What’s “Fair” Got To Do With It?
David Wessel, WSJ economic editor, claims that about 25% of Americans pay no federal taxes at all, while 46% at least pay some FICA tax. Some see this as unfair, he says. I agree, it’s unfair. That a large portion of the American work force is paid so little money that to be taxed on this pittance would subject them to serious hardship, is unfair. It’s also an unfair tax break to employers who benefit from the low-cost labor of workers who get by with less because they are not taxed on their income. Others say the income distribution is unfair. I think unfairness is a poor standard. If we just look at the economy and what it needs to function to distribute the most good to the most people, what is happening is not unfairness but a massing of wealth at the top. There is a huge overhang of money stored in nonperforming assets at the top of the pyramid that needs to be harvested through taxation and plowed back in at the bottom where it will instantly create massive aggregate demand, stimulate hiring and begin to raise all boats. And if that happens, will anyone scream “unfair!” if a few yachts get lifted, too? I think not.