Observations on life

Reducing income differences

Americans who hold advanced degrees have grown more supportive of government efforts to reduce income differences, whether through changes to taxes or strengthening the welfare system.

The above quote comes from an article in the Sunday New York Times, May 15, 2016, “Why are the Highly Educated so Liberal?”

The sentence caught my eye because it captures what I believe is a fundamental flaw in our approach to improving the economic status of average Americans.

The above approach does not raise income or provide a viable long-term approach to improve the status of Americans. Even lowering the taxes of lower-income people (which are already low or non-existent), provides a very limited fix if their income does not grow steadily.

img_0448Also, how does strengthening the welfare system reduce income differences and how does that strategy not provide disincentives for actually improving ones income?  How does it not help perpetuate low-income and a low standard of living?

We seem to mix the goals of short-term assistance to those in need with economic growth that allows individuals to raise their income and economic status.

In 2016 a single person who does not itemize deductions and who earns $30,000 a year will owe $2,488 in federal income taxes or about 8% of income. So, is the secret to reducing the economic difference between this person and a CEO lowering their taxes to say 5% or perhaps increase the Obamacare insurance credit or making them eligible for SNAP (both of which result in higher taxes on others or a higher federal deficit)…

Or is the answer to create economic conditions that will allow this person to raise that $30,000 income? And, which strategy will provide the greatest incentive for the individual to work toward improving their own income by increasing their value as an employee or entrepreneur?

The liberal approach takes what should be short-term assistance programs and turns them into economic traps.


1 reply »

  1. What welfare system??? With $1,637 in monthly income my wife and I applied for SNAP last month, we had $50 too much income. If we could show $100 in medical coast we would get $16 in SNAP benefits. My mom who is 86 gets $110 per month SNAP, her income $720 per month. Sure welfare is going to make us all equal, poor. lol.


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