The Truth About Income Inequality - Granite Grok

The Truth About Income Inequality

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The title, taken from the tax prof blog, is the simples beginning to this piece. Income inequality is a significant burr in the Left’s backside. Sorry, that’s not quite right. It is a burr they are trying to stick to everyone else backside. Class Warfare divides, but is it as bad as they claim?

Related: Trump Economy Middle-Class Income Gains Four Times Higher Than Obama’s

No. But even the swap rats at the US Census are working this crowd. And that is the jumping-off point for Paul Caron’s piece.

Never in American history has the debate over income inequality so dominated the public square, with Democratic presidential candidates and congressional leaders calling for massive tax increases and federal expenditures to redistribute the nation’s income. Unfortunately, official measures of income inequality, the numbers being debated, are profoundly distorted by what the Census Bureau chooses to count as household income.

I’m not here to share it all, but to note some key points you can share with your “liberal friends.”.

    • The published census data for 2017 portray the top quintile of households as having almost 17 times as much income as the bottom quintile.
    • This fails to account for the one-third of all household income paid in federal, state and local taxes.
    • Households in the top income quintile pay almost two-thirds of all taxes, ignoring the earned income lost to taxes substantially overstates inequality.
    • The Census Bureau also fails to count $1.9 trillion in annual public transfer payments to American households.
  • Leaving out taxes and most transfers overstates inequality by more than 300%.

Deceptions and Realities

The Census Bureau is ignoring the government’s current role in redistributing income when projecting the disparity. Given that the comrade’s of class warfare insist that Government is how the “problem” they champion gets resolved, leaving that information out of the discussion is an act of fraud. 

When we include the reductions from the top and additions to the bottom it sharpens our picture.

No matter how much income you think government in a free society should redistribute, it is much harder to argue that the bottom quintile is getting too little or the top quintile is getting too much when the ratio of net resources available to them is 3.8 to 1 rather than 60 to 1 (the ratio of what they earn) or the Census number of 17 to 1 (which excludes taxes and most transfers).

Seeing is Believing

The previous president pushed the state in the direction advertised by the class warfare folks while the current president went the other way. Obama added taxes and redistributions and expanded government regulation. Mr. Trump shepherded a significant tax cut package into law and has marshaled the state toward deregulation.

And we can see and feel the difference. Under eight years of Mr. Obama’s program, the median income only rose by about $1000.00 per family. Mr. Trump, in just three years, has lifted average family incomes by over 5000.00 dollars. His economic policies are shrinking the lower-income classes and lifting them into the middle and higher-income classes.

Write that down. Lower taxes, less regulation, allows people to lift themselves up. Government intervention keeps them down. 

The path to resolving income inequality is not more government, higher taxes, or adding regulations. Things that push people down the income ladder by making them victims of the State’s subsistence lifestyle.

The Census Bureau left out critical information, and the Democrats are pretending it’s the revealed truth. But it’s just another convenient lie.

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