The richest 85 individuals on Earth have as much wealth as the poorest 3.5 billion. It’s an eye-catching, gasp-inducing statistic that comes from a new report by advocacy group Oxfam, released in time for this week’s World Economic Forum in Davos, Switzerland, and, as intended, it provokes a “somebody should do something” reaction. But the proposed solutions — higher taxes, more welfare and increasing the minimum wage — will only punish the productive without helping the poor.
The richest 85 individuals on Earth have as much wealth as the poorest 3.5 billion. It’s an eye-catching, gasp-inducing statistic that comes from a new report by advocacy group Oxfam, released in time for this week’s World Economic Forum in Davos, Switzerland, and, as intended, it provokes a “somebody should do something” reaction. But the proposed solutions — higher taxes, more welfare and increasing the minimum wage — will only punish the productive without helping the poor.
Two of the top slots on the 85-richest list are occupied by Bill Gates and Warren Buffet, who have both advocated for higher taxes. We know from experience that taxes promoted as targeting “the wealthy” invariably hit hardest the middle and upper-middle class — who do not have the resources to hire savvy financial planners to set up trusts and corporations to limit their tax liability.
The truly wealthy, if they really feel like they are not taxed enough, are free to give as much as they like to the IRS, but they seem to prefer to agitate for higher taxes on those who have vastly less income than they do. Which is unfair. More importantly, these taxes do not help the poor escape from poverty. They keep the poor poor rather than give them a hand up out of poverty.
The latest numbers from the U.S. Agriculture Department show that, in 2013, a record 20 percent of U.S. households received food stamps, at a cost of $79.6 billion. And that’s just one of many anti-poverty programs. But making poverty more comfortable only results in the propagation of poverty. Handing out tax credits per child has only rewarded families for having children they cannot afford, and who are unlikely to break out of this destructive cycle.
In many states, welfare pays more than working full time at a minimum-wage job. So why bother? Why curb your spending and save your pennies to build a better life when you can rely on a government check for doing nothing? Government policy must reward, rather than punish, financially prudent behavior like working and saving if we want to see more of it.
We also reward states for recruiting more people to apply for food stamps with bigger checks from the federal government.
Class warriors — frequently paid from the public purse — like to use shocking statistics like the above in their campaigns for increased taxation. The California Federation of Teachers famously released a cartoon on income inequality that showed “The Rich” literally urinating on “The Poor” as part of a 2012 campaign agitating for repeal of the Bush-era tax cuts. This fosters resentment toward those who have achieved success, rather than a desire to emulate them, and convinces the poor that they are powerless to better themselves and must become helpless clients of the state.
Another solution being pushed by Oxfam is increasing the minimum wage. Unfortunately, this cost is simply passed to everyday consumers. Billionaires rarely order from the 99-cent value menu. Boosting the minimum wage also leads directly to more business automation and fewer jobs.
If we are serious about fighting income inequality we must allow workers to keep more of what they earn, limit free-money policies that encourage abuse of the social safety net, and stop making the demagogic argument that success for some has resulted in failure for others.
It is easy for cynical politicians to claim that more tax dollars will allow them to redistribute from the undeserving wealthy to the victimized poor, but the truth is that government handouts will never lift a single person out of poverty. Jobs will. The private sector can, and will, create good new jobs; but only if we let it.
— From the Orange County Register