Income Inequality Is Not the Enemy

Anders Koskinen | August 29, 2019

Income Inequality Is Not the Enemy

It’s easy to fall into the trap of comparisons. For myself, it can be very hard to not look at how my friends or acquaintances are doing and not feel that I’m running behind. Houses, cars, paychecks, life state – the temptation to grouse over what I think I don’t have is very strong.

Money has always been a point of stress and perhaps it’s due to my overly self-sufficient streak. Rationally, I know I need to relax. I should instead focus on being grateful for what I do have.

There are many of us who are far less concerned with how well we are doing, and instead see only how much worse off we are than our neighbors at the top of the hill.

Let’s look at the bottom of the hill. Worldwide, the definition of poverty is living on $1.90 per day, or $693.50 for the year – less than one-seventh of the lowest poverty threshold in the United States. Over 730 million people around the globe live on this amount or less.

By contrast, the U.S. has a median disposable income of $32,075, making it one of the highest-income countries in the world.

In 2017 the United States’ official poverty rate was 12.3 percent, meaning 40.2 million Americans fell under the Census Bureau’s rather liberal definition of poverty. Even at just $5,121 annually per person, the lowest possible threshold for American poverty is vastly higher – and reached at a rate not much higher – than the much more stringent standards of the World Bank.

People living in the United States of America have it better than perhaps any other people in the history of the world. Despite this, our politicians seek to divide us based on our income.

One example is the wealth tax proposed by presidential candidate Elizabeth Warren, which would tax net worth between $50 million and $1 billion at a two percent rate, and any net worth in excess of $1 billion at three percent. This is not income, these are either assets which already have been taxed, are currently being taxed, or will be taxed at a later point. It’s questionable whether these wealth taxes will actually work, and it’s also questionable that they were ever intended to actually accomplish the stated goals.

Greed, division, and jealousy are powerful tools for achieving tribalism and stirring up political fervor. But while Democrat candidates decry divisiveness and incivility, are they actually stoking the class-warfare rhetoric of the early 20th century?

“A small group of families has taken a massive amount of the wealth American workers have produced, while America’s middle class has been hollowed out,” complains Sen. Elizabeth Warren, D-MA, on her campaign site.

The grievance culture runs deep, but the evidence for such an attitude does not.

We have more than we have ever had before, and we continue to gain more every year. It does us no good to covet our neighbors’ possessions. Doing so only seems to enrich the campaign coffers and swell the egos of politicians who want to divide Americans, not unite them.

The world is doing very well, and is continuing to get better. Wealth taxes and estate taxes have had nothing to do with this. The villain is not income inequality, the villain is poverty regardless of any comparison point. 

New and higher taxes cannot solve the deficit, or income inequality, or buy you everything you ever wanted. There will always be politicians who promise that if you only empower them to operate other people’s money, then all will be right in the world.

Would America be a happier, less contentious place if more people took time to be grateful and count the blessings of living in this country?

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[Image Credit: Pexels]



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