James Kerian: What If Democrats Actually Cared About Income Inequality?
In 2008 liberals hailed Obama for his promise to “spread the wealth around.” But now even the most devoted liberals must acknowledge that income inequality has grown under this president.
Disappointed in their would-be savior the left-wing activists have turned their hopes to seventy-four year old Bernie Sanders who has had absolutely no success whatsoever stemming the growth of income inequality during his twenty-five years in congress.
When he loses and Hillary Clinton is coronated as the Democrat nominee then all of these people wringing their hands about income inequality will line up in support of this woman who made $25 million last year off of her political connections.
That is what has happened and what is going to happen. But what would happen if Democrats actually cared about income inequality?
Imagine if you shared the Democrats’ assumptions that it is the government’s responsibility to minimize income inequality and that taxes and regulation are the best way to accomplish that goal. There are three policies that would be pursued by someone who genuinely believed these things.
1) Change the Death Tax To Discourage The Concentration Of Wealth
Defenders of the death tax (or estate tax, as they prefer to call it) often insist that it will help to prevent “a tendency for wealth to become more and more concentrated in fewer and fewer people.” If that was the intent of the tax, however, we would tax estates for the amount that they left to a specific person rather than simply taxing the deceased for having died with too much money.
Currently a man who dies and leaves $20 million to his only heir will pay the same amount in taxes as a man who dies and leaves $1 million dollars to twenty different people. That makes no sense whatsoever if you’re actually trying to use this tax to spread wealth around rather than to concentrate money and power in DC.
2) Create A New Tax Bracket (Or Two)
When Democrats call for higher taxes they are always invoking the image of billionaires. But what Obama and his fellow Democrats have fought for since 2008 is a tax increase applied equally across the board to incomes over $200,000/year.
Your local dentist/doctor who exceeds this income cap may be doing quite well financially but even if you have no income whatsoever they are closer to you financially than they are to Hillary Clinton or any of the other high-rollers that the Democrats invoke when they speak of income inequality. Our current tax system enforces a progressively higher tax rate until your income exceeds $413, 201.
Beyond that point you’re paying the same rate whether you make five hundred thousand or five hundred million. If Democrats actually believed what they are peddling about using the income tax to combat the concentration of wealth doesn’t it seem likely they would make some effort to put in a higher tax bracket somewhere between your local dentist’s income and Warren Buffett’s?
3) Institute A Wealth Tax
In France individuals who are deemed to be exceptionally wealth are charged a wealth tax. On top of paying a percentage of their income (like our income tax) they must also pay a small percentage of the value of all of their investments/savings.
French economist Thomas Piketty released a book in 2013, Capital in the Twenty-First Century, prescribing such a wealth tax for the entire world as a remedy for wealth inequality. After all, given the left’s assumptions of inequality how can they ever be expected to truly remedy the situation when they are only taking a percentage of the income that is earned from investments while leaving untouched the principal of the investments themselves.
Piketty’s book was enormously popular among academics and made it to the top of the NY Times best seller list but the wealth tax has not been taken up as a political cause by any major figure in the Democrat party.
Again, I am not endorsing any of these plans. I believe that income inequality is a concern of the government’s only in a very limited sense and that to the degree that it is a governmental concern the solutions are unlikely to have much to do with raising taxes. But it is telling that Democrat leaders who claim to hold the opposite presumptions have not rallied to the causes above.
It’s almost as if, despite all their rhetoric, they were actually more interested in taking money from your local doctor/dentist and concentrating it in Washington DC where it can be controlled by them and their supporters than they are in dispersing the wealth of their billionaire donors. I wonder if that has anything to do with the fact that the large Wall Street banks are lining up behind the Democrats today the same way that they did in the last two presidential elections.