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A poor way to look at the rich
Michael Swickard
First man: “How’s your wife?” Second man: “Compared to what?”
Much of our public policy is tied to the notion of citizens falling neatly into three categories: rich, middle class and poor. Those designations are usually based on income, which can be deceiving and is a poor way to look at the rich. We have a wealth of opinions about what wealth is, but no consensus.
Are we wealthy if we have roofs over our heads and three meals a day? In some parts of the world we are extremely wealthy to be overweight since extra calories cost money not available in some societies.
Likewise, are we poor with a roof and three meals of Ramen eaten in a house with only one bathroom and only basic cable? We are poor in comparison but not in reality. Except in the extreme, when Americans talk rich and poor it depends upon very subjective comparisons.
Rich people do not look rich. That’s the message of the book, The Millionaire Next Door: The Surprising Secrets of America’s Wealthy (1996) by Stanley and Danko. Rich people look middle class and a number of middle class people look rich. But they are not rich; they are heavily in debt. Those people who look rich spend a lot of money looking rich. In some cases the money to look rich is borrowed.
The impetus for the redistribution of wealth
Why we talk about rich and poor is that politicians find this topic a big part of getting elected. There are fewer rich than poor people, so the politicians take the side of the poor. They relish poverty because it enables them to increase government’s size and role in society. The poor are the impetus for redistribution of wealth.
Should our government treat differently those who make more income than others? The founding leaders would say no, but our current society does so in a big way. The progressive tax structure requires a larger percentage of income to be taken from those who can “afford” it. We have a constitutional amendment to allow income taxes, and over the years this amended structure has developed a progressive life of its own. Our founders were not progressives about taxes.
About one half of all households pay no federal income tax, so how do you decide what is rich, middle class and poor? It seems we are only rich or poor. Again, it is tied to income and not real wealth. Someone with a paid-for house, car and college degree is considered less rich than someone making a lot more money but making payments on a house, car and college education. In deposable income the first person has more wealth.
Poverty statistics are based upon income, regardless of the possessions those people have. Are they poor when they have a roof over their heads and a number of amenities that my parents could only dream of owning?
Other people have a criterion that is a number. If I have a million dollars then I am wealthy regardless of expenses. Right now that dividing line seems to be $250,000 a year of income. Public policy is aimed at those whose income is over that magical number.
This class warfare and the disbanding of the middle class started as soon as people learned they could vote the money in someone’s pocket into their own pocket and the politicians found they could get more votes if they ran on the theft platform, “Vote for me and I will take from your neighbor and give it to you.”
In an unscientific survey voters are more likely to vote for politicians who proclaim they will take from the rich and give to the poor. Which poor? Us poor, of course.
We should lift the wealthy up as heroes
How poor are the American poor? Some are quite devastated. I am not speaking of the extremes in poverty. But there are quite a few people getting along nicely despite being considered poor. Some have more real wealth than those outside of poverty because of compensating programs like Medicaid, food stamps, etc.
The dialog today is that we must “tax the rich” out of a notion of fairness. Remember half of all households pay no federal tax at all. We assume those paying no income tax must be designated as the poor of our country. But you have to know that the other half that is taxed is taxed progressively so that when someone has lots of income, as a percentage of income they are already taxed quite a bit. It makes for a great photo opportunity for politicians to talk about taxing rich people who have it so easy.
We should lift the wealthy up as our heroes so that all who aspire to be as wealthy know that in our country they can do so. Herman Cain, the Republican candidate for president, made lots of people angry when he gave really good advice: “If you don’t have a job and you’re not rich, (assuming you want to have a job and or be rich) blame yourself.”
Every time you hear the “tax the rich” dialog, you can label that person a huckster who takes from one American to give to another American for their vote. In America we are left in the debate about the rich with this question: What do we do when we have taken all of the wealth from the rich? Who is next?
Swickard is co-host of the radio talk show News New Mexico, which airs from 6 to 9 a.m. Monday through Friday on KSNM-AM 570 in Las Cruces and throughout the state through streaming. His e-mail address is michael@swickard.com.
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Micheal Swickard,
Your assumption of what choices others may or may not make, is completely based upon a perspective moulded from a life experience of a white male property owner living in a society dominated by white male property owners, in a country in which white male property owners were the only eligible elecotrate for more than 75 years. Do you get my drift, yet?
What convinces you that you would have any clue regarding the challenges met by those whom you would dare to criticize for not meeting your expectations in regards to the application of effort? Please elaborate.
Artiofab writes “Dr. Swickard, are you saying that people who are mentally or physically incapable of holding a job should blame themselves? I’m sure they will be motivated into action by your compassion.”
Nope – I am not nor do I think Herman Cain is saying that at all.
However, the vast majority of people who did not pay attention in school are now paying for their free will to ignore the education offered. That seems Herman Cain’s message. We each have free will and can apply ourselves as much or as little as we wish. We can shepherd our finances carefully or spend our own money recklessly. We can select a spouse who will love, honor and correct us or we can make a more unfortunate choice. It is our free will and we must accept the consequences of our choices.
Herman Cain, the Republican candidate for president, made lots of people angry when he gave really good advice: “If you don’t have a job and you’re not rich, (assuming you want to have a job and or be rich) blame yourself.”
Dr. Swickard, are you saying that people who are mentally or physically incapable of holding a job should blame themselves? I’m sure they will be motivated into action by your compassion.
