We need a fairer distribution of income

2014

I read the following sentence in a recent WSJ editorial:

Progressives may concede the weakness of the economic recovery. Yet they urge more government spending and higher taxes, claiming that their policies will achieve higher growth and a fairer distribution of income.

Given there are both conservatives and progressives who read this blog, those words “fairer distribution of income” are most interesting to me.

Unless we have laws or policies that inhibit opportunity or permit outright discrimination, why do we care about income distribution? Exactly what does that mean anyway, what’s fair? Should everyone regardless of effort, motivation or ability have the same income? Should high income earners be taxed to the extent their net income is in line with middle class earners? What exactly are we talking about here?

If I work for forty-eight years, advance in my profession and along the way work additional jobs to increase my income and wealth accumulation is that unfair to anyone else?

In New Jersey among the 20 top paying school districts the highest pays a median salary of $90,228 and the lowest $79,185 plus active and retired employee benefits worth at least 50% more in non-cash compensation (for ten months full-time work). This means that these teacher households most likely have family income well in excess of $100,000. Is that unfair income? Now what if a told you that the $90,228 salary is twice that of the lowest paying school district, is that unfair!

Oh, that’s not what we mean, we are talking about millionaires and billionaires, you know, the guys who don’t pay their fair share. Then you must mean small business owners, entrepreneurs and innovators who start new businesses and entire industries and create jobs.

No, no we don’t like the idea of billionaires paying a lower percentage than many average people. You mean because most of their income comes from dividends and capital gains on money that has already been taxed once. Or do you mean on the money that is used by companies to grow their businesses as a result of these investment?

What about those CEOs making millions and millions? What about them? The highest paid CEO earned total compensation in 2012 of $96,160,696 of that amount he received $1 in cash and $90,693,400 in stock options plus some incentive compensation. The ultimate value of the options depends on the performance of the company and could be zero. Is this unfair to anyone else or do we just not like the idea of this kind of success?

Our progressive friends may say that nobody deserves that kind of income, but who are we to say?

Shouldn’t our real objective be as Abraham Lincoln once said, …”to afford to all an unfettered start and a fair chance in the race of life.” Where did the philosophy come from that says we must take more from the successful to accomplish this?

Since 1964 we reportedly have spent $20 trillion on programs to fight poverty and have managed to reduce poverty by 4%. Doesn’t that tell us there is more to this fight than money?