Progressives like Bernie Sanders talk a lot about wealth inequality, and it’s important that they do because it’s a real problem in this country.
According to a Congressional Budget Office report released in August 2016, families in the top 10 percent of wealth distribution hold more than three-quarters of the nation’s total family wealth. Also, those in the 51st to 90th percentiles own less than a quarter of it, and the bottom 50 percent owns just 1 percent of the total share.
People who see this as an issue have to not only point it out but tell us why we should be concerned about it. It isn’t about being jealous of rich people, although it’s part of human nature to think that way sometimes.
If progressives don’t link wealth inequality to how it needs to be considered in policy making, ranging from social programs to tax reform, then it’s too easy for conservatives to brush it off with their hysterical claims of socialism.
So, in the interest of never making it easy for conservatives to offer a false narrative, here’s a shot at it.
TAXES
Government needs a certain amount of money to operate. You can argue how much and for what, but we need taxes. If we succeed (Have we ever succeeded?) at keeping taxes as low as possible and still be fiscally responsible we still need to tax people.
And we need to tax richer people at a higher rate, because as our wealth inequality shows, the effects on the middle class and poor will be disastrous if we put too much of the burden on them. They simply don’t have enough money.
And that wouldn’t just hurt them. The rich aren’t rich without the lower financial classes working for them and spending money. Spending drives the economy that the rich disproportionately benefit from.
That’s why conservative bullshit about a flat tax or about cutting the number of tax brackets while lowering the top rate is so dangerous. That would put a disproportionate amount of the benefit of lower taxes in the pockets of the richest people and would minimize the benefit to poorer people.
This won’t grow the economy because rich people, who already can afford pretty much everything they want, aren’t going to see this extra money as a chance to buy the TV they’ve been wanting, or to take the family vacation they haven’t been able to afford. They’ll probably invest this money.
There’s nothing wrong with investments per se, but we need this money going into our economy, not some rich guy’s IRA.
Now, you put extra money in the hands of a poor or middle class person and they’re much more likely to spend it on those previously mentioned TV or vacation. The more that tax cuts are spent the more the economy grows, and human nature and common sense tells you that the have-nots are more likely to spend it than the haves.
You can extend this thinking to lowering the corporate tax rate. A lot of people think ours is too high, and maybe it is, but simply lowering it won’t grow the economy by any appreciable extent.
Why does common sense and human nature tell us this? Let’s say you have a company that makes TVs, you make $100 profit on every TV and you sell a million TVs a year. So before taxes you have $100 million in profits.
The corporate tax rate is 35 percent and Republicans are talking about dropping it to 15 percent. Not counting for deductions, that cuts your company’s tax bill from $35 million to $15 million. (I know, a lot of companies don’t actually pay 35 percent, but this is a hypothetical).
Tickle-down proponents want us to believe that you’ll take this extra $20 million and expand your business and hire more people. But maybe you won’t.
More likely you’ll study the market to decide if investing that $20 million in new production/employees will lead you to sell enough TVs to make a big enough profit. If not, you’re not going to expand. You’re going to invest that money to get a better return or use it for other things we’ll mention later.
And remember, the Republican’s personal income tax plan gives the bulk of the savings to the rich, so the poor and middle class won’t have a bunch of new money to maybe buy your TVs.
Wealth inequality limits the number of people who can afford to buy your TVs. Expanding wealth inequality with top-heavy tax cuts probably won’t significantly increase the number of people who can afford to buy your TVs. And without enough of them, you’re out of business.
One last thing on trickle-down. Why should we think these big tax cuts for corporations will trickle down in the first place? More likely they’ll go to executive bonuses, bigger dividends to stockholders, increased automation to put more people out of work, buying other businesses and purchasing company stock to raise its price.
Also, the best leverage to try to get these corporations to use some of their new-found money for salary and benefit increases are unions, and remember the Republicans who want all these cuts also want to get rid of the unions that could help the rank-and-file receive some benefit from them.
THE IMPORTANCE OF SOCIAL PROGRAMS
History is littered with stories, big and small, of people who rose from humble backgrounds to live successful lives. Poverty should never be looked at as an unmovable impediment to success.
However, the United States, like any other country, doesn’t present a level playing field in terms of substance and opportunity. Wealth inequality exacerbates that.
Critics of social programs see them as undeserved handouts. Those who see the world through the lens of wealth inequality see it as an investment in people and an attempt to somewhat level the playing field.
There’ll always be rich and there’ll always be poor. The rich will always have better things – from material items to job and educational opportunities. The true value of social programs isn’t giving people things. It’s helping them to overcome the huge disadvantages wealth inequality causes.
Our social programs need to become as efficient as possible. They have to include components that help people help themselves, such as work, training or school requirements, the requirement to take a job that is offered to them or at least some public service work.
I imagine this plan will need a lot of tweaking, but we should have enough smart people around to figure it out.
In the richest country in the world, with such a range of obscene poverty to obscene wealth, we need to understand those with a lot are going to have to make some sacrifices for the greater good. And in turn they receive the good of being in a stronger country with a stronger economy and more people contributing to it.
Otherwise you’re moving toward an oligarchy, and that’s not what this country stands for. At least that’s not what it used to stand for.
CAMPAIGN FINANCE REFORM
The United States is about one man, one vote. Although you could argue that Republicans with their unnecessary voter ID laws are making a real effort to suppress the vote from certain groups of people.
The horrible Citizen’s United decision by the Supreme Court has, while not changing one man, one vote, certainly has made it easier for some voices to drown out others in our political discourse.
And here’s where wealth inequality comes into play again. The rich will always have more money to push their personal political agenda. It will buy them a legislator’s ear and/or vote, and sometimes a seat at the table in the decision-making process (I’m looking at you Secretary of Education Betsy DeVos).
Just look at the Koch Brothers spending big money in local and state elections where they don’t even live. It’s part of their big-picture strategy to own as much of the government as they can. What can a poor person do against an ocean of cash like that?
Without campaign finance reform that limits the power of big money, democracy will be another victim of wealth inequality. And sadly, our greedy, gutless and immoral politicians are standing there watching it happen -- with their hands out, of course.
WHAT THIS IS ABOUT AND WHAT THIS ISN’T ABOUT
Intelligently addressing the issue of wealth inequality isn’t going to make all the rich people poor and all the poor people rich (although it could help more people become rich in the long run).
Wealth inequality is a roadblock to a better country. It makes the call greater to address the needs of those who aren’t as fortunate. Not to give them things, but to understand when we invest in people we’re investing in a better future for them and our country as a whole.
It also cries out for limitations that help slow the process of great wealth leading to great political power and influence. It’s a threat to our democracy when this wealth and power is in the hands of a relatively small amount of people with no checks to stop them.
To advance policies that don’t take wealth inequality into account is to advance policies that won’t work, unless your idea of working is to benefit the rich and hurt the poor.
Instead they’ll increase the problem, divide us even more into a class society and leave many people with great potential behind.
And make no mistake about it, leaving those people behind will make us a poorer country in the long run and will leave us with a legacy no great country should be proud of.