RebelCapitalist: Financial Information for the Rest of Us

The Choice Is Simple

Feb 09, 2010 | By: Mr_Blue | Tags: income inequality, government spending, tax code

The federal government is very good at redirecting income or ‘redistributing wealth’ as right wingnut-conservatives like to call it. Funny, this is probably the only thing right wingnuts and I agree on, but currently government policies help redirect income upward to corporations and upper income households - entities and people who really don’t need the help.

How does government do it?

Through the tax code, international trade agreements and helping keep wage growth to minimum. Look how effective government policies have been at redirecting income upward (graphs courtesy of the Center for Budget and Policy Priorities):

The choice is do we want a government to redirect income upward or downward? How would government redirect income downward? One way is a more progressive tax code. Second way is through social programs such as ones that help make college more affordable for working class families and access to affordable health care. For those in the middle consider this: redirecting income downward usually means strengthening the social safety net (not the welfare programs of 1970s & 1980s). So if you lose your job or small business fails there would be a social safety net to help you and your family. The challenge is making government work in the most efficient and productive manner and in favor of the most people as possible.

There are those who believe the government should not be in the business of redirecting income. These people believe that government’s sole purpose should be to protect private property interests - basically providing law enforcement and national defense only. Sure, and the ‘free market’ will take care of the rest. Right, and I have ocean front property to sell you in Nebraska. Leaving the government out is a sure way to a caste system - a system with no economic mobility (“climbing the ladder”).

Good luck.