Wealth Redistribution - A Bad Idea
Gary Loftis
November 06, 2007
Wealth Redistribution - A Bad Idea
(Watching the Philadelphia Democrat presidential debate reinforced my commitment to conservatism. While the candidates disagreed on specifics, they all agreed on three core principles: governmental redistribution of wealth, the desirability of federal intervention in people’s lives, and the need for government policies to address global climate change. In this and the following two columns, I will explore why federal government solutions in these areas are counterproductive and even dangerous to our nation.)
Governmental redistribution of wealth has become a centerpiece of liberal, Democrat dogma. While the Democrat candidates explain it in different contexts, the concept boils down to confiscating money from “the rich” and giving it to those who are “in need.” The problem lies in defining those two categories and the criteria used to transfer wealth.
Our nation was founded on the premise of economic liberty and private ownership of wealth, with the assumption that those with means would lend a hand to those with real needs. While there are many cases of wealthy Americans hoarding their resources, Americans in general have proven to be the most generous and giving people in the world. In the aftermath of every natural catastrophe, regardless of its location, you will find American volunteers and substantial donations to help victims rebuild their lives. The founding premise has been proven correct.
When people vest in their central government the prerogative to determine “ability” and “need” in this context, they are opening the way for bureaucrats and politicians to make arbitrary decisions based on purely political considerations. In the last several decades, those considerations have included defining need to secure votes. As the “needy” group has grown, so has the definition of “ability,” which now includes most of that group once called the “middle class.”
For the purposes of discussion, let’s say that the wealthy -- those with ability -- have annual household incomes that place them in the top 25% of earners. According to the National Taxpayers Union, the top 25% of earners earned $62,068 or more in 2005. That group paid nearly 86% of Federal Income Taxes. That same year, the top 10% of households, who earned $103,912 or more, paid over 70% of income taxes (http://www.ntu.org/main/page.php?PageID=6).
During the Democrat debate, there was no disagreement over the need for government programs to redistribute wealth. From Dennis Kucinich’s allusion to a triangle, where wealth is redistributed from the top (the rich) to the bottom (the poor), to Hillary Clinton’s assertion that those who are more fortunate should be willing to share more with the less fortunate, to the calls by virtually all on the stage for more sacrifice on the part of everyone, the message was clear: “If you are not poor, you have too much.”
The left has deemed economic equality a right of everyone. That philosophy indicts everyone with financial security and infers that those who lack such security are the victims of the former group. However appealing, that idea just does not track.
Another way to define the wealthy is by net worth. In their book The Millionaire Next Door: The Surprising Secrets of American's Wealthy, Thomas J. Stanley and William D. Danko set out to learn the characteristics that differentiate net millionaires. Their findings ran contrary to the victim hypothesis. They found that a majority of those with $1 million net worth or more are largely indistinguishable from "normal" people on the surface. The details of their lives tell the story:
two-thirds were self-employed
three-fourths were entrepreneurs
97% were homeowners who have lived in their homes (average value $320,000) for more than 20 years
live “well below” their means
80% were college graduates
most invested 15% or more of their income
(http://www.nytimes.com/books/first/s/stanley-millionaire.html?_r=1)
If two-thirds of America’s wealthiest people are self-employed and three-fourths are entrepreneurs, then they are creating wealth for themselves by creating jobs for “the poor,” not by victimizing them.
In the United States, there are countless opportunities to start new businesses and to invest in them. The poor have the same educational system and the same entrepreneurial culture that have enabled so many average Americans to become financially secure. When you look at Stanley and Danko’s data, it becomes clear that the keys to financial security are choices, not circumstances.
If the Democrats really wanted to help the poor, they would start programs to convince everyone to stay in school and reap the benefits of the available education, live frugally, and save and invest their money. Government programs should assist people in achieving those ends. But, Democrats are instead choosing to reinforce a class envy mentality by confiscating the wealth of those who are making the right choices in order to subsidize their political base, who are not.
