I think any rational American recognizes that raising income and capital gains taxes on wealthy Americans will not reduce the deficit or pay down our national debt any time soon if at all. Actually, confiscation of all income wouldn’t even make a dent in it. Likewise, printing money is not a long term solution to our economic troubles or unemployment problem. So unless some radical steps are taken to reduce entitlement spending, we can all look forward to more economic erosion and income redistribution; at least until the well runs dry.
Throughout all of this mess, for some reason, liberals have latched on to the belief that income redistribution is the key to U.S. economic success. It seems that if the underclass makes more and the upper class makes less our economy will flourish at historic levels and, like manna from heaven, money will just fall from the sky. Our fiscal problems will vanish.
A November 19 piece by N.Y. Times contributing editor, Daniel Altman, a Harvard economist, seems to have the solution to all our economic problems both here and abroad. Mr. Altman recommends a new “wealth tax” to bridge the growing economic gap between the haves and have-not’s created by capitalism. Mr. Altman claims that the only way to increase economic opportunity in America is to tax the accumulated assets of wealthy Americans. Yup, the idea of taxing everything you own is now being floated by Keynesians who have become crusading visionaries.
Mr. Altman believes the real cause of our economic malaise is more about wealth inequality than income inequality. For him not only do the rich make more than their fair share, but they also own more than their fair share; and as a result economic opportunity for all Americans unfairly sides with the wealthy who are responsible for the peaks and valleys of our capitalist system.
Nowhere in Mr. Altman’s article is there any suggestion of the root causes of income and wealth disparity. Things like obscene high school dropout rates, illegitimate pregnancies, the inability to read and write, drug abuse, and government dependency fail to register on Mr. Altman’s economic radar. Mr. Altman seems to feel that access to American opportunity is dependent on wealth being more evenly distributed to all Americans.
Based upon 2008 estimates of U.S. wealth, Mr. Altman’s proposed “wealth tax” of 1-2% (for select Americans) is projected to produce between 1.8 and 2.8 trillion dollars in tax revenue. In all fairness, Mr. Altman suggested that replacing all income, estate and gift taxes (excluding S.S., Medicare, state/city taxes) with his progressive theory will create more long term economic opportunity for disenfranchised Americans; therefore causing increased economic growth. Huh?
Now I’m no economist. By Mr. Altman’s standards I am a ditch digger. But even a ditch digger knows that half our nation’s income earners pay little to no taxes and government spending is out of control. Very little of our government’s previous attempts to bridge both the income and wealth gap in America has produced any favorable economic results. As a matter of fact government intervention is the number one cause of economic peaks and valleys. Evidence of this can be found in the housing market collapse and our ongoing recession.
In the 90’s, Washington, in an attempt to fix a non-existent problem of affordable housing shortages, forced changes to our traditional lending standards and practices to accommodate the purchase (by unqualified buyers) of homes with overinflated prices. As a result many American families began paying an obscene percentage of their family’s income on their home. Eventually this self-righteous government crusade led to economic constriction, ARM defaults, the collapse of our capital markets, and massive layoffs. Thrifty Americans were victimized and Wall Street and the unqualified homeowner were bailed out; and continue to be coddled by Washington through historic entitlement spending.
I would like to offer a little common sense advice from one ditch digger to a Harvard economist. Government has never been the solution and confiscation of wealth is not an answer to our fiscal dilemma. Austerity is! Wealth taxation has existed for centuries my educated friend; and it didn’t do much to solve wealth inequality back then and it won’t now. It only served to fulfill the desires of Emperor’s and Kings who through threat of complete property confiscation or imprisonment extorted their subject’s compliance.
“The study of history is a powerful antidote to contemporary arrogance. It is humbling to discover how many of our glib assumptions, which seem to us novel and plausible, have been tested before, not once but many times and in innumerable guises; and discovered to be, at great human cost, wholly false.”
British Historian, Paul Johnson