Paper rebuts popular assertions about income inequality in U.S.
TAX Day has come and gone for 2016. Unfortunately, the outcry from certain quarters on who’s paying too little income tax won’t go away for even a day. The high priest of this outcry is, of course, Bernie Sanders, he of the Church of the 99 Percenters. In his mind, it’s apostasy to point out that while 1 percenters gain the most during economic expansions, they lose the most during recessions.
And it’s downright heresy to counter Sanders’ embrace of Pope John Paul II’s Centesimus Annus. The democratic socialist took time off from his presidential campaign for a carbon footprint-leaving jet trip to Rome, joining Pope Francis in honoring the 25th anniversary of Centesimus Annus.
When he’s not describing climate change as the greatest threat to world security, Sanders is pounding the pulpit over income inequality. When in Rome, he sermonized that income inequality is “the great moral issue of our time.” But all this is based on poor exegesis. “Almost all new income and wealth is going to the top 1 percent,” Sanders said earlier during the campaign. Not so, according to a Manhattan Institute research paper. “Claims that only the very top earners benefit from economic growth — or that the rich are unaffected by recessions — are patently false,” Manhattan’s Scott Winship concluded.
From 1982 to 2007, the top 1 percent of households got a third or more of overall income growth during expansions. But in times of income declines, the 1 percenters took a much greater hit than the rest of us. From 2007 to 2014, the income of the top 1 percent declined by 18 percent, compared with 9 percent for the bottom 90 percent. And since 2000, the very wealthy’s prospects have mirrored those of the middle class, seeing “barely any real income growth,” Winship found.
Just as some believers cherry-pick Bible verses to support an agenda, Sanders and others cherry-pick economic data to spread the gospel of income inequality. The salvation from what they see as the sin of prosperity is to tax the rich even more. But IRS data gleaned by the Heritage Foundation shows that in 2012 (the latest year for which this information is available), the top 10 percent of taxpayers paid 70 percent of all federal income taxes even though they earned less than half of all income.
The bottom 50 percent, earning 11 percent of all income, paid 3 percent of income taxes.
At the Vatican, Sanders thought he had found a perfect platform for his income inequality jeremiad. He apparently failed to read Centesimus Annus, however. As a Wall Street Journal editorial noted this week, John Paul’s encyclical “was one of the most promarket documents ever to come out of the Vatican. While it certainly carries warnings about a capitalism unbounded by law and a healthy culture, it also spoke eloquently of the ‘human rights to private initiative, to ownership of property and to freedom in the economic sector.’ ”
As for socialism, Centesimus Annus considers it anathema to human freedom. Contrary to Sanders and Barack Obama, it celebrates success! Suffice it to say that wealthy, successful people pump a lot of money into churches and charities.
All of this might seem overwrought criticism of a man who has little chance of winning the Democratic nomination. Sadly, though, his opponent is reciting many of the same beliefs, chapter and verse. The party itself seems determined to put a scarlet letter on income inequality dissidents.
The Democrats may yet make Tax Day a religious holiday — the date on which the rich get their comeuppance when taxes are raised to historic levels.