Copyright 2007, Gary Loftis. All Rights Reserved.
(Watching the Philadelphia Democrat presidential debate reinforced my commitment to conservatism. While the candidates disagreed on specifics, they all agreed on three core principles: governmental redistribution of wealth, the desirability of federal intervention in people’s lives, and the need for government policies to address global climate change. In this and the following two columns, I will explore why federal government solutions in these areas are counterproductive and even dangerous to our nation.)
Governmental redistribution of wealth has become a centerpiece of liberal, Democrat dogma. While the Democrat candidates explain it in different contexts, the concept boils down to confiscating money from “the rich” and giving it to those who are “in need.” The problem lies in defining those two categories and the criteria used to transfer wealth.
Our nation was founded on the premise of economic liberty and private ownership of wealth, with the assumption that those with means would lend a hand to those with real needs. While there are many cases of wealthy Americans hoarding their resources, Americans in general have proven to be the most generous and giving people in the world. In the aftermath of every natural catastrophe, regardless of its location, you will find American volunteers and substantial donations to help victims rebuild their lives. The founding premise has been proven correct.
When people vest in their central government the prerogative to determine “ability” and “need” in this context, they are opening the way for bureaucrats and politicians to make arbitrary decisions based on purely political considerations. In the last several decades, those considerations have included defining need to secure votes. As the “needy” group has grown, so has the definition of “ability,” which now includes most of that group once called the “middle class.”
For the purposes of discussion, let’s say that the wealthy -- those with ability -- have annual household incomes that place them in the top 25% of earners. According to the National Taxpayers Union, the top 25% of earners earned $62,068 or more in 2005. That group paid nearly 86% of Federal Income Taxes. That same year, the top 10% of households, who earned $103,912 or more, paid over 70% of income taxes (http://www.ntu.org/main/page.php?PageID=6).
During the Democrat debate, there was no disagreement over the need for government programs to redistribute wealth. From Dennis Kucinich’s allusion to a triangle, where wealth is redistributed from the top (the rich) to the bottom (the poor), to Hillary Clinton’s assertion that those who are more fortunate should be willing to share more with the less fortunate, to the calls by virtually all on the stage for more sacrifice on the part of everyone, the message was clear: “If you are not poor, you have too much.”
The left has deemed economic equality a right of everyone. That philosophy indicts everyone with financial security and infers that those who lack such security are the victims of the former group. However appealing, that idea just does not track.
Another way to define the wealthy is by net worth. In their book The Millionaire Next Door: The Surprising Secrets of American's Wealthy, Thomas J. Stanley and William D. Danko set out to learn the characteristics that differentiate net millionaires. Their findings ran contrary to the victim hypothesis. They found that a majority of those with $1 million net worth or more are largely indistinguishable from "normal" people on the surface. The details of their lives tell the story:
two-thirds were self-employed
three-fourths were entrepreneurs
97% were homeowners who have lived in their homes (average value $320,000) for more than 20 years
live “well below” their means
80% were college graduates
most invested 15% or more of their income
(http://www.nytimes.com/books/first/s/stanley-millionaire.html?_r=1)
If two-thirds of America’s wealthiest people are self-employed and three-fourths are entrepreneurs, then they are creating wealth for themselves by creating jobs for “the poor,” not by victimizing them.
In the United States, there are countless opportunities to start new businesses and to invest in them. The poor have the same educational system and the same entrepreneurial culture that have enabled so many average Americans to become financially secure. When you look at Stanley and Danko’s data, it becomes clear that the keys to financial security are choices, not circumstances.
If the Democrats really wanted to help the poor, they would start programs to convince everyone to stay in school and reap the benefits of the available education, live frugally, and save and invest their money. Government programs should assist people in achieving those ends. But, Democrats are instead choosing to reinforce a class envy mentality by confiscating the wealth of those who are making the right choices in order to subsidize their political base, who are not.
Copyright 2007, Gary Loftis. All Rights Reserved.
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