Wealth is not income; there is no such thing as "fair share"
- Peter Lorenzi
- Oct 11, 2021
- 2 min read
From the October 11, 2021 Wall Street Journal column, Is the Income-Tax Rate on the Rich 8%, or 23%? Depends on Whose Math You Use, "The Biden administration estimates the wealthiest households pay an average of 8.2% of their income in federal taxes to the Internal Revenue Service."
How is it that the Wall Street Journal -- I can forgive our senile president for not knowing this -- can fail to understand and accurately describe the difference between wealth and income, especially when it relates to "income taxes"? It's not about the numerator or the denominator; it's about the definition of wealth and income.
"Unrealized capital gains," i.e., the increase in the face value of one's stock is a chimera. It is certainly not income. And any of those 'gains' could disappear in a stock market crash, or in a pandemic-induced economic collapse, or from a tax policy that forces people to sell their stock to satisfy their tax bill, which would also likely decrease the value of the he'd stock, and not just for the rich person being taxed. Every stockowner would suffer a loss of wealth based in part of not in its entirety on the government's foolish claim to tax wealth as income, to buttress their foolish claim that "the rich" need to pay their "fair share" of taxes.
Even the concept of "fair" is highly problematic, and "fair share" is even more so. Does this mean the share of total tax revenues collected or the "fair share" of a person's wealth, or income. A progressive pol uses this canard with an almost explicit wink-wink to convey that we all know that the term is meaningless, other than as read meat to the progressive radicals, like Bernie Sanders.
As I wrote earlier, this approach to taxation is a lose-lose proposition in the long run, i.e., a short-term spot of tax revenue in exchange for a long-term decline in wealth and tax revenue. Return to the basic concept of wealth creation as something to be pursued and incentivized, not punished, and we could continue to a sustainable, prosperous economy, reduced poverty, starvation and malnutrition, and increased resources to apply to solving the problems that persist, problems such as single-parent family poverty, forced emigration, obsolete educational institutions and systems, and a lack of worker productivity, engagement, innovation and well-being.
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