Does the Top 1% Pay Their Fair Share?

Does most new wealth go to the top 1%

 Bernie Sanders recently said that "49% of all new income goes to the top 1%." But is that true? " Sanders gets his numbers from a new study by Emmanuel Saez. But, Politifact points out some important information left out by Sanders: 

"Saez’s work does not include income received from government programs such as Social Security, food stamps and unemployment compensation, or health insurance benefits. Other studies that do account for these significant income factors, along with after-tax income — including one performed by Saez — suggest a more narrow gap in income growth" (Link).

Also, "Because Saez’s calculations are based on pre-tax income, his work doesn’t account for the other way in which the federal government redistributes earnings — by requiring the wealthy to pay a heftier share in taxes. That’s particularly relevant here, given that Sanders was speaking about the need to hike taxes on the very rich" (Link).

Do the top 1% pay their fair share?

According to the Tax Foundation, "The top 1 percent paid a greater share of individual income taxes (38.5 percent) than the bottom 90 percent combined (29.9 percent).

The top 1 percent of taxpayers paid a 26.8 percent average individual income tax rate, which is more than six times higher than taxpayers in the bottom 50 percent (4.0 percent)" (Link).

Does Printing Money Help the Poor?

Somebody once explained inflation to me in these terms: "Imagine there are only 10 Babe Ruth rookie baseball cards in existence. Now imagine they decided to print 100 more that were indistinguishable from the originals. What would happen to the value of the originals?" Of course, the value would go down, and this is what's happening to the US dollar, as we continue to print money in order to "help the poor" (Link).

But what if printing money actually hurts poor people by leading to more inflation? As the Wall Street Journal puts it, "Prices often increase more for basic needs than for luxury items, a phenomenon economists call 'inflation inequality.' Simply put, low-income families’ budgets will stress and strain as they confront the coming rising costs of the essentials they need (food, energy, transport, child care)" (Link). Therefore, simply printing more dollars to "help the poor" is ultimately hurting the poor the most. Although increasing inflation (by printing more money) is a terrible long-term solution, it seems to be popular these days.

American Money to China?

In a global economy, it is increasingly becoming more common for American businesses to search for cheaper wages abroad. As the Economic Policy Institute states, "Growing China trade deficit cost 3.7 million American jobs between 2001 and 2018" (Link). But does this effect income inequality in America? "Between 2001 and 2011 alone, growing trade deficits with China reduced the incomes of directly impacted workers by $37 billion per year" (Link).

Healthcare Reforms are Needed

While 92% of Americans have health insurance (Link) and others are covered on health sharing plans, there are still millions of Americans that are uninsured. An uninsured friend recently told me that an ambulance trip alone cost him $3,000. This seems ridiculously expensive and adds insult to injury for the poor people in our country. 

Indeed, the rise in healthcare costs over the past 50 years might be the biggest financial burden to Americans overall. "In 2018, U.S. health care costs were $3.6 trillion. That makes health care one of the country's largest industries. It equals 17.7% of gross domestic product.1 In comparison, health care cost $27.2 billion in 1960, just 5% of GDP" (Link). While some people are calling for Universal Healthcare, others are calling for allowing for more affordable health sharing options. 

In conclusion, by addressing the skyrocketing healthcare costs in America and the growing presence of healthcare fraud, I believe we can better help those who are not financially well off and uninsured.