Wealth Disparity (5/11/2011)
A drive through New Smyrna Beach demonstrates the extreme wealth disparity that can be found anywhere in America or the world. From the mega-wealth of beachside to the barely surviving poor west of U.S. Highway 1 radical contrasts in daily life are found. It is impossible to look away in a small town and not acknowledge differences, to ignore them would be unconscionable. Like New Smyrna, America’s numbers are mind-blowing: the top 1% controls nearly 33% of the wealth in America whereas the bottom 50% has just 2.5% of the wealth.
Don’t misunderstand me. I love nice things, eating out, a beautiful home, new cars, and a big bank account. As a country even our poorest live far better than the middle class does overseas, but such argument is not cause for turning our backs on the needy. Similarly, the populist envy driven by our current President does not justify excessively taxing wage earners, or the ultra-wealthy. The current raging debate has disclosed the failures of our progressive tax system: envy that the “rich” pay much of their tax through a 15% dividend, and sadly uncovering through subsidies and support programs a single mother of three earning $14,000 per year has more disposable income than a similar mother earning $60,000.
We need the successful to succeed, creating jobs, opportunities, and capital for driving the economy. Simultaneously an understanding and empathy must exist for those who need help. I do not have solutions, but must argue the debate is lost in political rhetoric and desire to drive pet projects. Taxing the wealthy at 100% will not provide enough revenue to fix the government spending problem and it certainly will not lift those in need. Milton Friedman argues in the movie, “The One Percent” the increasing wealth gap is justified because it has also lifted the poorest of poor. In earlier lectures Friedman, in characteristic fashion, shows at least that government creates a perverse system starting with bad schools, limits opportunity through minimum wage laws, and creates dependency via welfare programs.
The political debate from both sides focuses on our tax system and protecting special interests, Republicans arguing to keep tax rates low on the rich, Democrats seeking more. Sadly, both sides view 67,000 pages of tax code as the holy grail of government purpose and fail to understand simplifying the tax system and cutting spending will allow market forces to work toward solutions benefitting both rich and poor.