The Washington Post this morning proclaimed that the top one percent of households in the United States currently controls 40 percent of the nation’s wealth, citing a recent paper by economist Edward N. Wolff, and pointing out that this number is higher than in any point in United States history since 1962 at the very least.
Extending that percentage out to the top 20 percent of households covers 90 percent of the wealth in America, with an average household worth of $3,000,000. The top tax brackets in the United States have been doing much better lately, and the numbers reflect it. According to the Washington Post, a reliably left-leaning publication, this is a bad thing.
Something that the Washington Post article declines to make any mention of is where that wealth is concentrated. According to American Community Survey data that was recently released by the U.S. Census Bureau, the richest five counties in the United States are all suburbs of Washington, D.C. This is interesting to note because it is common for politicians and those who interact with them to live in these particular counties.
Loudon County, Falls Church City, Fairfax County, and Arlington County, Virginia, are all on the list, as is Howard County, Maryland. These are counties that are filled with lobbyists, political insiders, and congressional and senatorial staffers. The median household income in each county easily tops 100,000 a year, almost double the national median.
The Washington Post article does its best to gloss over the shocking growth in wealth of the political class, and of candidates and ex-politicians. The Clintons, for example, went from claims that they were ‘broke’ upon leaving the White House to raking in a half-million dollars for single speeches. Indeed, the halls of power in D.C. are filled with the wealthy who seem to escape notice from the Washington Post, like Elizabeth Warren who receives a salary of almost $500,00 from Harvard University to teach a handful of classes.
Of course, the Washington Post article can’t help but editorialize about the idea that the wealthy investors and business owners have more wealth, and that they continue to be gaining wealth. Indeed, much of the wealth created recently has gone to the investor class, the people with the additional money to invest in a continuously-growing stock market that seems to be hitting new highs with every passing week.
The Washington Post article, in a twist that will shock no one who has read the paper in the last decade, then goes to bat for the idea that the best way to influence the economy is to redistribute the largess of the wealthier classes, because handing out money, in their opinion, is the best way to improve the economy. They continue on to lambaste the tax reform bill, saying that it is the opposite of what is needed.
The problem is that despite what the Washington Post’s graphs are carefully designed to suggest, the wealthy getting more money doesn’t mean that the poor get less. Nor does it mean that things are worse for the poorest 40 percent of the nation, who are, according to the Washington Post, an average of $8,900 dollars in debt.
To begin with, the tax reform bill will be a boon to many communities in the United States, especially to businesses that currently struggle with the high corporate tax rates in the nation. The money saved from changes to that corporate tax rate can equate to better pay, more employees, or even expansion of the business to new locations or markets.
While the Washington Post and many other liberal outlets seek to proclaim that tax reform is hosing the poor or middle class, it isn’t doing so at all. It is returning money to those who actually pay taxes. The poor don’t get a tax cut because the poor generally pay little to no tax on their income, and their tax burden is often offset by their tax return and the services and entitlements that they consume.
The middle class will get a tax cut in many cases, but some states with ridiculously high state tax and local tax rates will see the middle class paying more in federal taxes. The sad fact is that it is not the federal government’s job to allow people to write off absurdly high taxes from their federal tax return simply because states refuse to manage their money and instead apply extreme tax schemes to their citizenry. Hopefully, by limiting SALT (state and local tax) deductions, citizens will be encouraged to demand their taxes be lowered by their local government.
The most important issue with the way that the Washington Post presents this information, however, is the idea that because the rich are making more, somehow the poor are being given the short end of the proverbial stick. The Washington Post tries to present the wealth of the nation and of various tax brackets within it with a simple ‘100 pies’, suggesting that the wealthy have taken more of these pies over the course of recent years. The reality, however, is that the number of ‘pies’ being produced is not a static number, but rather a growing one.
While the poorest in the United States may not be seeing quick improvement in their lot in life as a percentage of wealth they control, that does not mean that they’re worse off today than they were last year. It just means that as the wealth of the nation grows, it is those who invest in that growth who are most likely to reap the rewards.
This comparison by the Washington Post is designed to give the idea that the poorest forty percent are being disadvantaged by government and tax reform. However, the reality is that the bottom forty-eight percent in the United States pay less in taxes than they receive in direct benefit. A rising tide lifts all ships, and greater wealth in the nation creates the possibility for great wealth for individuals.