Entitlements Of The Rich

If you've been reading these essays you know that I'm opposed to the use of tax money to provide entitlements to the underprivileged. It's not that I'm opposed to helping the needy and the burdened, but I have other views about how this support should be obtained. Some of my thoughts can be read in earlier efforts. For a start, try “Giving And Receiving,” (October 24^th, 2010) and parts one and two of “You Get What You Pay For?” (August 7^th and 14^th in 2011). In short, I decried the use of tax money as the source of such aid.

My ideas were not new: those who pay taxes should not be forced to give “charity.” However important the goal, obligatory payment is not charity. And that's just what “entitlements” are. Whether as welfare, food stamps, free medical care, “negative tax,” shelters and other housing, or whatever, they reflect the use of tax money for charity, and represent a shift of American values. Perhaps it was a “necessary” shift, but we ought not sugar-coat the change. There was a time in our history when Americans were fiercely independent. The “pioneer spirit” dictated people's behavior. They viewed it as their responsibility to make a living and fend for themselves. If that wasn't possible where they were, they moved somewhere else.

But to understand our actions it is necessary to understand the terminology. What does “underprivileged” mean? What does “burdened” mean? What does “needy” mean? Think about it.  Maybe I'll cover it more fully some time. 

The Progressive Era – and especially actions intended to end the depression – marked a new approach to the situation. Although those actions were, by and large, unsuccessful, and it took World War II to spur economic growth, the legislation of the (Franklin) Roosevelt administration, and expansions of it since, have created a society in which the government has undertaken to provide for the needy. Employment increased, at least for bureaucrats, civil servants, and “experts.” But the fiercely independent became the frighteningly dependent.

Many years ago I read an article that addressed this kind of situation. As I remember (and it's been decades, but even if I have some of the facts incorrect this retelling illustrates the point) it was published a few years after World War II and was framed as a narrator educating an ex-serviceman. The former soldier was complaining about how he had to work for a living while others were getting welfare – a “ free ride” at his expense. I don't remember the specifics at the time (it was several decades ago) but it included benefits for food and shelter and for the kids and for medical care and more. And it was paid for out of taxes.

The one who was complaining was really angered by what he considered an injustice until the narrator, the voice of reason, pointed out to him that he, too, received welfare. After all, he had received an education through the “GI Bill of Rights,” he benefited from road construction he was entitled to Social Security, he got veterans' medical care, was protected by the military, the police, and fire fighters, the cushion of unemployment insurance, as well as the gains received from the various governmental agencies and from research of all kinds which the government supported. All the wiser for the points made to him, his position softened regarding the use of public funds to “promote the general welfare,” as the Constitution promises us. The soldier was convinced.

As a liberal, I was heartened by the statement, and all doubts that I had – and I did have a few – faded. Those who complained about the support the poor were getting were either mean-spirited or hypocrites. Or both. And while the benefits to the underprivileged have increased over the years – and to the privileged as well – the arguments are the same, and most Americans condemn our government's failure to make the problems disappear. The haves want more, and they would deny the needs of the have-nots.

The answer was obvious. Justice and basic fairness demanded more assistance from taxes for those who were poor. So I forgot about the problem, leaving the government to address it. But over time it resurfaced, along with the doubts I had. And now, the more I think about it the more I realize that the narrator's sophistry might have been filled with convincing rhetorical flourishes, but it lacked substance. It was misleading, and I was misled.

The basic flaw of the argument is that the “privileged” pay taxes and the “underprivileged” do not. The serviceman in the essay about which I spoke earned the benefits he received, or paid for them in his taxes. The “needy” receive the benefits they get – and they're eligible for the ones provided for the “mean-spirited hypocrites,” even if those who pay taxes are not entitled to welfare or “negative income tax.” It's a system of income redistribution. Those who pay taxes are supporting those who don't pay. Winners lose and losers win.

That's not to say that I envy the needy or would voluntarily change places with them – I wouldn't – but it alters my perspective regarding the way we deal with the problem of poverty. It made me consider the definitions of “privileged” and “underprivileged,” of “poor” and “entitled.” And it made me wonder whether our current policies encourage some of the poor to remain so, or to find ways to convince government agencies that they're in need of help. (I also wonder if members of unions – governmental and other – who receive disability or large pensions while they take other jobs, aren't also “playing” the system.) One conclusion is that the way we are using money to try to solve the problem doesn't work. Like farm subsidies, using money to support those who don't pay taxes, or who don't produce, doesn't encourage work and production. If we're determined to redistribute taxpayer money, we should do it more intelligently and in a way that might decrease the temptation to take rather than earn. And it might increase the temptation to become taxpayers rather than depend on them.

How might that be done? Let me suggest one possible tax code change which could also motivate improved job performance and productivity among lower salaried employees – the ones most likely to be taking advantage of unearned government benefits. Contrary to every principle we've been taught, rather than a graduated income tax we ought to consider one for lower incomes that decreases as earnings go up, so there's an incentive to earn more. There might be a plateau at some particular rate, or an eventual increase to the level of a plateau, with a flat or graduated tax beyond that, but for individuals with lower incomes there would be a good reason to try to increase (and report) them. That would also lower the need for entitlements and for the agencies that administer them.

Providing more day care and care for the disabled would increase the number of salaried positions and would free more people for work. Tax benefits for families that stay together would encourage that practice and allow families in which parental care of the children is desired to be able to offer it. If our schools pay bounties to students who are improving, and many do, we can offer bounties for improving family life.

Lowering entitlement payments as time went by might also be tried. Perhaps it would spur some to try harder to gain employment. Private enterprise could be “bribed” to provide jobs for the unemployed at a higher “minimum wage,” increasing tax revenues and the number of jobs while tempering the cost to the employers. There will, by the way, still be entrepreneurs and others with high earnings, since they'll want more and put in the effort and expertise to earn it, and everyone will benefit from their creativity in the formation of new products, industries.

We should also use some of our taxpayers' money to improve our educational system, starting with districts that can afford the least per student. It should emphasize the new skills that are anticipated. It can be viewed as the beginning of the rising tide that lifts all boats – a kind of trickle-up economics.

Charitable institutions would take much of the burden off the government. There are inducements already in our tax codes, and new mechanisms can be written into it, to encourage individuals to give to charities, and charities to provide additional services. Right now we make charities tax exempt. Perhaps they should be considered for some kind of negative tax. Although individuals should not be obligated to give charity, those who do should be aided.

I suspect there are numerous other ways to increase our tax base – both in terms of industries and employed individuals. But simply distributing tax money to the poor isn't the solution. We have to try something new.