Poor peo­ple aren’t poor be­cause rich peo­ple are rich

The Atlanta Journal-Constitution - - OPINION -

A new study re­leased by the left-lean­ing In­sti­tute for Pol­icy Stud­ies in Wash­ing­ton, D.C., head­lines what they see as shock­ing news that in Amer­ica some peo­ple are much wealth­ier than oth­ers.

Some find­ings of the study, en­ti­tled “Bil­lion­aire Bo­nanza: The Forbes 400 and the Rest of Us,” are:

■ “The three wealth­i­est peo­ple in the United States — Bill Gates, Jeff Be­zos, and War­ren Buf­fett — now own more wealth than the en­tire bot­tom half of the Amer­i­can pop­u­la­tion.”

■ The 400 bil­lion­aires on the Forbes 400 list “now own more wealth than the bot­tom 64 per­cent of the Amer­i­can pop­u­la­tion.”

■ “One in five U.S. house­holds ... have zero or neg­a­tive net worth. Over 30 per­cent of black house­holds and 27 per­cent of Latino house­holds have zero or neg­a­tive net worth.”

The mes­sage that IPS wishes to con­vey here is that there’s a con­nec­tion be­tween wealth at the top and dis­mal eco­nomic cir­cum­stances at the bot­tom. That is, the poor are poor be­cause the rich are rich.

The way to make the poor less poor, in their view, is to make the rich less rich. And, of course, they pro­pose to do this with gov­ern­ment power. If we ac­cept the ques­tion­able as­sump­tion that higher taxes on the wealthy would raise “sig­nif­i­cant rev­enues,” who ex­actly, ac­cord­ing to their plan, would in­vest these funds to pro­duce all these new op­por­tu­ni­ties?

Those with the great­est in­vest­ment skills are those on the Forbes 400 list, who the IPS sees as the prob­lem and who they want to pun­ish for be­ing suc­cess­ful.

So in all like­li­hood it’s a gov­ern­ment bu­reau­crat that they want to put in charge of mak­ing these bril­liant “wealth-build­ing” in­vest­ments.

But bu­reau­crats would not be bu­reau­crats if they knew how to in­vest and cre­ate wealth. We’ve been through this be­fore — the list of failed gov­ern­ment projects is long.

Re­call most re­cently the Solyn­dra scan­dal — the failed so­lar panel firm backed by the Obama ad­min­is­tra­tion — leav­ing tax­pay­ers on the hook for $535 mil­lion in fed­eral guar­an­tees.

Who are these bil­lion­aires on the Forbes 400 list? Joshua Rauh of Stan­ford Univer­sity and Steven Kaplan of the Univer­sity of Chicago stud­ied the list.

In 2011, 32 per­cent came from wealthy fam­i­lies, com­pared to 60 per­cent in 1982. And in 2011, 69 per­cent started their own busi­nesses com­pared to 40 per­cent in 1982. So these are in­creas­ingly in­di­vid­u­als who cre­ated their own wealth.

And the fact is, the wealthy al­ready pay the lion’s share of the na­tion’s taxes, and this has in­creased over time.

Ac­cord­ing to the Tax Foun­da­tion, in 2014, those whose in­comes were in the top 1 per­cent paid 39.5 per­cent of all taxes. In 1982, the top 1 per­cent paid 19 per­cent of all taxes. Envy doesn’t cre­ate wealth. Free­dom and char­ac­ter does. How about we fo­cus less on pun­ish­ing those who suc­ceed and more on help­ing those who are not re­al­iz­ing their po­ten­tial?

Let’s ad­mit that our mas­sive wel­fare state has been a dis­as­ter.

I have long been for al­low­ing low-in­come Amer­i­cans to stop pay­ing the pay­roll tax and in­stead use these funds to in­vest in a per­sonal re­tire­ment ac­count to build per­sonal wealth.

We should be look­ing for ideas to bring up the bot­tom. Not drag­ging down the top.

Star Parker She writes for Cre­ators Syn­di­cate.

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