Spread the Wealth

When the notorious Jesse James was asked why he robbed banks, he replied: "because that is where the money is". The same is true today about those who support the government and who provide the generous benefits to all those who are in need of support through so-called entitlements. The well-to-do are the incredibly generous benefactors to both the government and the poor in America. They receive little credit for their generosity.

Wealth, and the ability to accumulate wealth in America, is the goose that lays the golden egg in the economy and to a large extent around the globe. America's generosity has not been limited to domestic programs, but has been distributed around the world like manna from heaven, including many countries that could care less about America. The spread the wealth story is primarily about the domestic economy, programs, and the country's future as a magnet bringing folks to our shores from all over the world.

Obama's statement to Joe the Plumber expresses his belief that the redistribution of wealth is warranted in the name of economic fairness, that more should be done for the poor. Add to this Michelle's statement that she was proud of her country for the first time in her adult life in 2008. For over twenty years she never believed that America was a very nice place to live?? On another occasion, Barack stated that his ambition was to rebuild America brick by brick. These and other statements combine to suggest that the Obama's have been and continue to be unhappy campers in their native land. To suggest that America is so fatally flawed that it must be rebuilt from the ground up, brick by brick, is an extreme misstatement, and one that does not sit very comfortably.

By contrast, the country many of us grew up in was generous to a fault. While the state and federal governments earlier were not as generous as they are today, there was always what was called a safety net, an assortment of local, state, and federal programs designed to provide a helping hand to many folks who experience either short and longer term difficulties. These services are targeted to folks through means testing, their status on an income scale, as specified by either state or federal government guidelines.

While a long term politician, like Barack, should be nominally aware of these many social assistance programs, he seems to believe that even more should be done for the least of these, the folks who do not do so well in our society and culture. As a minority, and as a community organizer for several years, I would hope that Barack would be intimately familiar with all the dozens of publicly funded programs which are already available and serving those with limited income. Perhaps Obama, as a community organizer, was more concerned with acquiring power than to serve the folks in his community.

Wealth is first a state of mind, a belief that we live in a country with virtually no restrictions on ones rise within the economic structure. Much of this unlimited opportunity has arrived within the past 50 years for all Americans, regardless of race, gender, religion, national origin, or sexual preference. This opportunity is a byproduct of the capitalist-market system in which an individual with the right ambition, a talent or idea, and the opportunity can rise within the system without limit. The incentive to support oneself and a family and profit sufficiently to save for the future is a priceless opportunity that is unmatched in the rest of the world.

When wealth is converted from a state of mind to an evil byproduct, opportunity is thrown out the window, and generosity becomes how much redistribution is fair. Most folks are woefully uninformed about the vast assortment of services and benefits that are already provided those who fall behind on the curve. One of the most frequently ignored facts on wealth accumulation is that in terms of sheer numbers, most of today's millionaires started out poor. They were poor in the beginning and started out like everybody else.

From this poor beginning, they view the country as an incredible opportunity to get ahead. With vital assistance through their parents and the schools, they acquire and develop valuable talents. Through discipline and hard work they find a personal niche in the capitalist - market economy and through use of their talents, they generate wealth. While a few inherit wealth, the vast majority earn their wealth during their own lifetime. This is the American dream, and one that is rarely achieved by those who chose a different path.

The idea that those, who have earned their wealth in their own lifetime, should share a greater proportion with those with less ignores what those with wealth already share. Most folks know very little about the extent of this sharing, the vastness of America's generosity in providing a modern day safety net for those with less. The following is not a comprehensive, but is an introductory listing of America's unequalled generosity.

Federal Income: The most glaring, and least appreciated source of generosity is the federal income tax code through which a very small percentage of tax payers underwrite the bulk of the cost of government services. These are the high income earners who file and pay their federal taxes every year. This very small group of wealthy folks pays most of the cost of government services across the board. From 30 to 40 million lower income persons pay nothing at all for all their government services. Their services through federal auspices are absolutely free of charge, thanks to the wealthy among them.

