government programs, another hidden subsidy.

The analyses also ignore contributions to charity. 

Beyond the school system, our huge out-of-control government spending is a tremendous threat for the poor.  When the economy collapses, the poor are likely to bear the brunt.  Those of us who are affluent may have options to avoid personal disaster.  Analyses of national debt are also duplicitous.  They ignore public program debts (Social Security, Medicare, etc.).  

Budget hawks who challenge these misleading reports still sadly understate the problem.  They accept government reports regarding these public program debts, reports which ignore the huge unfunded liabilities that result from 75-year cliff funding.  (The analyses assume that the programs will disappear in 75 years and, at that time, renege on all the promises they have made.)

I believe a rising tide can lift all ships, although I’m not convinced that the tide will do so enough to satisfy my preferences.  We need to build an education system and culture that encourage productive work.  I must note that, much as I detest Donald Trump, his administration improve dliving standards for minorities living in the USA and, unlike recent Democratic administrations, reduced the income gap.