The Shrinking Middle-Class?

So, you ask, does wanting to get rich make you a bad guy? Of course not. Indeed, I would go further: The rich are in the best position to be the good guys, because only the rich have the resources to really help those who are in need. Still, despite the philanthropic advantages conferred by wealth, I am not at all surprised that your roommate is outraged by your desire to make money. Your roommate apparently believes that rich people are evil because they make money and that the government is good because it takes away some of that money. Not that liberals would put it that way. They would say that the government’s job is to promote equality by redistributing resources from the rich to the poor. In my last letter, I tried to argue that this attempt is wrong-headed; here, let me argue that it is unnecessary. Indeed, I intend to show that technological capitalism – not government – is the catalyst for equality. You can consider this letter a kind of extended postscript to my previous critique of Big Government.

Whenever a Republican – be it Reagan or George W. Bush – proposes a tax cut, the liberals say, “This tax cut will mostly help the rich. ” Of course tax cuts help the rich the most; the rich in this country pay most of the taxes. I wonder how many Americans know that the top 10 percent of income earners in America pay two-thirds of all income taxes. Meanwhile, the bottom 50 percent of income earners pay less than 5 percent of the income taxes. These statistics, which I got from the Internal Revenue Service, are of obvious relevance in determining who is going to benefit most from virtually any proposal to reduce income tax rates.

Thus if the rich guy makes $250,000 and pays $100,000 in taxes, and the (relatively) poor guy makes $40,000 and pays $5,000 in taxes, a ten percent across-the-board tax cut will cut the rich guy’s taxes by $10,000 and the poor guys taxes by $500. This provokes the liberal wail, “But the rich guy is getting twenty times more than the poor guy.” One does not have to be a math major to figure out that it is not even possible to cut the poor guy’s taxes by $10,000 because he pays only $5,000 in the first place. Contrary to liberal demagoguery, proportional tax cuts are just because they benefit citizens in proportion to what they have been paying in taxes.

Liberals usually oppose tax cuts and advocate higher taxes for the rich because they are convinced, as the old liberal mantra has it, that “the rich get richer while the poor get poorer.” But is this really true? For the past half century, and especially for the past two decades, it has not been true in America. In reality, the rich have grown richer, and the poor have also grown richer, but not at the same pace.

Let me explain. In 1980, when Reagan was elected, America was a much more egalitarian society. According to the Census Bureau, if one earned $55,000 that year, one was in the top 5 percent of earners in the United States. That sounds amazing, but it’s true. Now, taking inflation into account, $55,000 in 1980 equals something like $75,000 today. But today if you want to be in the top 5 percent of income earners, you have to make $155,000.

What this means is that lots of people who use to be in the middle-class, or the lower middle class, have moved up. In moving up, they have increased the economic distance between themselves and the rest of the population. So, inequality is greater. But the exclusive liberal focus on inequality misses the larger picture, which shows that more and

more people are moving into the ranks of the affluent class.

Dinesh D’Souza, Letters to a Young Conservative (New York, NY: Basic Books, 2002), 85-87. (Any bold text is emphasis I added.)

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