A visual aid of this tax advantage below shows that the top 20 percent pay more income tax than all the other federal tax payers combined. The suggestion that this 20 percent is not paying its fair share is at best a ludicrous notion. The blue bars on the below graph show their share of total income earned, while the yellow bars reveal their percentage of the total federal income taxes paid. This pattern is not a one time affair, but is repeated each and every year by those who report taxable income.

Low Income Entitlements: At this point it is appropriate to focus upon the lowest 20% of the tax reporting population that pays less than 1% of the federal taxes.

E.I.T.C. (Earned Income Tax Credit): Since 1977 low income earners receive an additional income supplement in the form of checks from the government. On average, these checks varied from $688 in 1977 to $1,869 per family in 2003. As a supplement to earned income, these checks are provided from general revenue, and amount to a deduction from annual tax revenue, thanks to the wealthy taxpayers every year. These checks are in addition to earned income, and are paid every year as a supplement because they are behind the curve in income.

Child Tax Credit: In 1998, families with children are granted a per child tax credit (an income supplement in the form of a check) of $500 for each child. This was increased to $1,000 per child in 2001. This supplement is phased out for families starting at $55,000 and when reaching $110,000 is phased out completely. This program was the subject of considerable fraud as the documentation invited graft. Many filers included neighbors' children, cousins and other fictitious children in the name of $1,000 checks for each fraudulent name. These checks are thanks to wealthy taxpayers across the country.

The above two sources provide on average $3,800 annually for a family with two children, provided their total reported income does not exceed $55,000. On a monthly basis, this annual check amounts to $300 plus each month to help with the support of children. This is in addition to the family's standard deduction as allowed on the federal tax form.

Supplemental Security Income: Persons or couples who are aged, blind, or disabled, (spouses and survivors) and have limited income are entitled to a cash support program, or S.S.I.. Entitlement is adjusted for any earned income, but maximum benefits in 2004 were $579 per month, or $869 per month for a couple. Annually this is $6,948 for an individual or $10,428 for a couple. With minimal earnings and two or three dependent children or grand children, (foster children, etc) one could also be entitled to both of the above entitlements. This would bring the total to $14,228 of benefits, plus a small reported income. These gratuitous support checks are thanks to wealthy taxpayers across the country.

Most Americans would not wish to learn that this income is also payable to selected eligible foreigners living within the country legally.

Welfare American Style: Most Americans are unaware that American style welfare includes many types of assistance. An analysis of the six most common types are: (1) Aid to Families with Dependent Children (AFDC), (2) food stamps, (3) Medicaid, (4) housing, (5) nutrition and (6) energy assistance. This assistance is administered through county offices, but is based upon primarily federal funding. Local and state sources often supplement the federal funds as provided by local and state laws.

Without specifying the detailed breakdown, the national average for just AFDC (type 1) in 1996 was $400 per month. Adding the additional categories produces an amazing range in annual assistance for a single mother with two children as follows: Low state average in Mississippi of $11,500, high state average in Hawaii of $36,400. Clearly if one chooses welfare entitlement, you should choose your state carefully. All of this assistance is provided by the affluent and evil rich taxpayers of the country. They receive little credit for their contribution.

While much of the above information is taken from an old (1996) report from Alaska, the focus of the report was upon the benefit of working at a minimum wage versus remaining on welfare. The rest of the report is summarized as follows:

In 39 states, welfare pays more than an $8-an-hour job. In 16 states, the welfare package is more generous than a $10-an-hour job. In Hawaii, Alaska, Massachusetts, Connecticut, New York, New Jersey and Rhode Island, welfare actually pays more than a $12-an-hour job-or 2-1/2 times the minimum wage.

In eight states, welfare pays more than the national average first-year salary for a teacher. In 28 states, welfare is more generous than the starting salary for a secretary. In 46 states, welfare recipients actually make more than full-time janitors.

