A poor way to look at the rich
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 email@example.com.
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