Sadly this is counter intuitive in today’s American society. We have been told since childhood that government “evens things out” and helps reduce income inequality. We were all regaled with stories of the Great Depression, where big government’s patron saint FDR bestowed “relief” to those stricken by the downturn of the 1930s. We were too young to understand that these myths were being propagated by people who benefited from an expanded government, namely the teachers (unions). We were also too young to understand that government actually extended the Great Depression for reasons we won’t go into here. We have been told our entire lives that government makes things more fair.
I woke up this morning to Steve Liesman on CNBC explaining the theme of tonight’s State of the Union Address. You see, since 1980 middle class wages have gone up only 50% in inflation adjusted terms whereas for the top 1% of earners income has gone up by 210%. Something clearly must be done. How can such a disparity be? This is unfair. Can’t the government “solve” this?
On February 3, 1913 Delaware ratified the 16th Amendment to the Constitution which created the income tax. It was a dark day for America yet some see it as a day to be celebrated, or ahem, “commemorated.” Professor Ajay K. Mehrotra at Indiana University is one of these people. In an essay in Bloomberg he explains to us that the income tax was not born from any effort “radically” redistribute of wealth, but in fact from a high minded progressive effort more interested in “balanc(ing) fiscal duties and civic responsibilities.”
Unfortunately, the government isn’t helping answer the question.