Entitlements, Income Inequality and Inheritance

Democrats are proposing some very big giveaways and entitlements. Elizabeth Warren is shaping up to be the leader of the pack along with Alexandra Ocasio-Cortez and Bernie Sanders.

It’s disquieting to witness how liberals are attempting to take over the federal government by bankrupting the country. Among Democrats there is not one iota of fiscal sensibility. They think they can buy votes by giving freebies to their base. If they are successful in 2020, there is no chance that any of their ridiculous and expensive entitlements will actually become law.

It’s comforting that many legislators, in both major parties, have admitted that the proposals by the politicians mentioned above are outrageous, even as millennials and ethnic groups are celebrating promises that won’t be kept. The types of aid being suggested go far beyond socialism and would be a recipe for financial disaster.

Warren’s objectives are actually the most draconian. The only strategy she has to pay for entitlements is to tax the affluent. After telling us about her intent to spend trillions, she has not offered one creative idea about how to fund universal health care, free college tuition, free child care and so on. If wealthy class taxes were increased to 60 or 70%, it wouldn’t be enough to avoid crushing fiscal deficits. Have any of the Democrats ever taken a course in economics or accounting?

Liberals say their base is totally supportive of proposals to bilk rich people. Of course they are. Other people are being asked to make sacrifices, not them. Proposals would be far more palatable if all Americans made contributions to improve our country.

For instance liberals never speak of commitment from the individuals receiving aid. Why should welfare be paid to able-bodied people if they refuse to accept available jobs? The job market is vibrant. People can find work. Aid should be contingent upon the recipients improving their lot. Aid should be temporary and not a perpetuity.

Some have suggested that young people with college debt should have an obligation to pay a percentage of their earnings, over a minimum level of earnings, into the future. If they were successful their debt would be paid back. If they cannot find employment above a certain amount, they would not repay with money needed to survive.

The point is everyone should make sacrifices. The Democrats and the federal government should not be allowed to continually demand more from successful Americans. And, since when is it a crime to earn a high wage? The mantra “everybody should pay their fair share” is a license to rob the rich. The affluent class in America has worked hard for their standard of living. The mantra is apropos for Robin Hood in Sherwood Forrest, not the US.

The amount that an individual earns is based upon the contributions he or she makes to the success of the organization he or she works for. Even in government, individuals that have advanced education and experience earn more than newer, less educated employees. Over time, with hard work, ambition and creativity people can advance. This holds true for both governmental and private positions.

One of the most absurd controversies deals with the outrage over CEO compensation. Why would anyone find it offensive that the person who manages a corporation with 20 or 30 thousand people would earn 200 or 300 times the lowest paid employee? People are not paid millions of dollars unless they bring many times their compensation in value added service.

One of the most important tasks of Boards of Directors is to pay the person who runs the business a competitive salary based upon performance of the organization, personal achievement and comparison to others at different companies doing the same job. Usually, in the beginning of the year, targets for performance (financial, reputation, competitiveness, diversity, employee relations, etc.) are negotiated. If goals are achieved compensation will reflect them. If goals are not met compensation will suffer.

There is a growing misconception that certain people are dealt six and seven figure salaries as a gift. This is absolute nonsense and a myth perpetrated by radical social progressives. To bring home this kind of money is only possible for individuals who have the education, skill, drive and integrity necessary to be successful.

The New York Times had an article in the Sunday edition that spoke about the revulsion of children for inherited wealth from their parents. All parents are trying to do is to give their children a great life where decisions need not be made based upon the money. For this some parents are scorned. Talk about no good deed going unpunished.

It comes as no surprise that young people are so overly sensitive to income inequality when 90% or so of their teachers and college professors along with the media are so critical of high wage earners in the country.

My advice to the unfortunate young people saddled with so much cash: find a charity and write a big check.

As for Democrats, they will continue to play upon the problems of the lower classes by blaming them on the affluent.

 

 

The Secrets Of Greater Compensation

What would Democrats do if Trump were no longer president? Given that nearly every ounce of effort is directed at destroying the president, the answer is who knows? Nevertheless, I have a sneaking suspicion that battling income inequality is going to be high on the liberal their agenda for some time even after Trump is gone.

Liberals in the country want two things, the ouster of Trump by any means and more entitlements. Regarding the latter, the have-nots, represented by congressional Democrats, want to denigrate the most successful individuals in the country. Inequality is the refrain from virtually every downtrodden group in the country.

There are so many things the government can do to encourage “all boats to rise at the same time.” Why is it so important to steal money from those who have distinguished themselves? Should Americans be attacking other Americans for doing their job well and earning more compensation?

Our leaders ought to document the reasons why some people earn more than others. If they did they would see a number of interesting things. For instance, most big earners are intelligent and have attended college. A large number of them are creative, innovative and ambitious. Many are risk takers. The vast majority are quantitatively gifted and/or qualitatively advanced. Most successful people have personality characteristics that encourage others to follow them. In other words they are born leaders.

Successful people are not just focused on amassing a large bank account. They know that material benefits will follow success if they build companies and convert ideas into tangible items that people need. Earning large compensation is just a derivative of the actions of brilliant business people.