The value of the six-benefit welfare package in Michigan in terms of pre-tax wage equivalent is $19,700. That equates to a job paying $9.47 per hour, ranking the state above the national average and 21st in generosity among the 50 states. Within the state, because of widely varying tax burdens, the disparity between what welfare pays and what a worker would have to earn in the private sector to end up with the same income after taxes can be even higher. In Detroit, where workers must pay a whopping 3 percent city income tax on top of both federal and state income taxes, the disincentives for work are overwhelming for many welfare recipients.

This welfare assistance is completely tax free, and with a little earned income may be supplemented with both the EITC and child tax credit above, moving the total family revenue, for instance, in Michigan from $19,700 to $23,500 per year. Adjusting this tax free income for that which would be required of a tax payer (estimated at $28,000) produces an equivalent of $14.00 an hour. Is there any wonder that a mother of two has little incentive to go to work at a minimum wage. She is far smarter than Washington's liberal politicians. This incredibly generous package of support is complements of wealthy taxpayers, who pay the bulk of state and federal income taxes.

School Assistance: While an education through high school is "free", the actual cost is paid for through federal and state income taxes with a heavy load through property tax. This cost is paid for disproportionately by the evil rich, and a number of fringe benefits accrue to schools and students through means testing and state-wide equalization formulas. Virtually all public schools offer lunch for a fee. The offspring of the evil rich pay for their own. For those with less the schools provide free and reduced price lunches and often breakfast, too. This feed the hungry children program is a supplement to welfare's child support, the child tax credit, SSI, and the dependent deduction on income tax.

Because the tax base of urban and suburban schools is often eroded, the per-child expenditure is often less in the cities than in the more affluent counties and districts. Through a stroke of the political pen, tax money of the rich counties is shifted to the poorer cities, increasing their per-pupil expenditure. Does it make a difference? In the name of fairness this cost shifting is a matter of local and state laws across the country.

Health Insurance: While much has been said about free health insurance for the millions of uninsured children, health services are free to the children in welfare families. Hospital emergency rooms offer free care as needed for unexpected health and medical problems. Much of this cost within hospitals is shifted to those whose bills are paid in full, those with wealth and health insurance.

Unemployment Insurance: A safety net has been required through employers to pay for job layoffs and displacements for those with seasonal employment. These funds are generated as a company cost of doing business, which raises the cost of their product or service to consumers. While much unemployment is well warranted, many persons on unemployment learn the rules required to game the system legally. At least one of the working poor, who did not show up for work as expected, was discovered by his employer standing in line to certify his continuing unemployment, and to receive the check to which he was entitled. This is often a felony, as a rule, but the number of offenders mitigates against prosecution.

Worker's Compensation and Vocational Rehabilitation: Designed to provide medical and restorative services following a work-related injury, these programs are often the gateway to long-term and permanent disability benefits. For those who are willing and wish to return to employment, Vocational Rehabilitation services may be provided to assist with retraining for entry into different employment. Many of the costs of such services are means tested, as determined by each state within this state-federal partnership program. Those who have few resources may receive the services essentially free of charge.

As part of his campaign rhetoric, Obama promised a tax reduction for 95% of Americans, reduced taxes for the middle class, and checks for the poor, which he called tax credits. In view of the more than generous assistance currently being paid by wealthy tax payers, additional checks in the name of fairness sounds more like welfare. Such verbal sleight of hand, like tax credits, is a key element in confusing the public at large. Greater transparency in all operations is clearly needed. With improved transparency, fairness will take care of itself.

While Obama has promised a tax cut for 95% of Americans, about half of all Americans pay no income taxes at all, and receive in addition to marginal taxes paid, one or several of the additional checks gratis from the federal coffers. When half pay virtually no tax at all, how can 95% receive a cut? The answer is "only by increasing the size of the checks they already receive", thanks to the wealthy tax payers who, according to Obama, are not paying their fair share.

On this issue, Barack is off the tracks, or he is ignorant of what-all the wealthy of the country already are doing for the least of these. When those on welfare make more tax free money than many fully employed persons, the system is generous to a fault.

Should the wealthy do more? Absolutely not.

07/23/09