Taking from the Top 40 Percent

Last week, the Wall Street Journal ran an article written by Scott Hodge of the Tax Foundation.  If we want true income equality, according to Mr. Hodge, income would have to be taken from the top 40 percent of income earners and distributed to the bottom 60 percent.  So redistribution is not just limited to confiscating from the top 1 percent.  $1.5 trillion is already distributed in benefits from the top 40 percent but total income equality would require an additional $2.5 trillion to be transferred from the this income group.  So for the remaining upper 39 percent who are wringing their hands over income inequality: are you willing to pay up?

Comments (10)

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  1. Raja says:

    That proposal sounds really ambitious. The fact, however, is quite cruel. First, economics teaches us that such distribution may undermine the economic activity. Second, how to persuade the remaining upper 39 percent to agree with the proposal?

  2. Thomas says:

    “Take about $4 trillion from the top 40% of families and give it to the bottom 60%.”

    There is already 1.5 trillion dollars being distributed, so more than doubling that will bring income equality. The upper and middle class can only pay so much, but then again that is the point, to make everyone equal.

    • Matthew says:

      “those in the bottom fifth, or quintile, of the income scale received $9.62 in federal spending for every $1 they paid in federal taxes of all kinds.”

      If this isn’t a form of income equality, then I don’t know what is. Obama cannot equalize everyone’s wages, he is doing enough already.

  3. Walter Q. says:

    The president wants to close the income inequality gap, but as evident in this article, it would be a massively painful fix.

  4. Frank L says:

    It is almost impossible for this proposal to actually take place. If the top 40% have to pay 70% of their income in taxes, they will simply leave the market. It would create lots of incentives for them to quit their jobs and thus fall in a lower income bracket. The problem with equality is that, the ones in the top have no incentives to work hard because with the bare minimum they would have enough. Those with lower income will realize that they don’t have to work because the government is going to provide everything for them regardless of what they earn. This would destroy the nation’s economy and it would create an unsustainable system doomed to fail, similar to the Soviet Union.

  5. Lucas G says:

    America’s foundation was difference. The first settlers came to this country fleeing from restrictions the government imposed them. Today it seems as if we have forgotten the importance of differences. People want the same for everyone, forgetting that it was the American ambition that made this country the best nation on earth. Inequality is not something to revere, but it is a mechanism that rewards those who have worked hard and serves as an incentive for people to work hard.

  6. Veronica P says:

    After reading this article it proves that those who claim that the tax system is regressive simply don’t know what they are talking about. The U.S. has a progressive tax system, but it is so complicated that is easily manipulated by politicians to make it look as if it wasn’t.

  7. Raul W says:

    The lower 20% is receiving $9.62 per every dollar they spend on tax. That is an outrageous amount of money that they receive for not doing anything. It is a big incentive not to work nowadays, especially now that there are affordable insurance plans. It seems that our government likes to see high unemployment in the country, because this administration is doing everything in their power to increase it.

  8. Brian Williams. says:

    Like two wolves and one sheep voting on what to have for dinner.

  9. Roger Waters says:

    Redistribution is such a rediculous, big-government (did I say “socialist”) word and concept. To state the obvious, it is a huge disincentive. Why don’t they give people the tools, economic incentives, and encouragement to improve their own economic situation.

    For a real-life example, my family was poor, with an immigrant father and mother who both were teachers. I learned how to work hard, because I had no money and realized the value of hard work (I recall getting $1.25 a week delivering a local newspaper door-to-door – called “The Advertiser” – and valued the little money made by me).

    Those lessons stay with you, and I realized I needed more skills to do more and make more. To make a long story short, I got a good education (paid by me) have worked hard, and now make a good living. My biggest concern, ironically, is how to make less or shelter what I make because of the huge tax burden.

    It seems like there is a “cap on success” and Obama wants to discourage wealth generation? My question is if you limit success, and therefore discourage new business formation, how do you then fuel your big-government redistribution if there are fewer businesses to contribute?!?

    Had to get this off my chest, during tax season, when I struggle with how much I want to get paid because much of it goes to government, therefore limiting my purchases and economic activity – living a minimalist life, and limit how many people can be hired because of the increased government-mandated costs, and refuse to take risks on new business because of the risks created by government regulation (federal and state). These are the issues that reduce economic activity, IMHO – the cap on success and the disincentive to work hard – for both the well off and the poor.

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