It’s true that many successful individuals are brought up in homes that include intelligent parents with great work ethic. They emphasize hard work and attaining good grades in school. They recognize the importance of attending college. In these households earning a degree is not debated.

It’s true that families in lower socioeconomic classes have greater challenges including less money and time (especially for single mothers and fathers). Putting food on the table may supersede deep conversations about getting ahead and excelling in school. It’s all this that makes it so difficult for urban kids to compete with affluent children.

But the search for equality should not entail tearing down successful people or organizations. The demise of exceptionalism will not result in the advancement of the middle class. The have-nots should focus on what the haves do and have done to get ahead. They should be instructed on which characteristics enable one to get ahead to make a better life.

What does it take to earn significant compensation? Does anyone really believe that a company will pay its employees a huge amount of money without requiring something in return? What does one have to do to convince his or her company to pay them high six figures?

The answer is that individuals would likely need to be responsible for generating revenues equal to at least ten times their compensation (a rough estimate). How easy would it be so sell that many products or services?

Earning a good living is not as difficult as it seems. But, not everybody can earn out-sized compensation. If you aren’t trained, have minimal education, aren’t ambitious and aren’t willing to work hard and be a productive contributor to the success of your employer, you will be doomed to mediocre compensation for life.

Income Inequality Arguments Are Bogus And Dangerous

Not long ago, President Obama instituted a tried and true gambit to garner political favor- he began to attack affluent Americas. As expected, our leader’s rhetoric gained traction with liberal members of Congress and progressives throughout the country. Income inequality is now the mantra of many people who have less than the “1%” in the United States. But some astute economists and social scientists believe this strategy is misguided and dangerous.

 

There are some basic questions that one should ask before adopting the president’s perspective. Do the affluent actively prevent the other 99% from improving their standard of living? No. Does incrementally higher compensation of the 1% come out of the pockets of the 99%? No. Does the income inequality argument foster class warfare? Yes.

 

What specifically is the objective of those who demonize the wealthiest among us? The obvious goal is to increase taxes on the 1% and distribute it to the 99% (via welfare and/or tax relief). Considering that the marginal federal tax rate is almost 40% for the wealthiest Americans, and they pay about 50% when state and local taxes are factored in, is it shocking that some people believe the wealthy are already paying their fair share?

 

One of the classic arguments against high compensation is “These people [the 1%] earn too much money. It’s selfish and un-American to want more.” Since when is there a limit on the amount of wealth a person may accumulate? I always thought that the free market decides the value of a worker. Now, philosophers and local government representatives have become compensation experts. The moral argument is another canard. I ask, do the scriptures say a person’s compensation be limited? And what about our laws?

 

Throughout history, aristocracies stole money from the lower classes. In France, the greedy upper class ultimately got what they deserved- revolution and execution because they were thieves. In Russia, the same story played out. The czars and the czarinas absconded property and money from their subjects. Once again, a revolution resulted, and now there are no more czars and czarinas.

 

The political implications of singling out an innocent group because they have a different skin color, a different God or even if they earn a high salary are inappropriate. Rallying the majority against a minority who is not breaking the law for political advantage is a dangerous precedent as we have seen in any number of situations throughout time.

 

There will be some who object to the position I have taken. But, consider that the vast majority of billionaires and millionaires in this country earned their money by working diligently. True, some inherited their fortune, and some broke the law (hopefully they will all be prosecuted). But, the vast number of affluent people in this country wake up every morning, go to work, try to be creative and think of new ways to earn money legally.

 

Notwithstanding this, some affluent people have advantages in the race for financial success. (Note: I totally understand and support those who have aspirations aside from the accumulation of money.) Children of wealthy parents usually do not pay for college. Parents may be alumni, increasing the probability that their offspring will be accepted to the most prestigious schools. And the list goes on.

 

But, the most important advantage of affluent children is that their parents emphasize the importance of education, good values and the ability to support one’s self. It is a given that these children will go to college and graduate, for the most part. Considering that a huge amount of money is available for scholarships and grants, the financial burden on middle and lower class children in not overly burdensome as we have recently learned (See my essay “The Real Cost of Education” published by Softball Politics).

 

Progressives have attacked affluence mercilessly over the past decade or so, as if every person with a high net worth is a felon. Of course, the economic crisis and the greed that fueled the recession did not help the reputation of the wealthy. They were targeted even more aggressively, as if every investment banker packaged and sold “crappy” mortgages. And, every financial person is a Bernie Madoff in-training.

 

The fact is that the group being persecuted pays the lion’s share of taxes. Every new dollar of ordinary income that they earn, results in 50 cents of new revenue for federal, state and local authorities. Every dollar of long-term gains is taxed at 20%. The 99% should hope that rich people earn more because the U.S. Treasury will collect more that can be used for entitlements and other benefits that accrue to the 99%.

 

The best outcome is for all economic groups to rise in unison. This has not been the case in recent years, but it should be the objective, rather than mass redistribution of wealth. In the first, everyone earns their keep. In the second, more people will become wards of the state.