An oft-heard mantra these days from the Left is that we’ve got to reduce the disparity of income between the rich and the lower and middle classes. The “rich” simply make too much more money than the rest of us and that gap has to be reduced.

Mark Thoma, writing in the Fiscal Times, recently penned an article entitled, “Why US should spread the wealth,” that suited MSN’s philosophy closely enough to be linked from their homepage.

“We hear that raising taxes is unfair and that tax increases will harm economic growth. But there’s nothing unfair about correcting the maldistribution of income that we’ve seen in recent decades, or about making sure the burden from paying taxes is more equitable than it is now.”

This is quite an astonishing article. It is amazingly honest and revealing of the Left/Socialist mindset that puts “fairness” and “equitability” above individual achievement and entrepreneurship.

At the heart—the very core—of the matter is this question: Does the increasing success of the “rich” in recent times actually detract from and reduce the standard of living that the lower- and middle-class aspire to? Put another way (perhaps a bit more colloquially), does Bill Gates’ (or Steve Jobs’ or Warren Buffet’s or Derek Jeter’s) personal financial success take food off my table? If the Derek Jeters in this country made $2 million less per year, would that translate directly into my being able to afford steak instead of meatloaf?

When Thoma speaks of “correcting the maldistribution of income,” what, exactly, is he talking about? What is the economic device by which greater monies will be directed into the bank accounts of lower-income individuals if taxes are raised on the wealthy? How will that come about? Is he actually proposing that the U.S. Government cut checks for people below an arbitrary income level funded by the increased taxes on individuals making more than an arbitrary amount?

If Thoma is not advocating direct Government payments, then it’s hard to discern his point, other than empty, envious carping about others’ success.

Certainly, his argument for raising taxes can’t have anything to do with reducing our national debt. Economists from both sides of the aisle—while they disagree in the details—agree that fundamental debt reduction is not attainable by raising taxes on “the wealthy” alone. There are simply not enough of them, the marginal dollars involved by increasing their taxes don’t put a meaningful dent in the national debt, and millionaires’/billionaires’ income tends to be too unpredictable and unrepeatable a source (income from movie receipts, album sales, non-recurring real-estate sales, etc.) on which to reliably base a debt-reduction strategy.

Debt reduction depends on fundamental Government spending reductions, and the increased tax receipts from a dramatically-broadened tax base that will result from an improved economy with sharply higher employment. It’s millions of people paying income tax on $50,000 salaries that will sharply increase Government revenues—not raising punitive taxes on 10,000 “millionaires.”


So if we assume Thoma is reasonably well-informed and has read and understood the same economic tax data that both Democrats and Republicans agree on, what is behind his call for increasing taxes on the wealthy?

Implicit in his article is the unmistakable notion, common to all Leftist/Socialist-minded people, of the finite-sized economic pie. That theory states that the amount of economic wealth is stagnant, constant, and not apt to grow in the near term. Therefore, an equitable and just society divides up that finite pie into shares that enable everyone to live at a minimum-guaranteed acceptable level. If a person requires “3” as a humanely-justifiable minimum and the rich have “8” in a 10-sized pie, then you take 1 from the rich and give it to the class that only has 2, thus raising them to “3.” The rich won’t miss the 1, the lower class is now at 3 and everyone’s happy.

The problem with this theory is that onerous taxation and excessive Government regulation and interference in a free-market economy usually reduces the pie from 10 to 9. Now the rich only have 7 and the lower class still only has 2. No one’s happy. That’s where we are today, as the number of people living below the poverty line has increased sharply under Obama.

Conservatives/free-market advocates reject the finite pie paradigm. They say a successful free-market economy that puts a premium on innovation, risk-taking and the profit motive, will increase the size of the economic pie, even in the near term. When the pie goes from 10 to 11, the rich still have their 8, and the lower-class can have its minimum-requirement of 3, with the promise and potential of even more tomorrow (as the pie goes from 11 to 12). Now everyone has the opportunity to be truly happy—without depending on the Government.

The Occupy movements (with their plaintive, hypocritical bleating about “corporate greed”) unquestionably adhere to the “finite pie/give me theirs” philosophy. The Occupiers are not espousing hard work, individual responsibility, entrepreneurship, or personal economic creativity. Instead they are saying spread around some of “theirs” to us and forgive our debt—at your expense.

President Obama’s policies may reduce the pie from 10 to 9, but he seems determined to bring the lower class up to 3 by any means necessary. And furthermore, he looks as if he intends to make the bringing from 2 to 3 a political virtue on which to base his re-election.

The Republican candidates should frame this issue in clear, easily-understood terms (highlighting the attendant benefits that result for everyone when the pie goes from 10 to 11 and beyond) and not let the Democrats (and their liberal MSM cheerleaders) take the PR initiative away from them, as they usually do.