Good article, Mr Swickard!
Mark Best,
It may appear that a consumption based tax is fair, until one realizes that the one you promote allows for mass consolidation of unspent wealth in tax havens for offshore for later untaxed consumption.
The FAIR TAX proposal is promoted by an astroturf organization begun in 1995 by three multi-millionares. It has been largely promoted by the Heritage Foundation, The Cato Institute, the Baker Institute for Public Policy. These mouthpieces are funded by the group, to promote a tax scheme originally conceptualized and developed by The Church of Scientology.
Good luck with that!
http://en.wikipedia.org/wiki/American_For_Fair_Taxation
A consumption tax is one way to spread the wealth and make everything fair for all.
I encourage people to take a look at the FAIR TAX (www.fairtax.org).
It makes real sense …. but that is why the FAIR TAX faces an uphill battle in Washington DC.
Thomas Jefferson has the best response: “Experience demands that man is the only animal which devours his own kind, for I can apply no milder term to the general prey of the rich on the poor.”
Swickard’s commentary is just another segment of “How To Be Blinded By Ideology”.
Dr.Swickard has been, for some time, the master of the bait-and-switch or strawman argument. This idea of “tax the rich” is nothing of what Dr.Swickard claims it to be. It is not about taking money from wealthy folks because they are wealthy. He continues to promote this false premise because the true argument is one he would not last 10 seconds with in front of a high school debate team. That true argument is that the current tax law allows wealthy people to avoid taxes and pay a lower percentage of taxes than those who cannot afford expensive tax lawyers or to pay lobbyists in Washington to skew the laws in their favor.
Dr.Swickard conveniently (and scrupulously) avoids the point made by that icon of his beloved American capitalism, Warren Buffett. Isn’t it curious that Swickard never bothers to mention the position of one of the world’s richest men who is calling for an overhaul of the tax system to make it more fair? Wonder why Swickard misses that position in his totally mistaken, false and biased position? Because the fact that Warren Buffett calls for a reform of the unfair tax system would further expose Swickard’s position as a phoney and straw argument. He continues to argue about a position very few, if any, advocate who are in the public dialogue regarding taxes.
Nobody I know of who is interested in the taxation is interested in in taxing people because they have worked hard, played by the rules and become wealthy. I don’t know who Dr.Swickard is speaking about, but that miniscule number of extremists who simply want to take from others does not represent the folks concerned about unfair taxation, yet Dr.Swickard can’t promote his phoney claims with the true positions of the vast majority of those involved in the issue. He has to pick out few extremists and base his argument on those wacky ideas, hence, he again is promoting a strawman argument in hopes of discrediting the valid and rational call from n’eer-do-well whiners like Warren Buffett for a more fair tax system.
To make just one point regarding the issue that Dr.Swickard can’t seem to grasp in his false-premise argument:
Income that flows from non-wage sources is taxed at a considerably lower rate than that of wages. So, if you are a person making a decent living as a tradesman receiving wages you are taxed at a higher rate than someone like Mr.Buffett who has an income derived from non-wage sources. The point is not the taxing of the rich, the point is that the hard-working tradesman should not be taxed at twice the rate of someone fortunate enough to be enjoying most of their income from dividends, distributed earnings, etc.
For Dr.Swickard to continue to misrepresent the arguments of fairness in taxation or to take the positions of a tiny fraction of extremist thought and represent it as the position of the vast majority who don’t hold that position in order to attack the real position of the majority on taxation is intellectually dishonest, false and not worthy of merit. Dr. Swickard needs to familiarize himself with the real positions of those calling for tax reform, heed the public call for fairness from experts like Warren Buffett and cease his continual misrepresentation of the facts of what people are advocating.
Well said Dr. Swickard. This new attitude about success and wealth, as demonstrated by the OWS groups and their left wing allies in the Democratic Party, is quite curious. When I was growing up dirt poor in NM, our family living on a single Mom’s minimum wage job and taking help from the Salvation Army and church at holidays, and when I got old enough, working myself during high school, I never hated and demonized the rich and wanted to take their money away from them. Some of my friends did, and were bitter and angry like the OWS and the left wing libs are today. I, and many like me, saw the rich as heroes and people I wanted to be just like. When I was able to work hard, finish 4 university degrees, get a good job and become like them, I felt a sense of accomplishment and fulfillment. For now, I could do the same for many others who started out poor like I did, and I did. I don’t understand why this younger generation has lost appreciation for, and denied the way America has always worked, and is still working if you have the guts and fortitude and ambition to make it happen. It is a sad state of affairs in our great country when we have people like this doing what they are doing, it damages our society and destroys dreams when people like this are paid attention to and even held up as “heroes” and “patriots”.
This whole arguement is based on false assumptions–too many to list here at three in the the morning; but I’m willing to debate it with you; though I doubt you are brave enough to do so. Ask Janice. =]
I can think of two reasons to set a 90% tax rate on the TAXABLE income (after all the deductions) of those whose TAXABLE income exceeds something like one million dollars.
(1) It would return us to America’s “good old days,” the era immediately after WWII when we funded the Marshall Plan and built our excellent interstate highway system. This tax rate, with minor variations, was the norm from 1944 to 1963, when the rate dropped to 70%. Then along came Reagan, in 1981….
(2) It would give those focused on making money an incentive to focus on their families and on their personal lives and relationships instead. An excess of money is not good for character development, IMHO.